I am recommending we sell a call on our uncovered CVS Health (CVS) shares. I expect the company to be on the forefront of coronavirus testing and vaccinations, which makes this a good long-term play.
Next, the protective put from our Microsoft (MSFT) strangle is on track to expire worthless tomorrow. We will watch it do so and buy another put next week.
I also want to initiate a new bull put spread on Netflix (NFLX) today, carrying over our net debit from the previous position. This “pandemic stock” should continue to benefit as people all over the country shelter in place.
Finally, our Nike (NKE) call is deep in the money, and I am recommending we allow shares to be called away. I see more downside risk in the stock than upside potential, so now is the time to cut our losses and walk away.
CVS Uncovered Shares
Current Stock Price: $59.08
Cost Basis: $69.68
Action: Sell to open the CVS Apr Monthly (4/17) 60 Call for around $1.40
New Cost Basis: $68.28
MSFT Jan 2021(1/15/21) 125 Call/
Apr Monthly (4/17) 155 Call/ Apr Week Two (4/9) 140 Put
Current Stock Price: $164.16
Cost Basis: $41.24
Action: Watch put expire worthless
Current Stock Price: $371.03
Net Debit: $2.31
- Sell to open the NFLX Apr Monthly (4/17) 330 Put for around $1.90
- Buy to open the NFLX Apr Monthly (4/17) 320 Put for around $1.25
- Set initial credit limit at $0.65
New Net Debit: $1.66
NKE Apr Week Two (4/9) 71 Call
Current Stock Price: $85.13
Cost Basis: $92.89
Action: Allow shares to be called away
Loss: $21.89, or $2,189 per 100 shares