I am recommending we roll our General Motors (GM) and Micron Technology (MU) puts to higher strikes while keeping the expiration date the same.
The income we generate will reduce our net debit on these positions. With GM, we will flip our net debit to cash in hand.
If you are not currently in a GM and/or MU position, you can enter today by selling the higher-strike puts. Just be aware that we will be managing and tracking based on the ongoing positions.
GM Dec Week One (12/3) 60 Put
Current Stock Price: $62.96
Net Debit: $0.04
Action:
- Buy to close the GM Dec Week One (12/3) 60 Put for around $0.51
- Sell to open the GM Dec Week One (12/3) 62.50 Put for around $1.35
- Set initial credit limit at $0.84, but adjust as needed to roll today
New Cash in Hand: $0.80
Expiration: After the close on Friday, Dec 3
Potential Rate of Return: 1.3% in 158 days, or 3% annualized, if this option expires worthless
MU Dec Week One (12/3) 72.50 Put
Current Stock Price: $85.85
Net Debit: $2.37
Action:
- Buy to close the MU Dec Week One (12/3) 72.50 Put for around $0.09
- Sell to open the MU Dec Week One (12/3) 82 Put for around $0.99
- Set initial credit limit at $0.90, but adjust as needed to roll today
New Net Debit: $1.47
Expiration: After the close on Friday, Dec 3
Potential Rate of Return: I am targeting breakeven for this position