I am recommending we roll our General Motors (GM) and Marvell Technology (MRVL) puts out two weeks to generate more income and reduce our net debits on the positions. The net debits are sizeable, but these are core stocks that we are in for the long haul. I want to continue trading them every week or two to generate income.
We are going out two weeks due to next week’s Federal Reserve meeting. While the Fed is widely expected to raise rates 0.75%, the market could move sharply in either direction based on the actual size of the rate hike or the Fed’s choice of language.
You can enter the second leg of today’s trades even if you were not in the previous ones. Just be aware that we will be managing and tracking them based on the ongoing positions.
GM Sep Monthly (9/16) 39 Put
Current Stock Price: $40.58
Net Debit: $9.93
Action:
- Buy to close the GM Sep Monthly (9/16) 39 Put for around $0.17
- Sell to open the GM Sep Week Five (9/30) 39 Put for around $0.81
- Set your initial credit limit at $0.64, but adjust as needed to roll today
New Net Debit: $9.29
Expiration: After the close on Friday, Sept. 30
Potential Rate of Return: I am targeting breakeven for this position
MRVL Sep Monthly (9/16) 45 Put
Current Stock Price: $48.75
Net Debit: $19.65
Action:
- Buy to close the MRVL Sep Monthly (9/16) 45 Put for around $0.10
- Sell to open the MRVL Sep Week Five (9/30) 45 Put for around $0.89
- Set your initial credit limit at $0.79, but adjust as needed to roll today
New Net Debit: $18.86
Expiration: After the close on Friday, Sept. 30
Potential Rate of Return: I am targeting breakeven for this position