I am recommending we roll our SPDR S&P Biotech ETF (XBI) put out two weeks to generate a large chunk of cash. The hope is to close the position early with a nice profit.
Note that the new put expires on a Thursday, as the market is closed on Friday, April 7, in observance of Good Friday.
Current Stock Price: $74.55
Cash in Hand: $0.74
Action:
- Buy to close the XBI Mar Week Four (3/24) 75 Put for around $0.97
- Sell to open the XBI Apr Week One (4/6) 75 Put for around $2.14
- Set your initial credit limit at $1.17, but adjust as needed to roll today
New Cash in Hand: $1.91
Expiration: After the close on Thursday, April 6
Potential Rate of Return: 2.5% in 17 days, or 55% annualized, if this option expires worthless