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Top Trades for Wed, 26 Sep 2018 11:21 – 9 Trade Ideas!

Adding some holiday income (and hedges) for Q4 with a set that you can start a whole new portfolio with:  

In the LTP, we have BBBY:

Short Put 2020 17-JAN 17.50 PUT [BBBY @ $19.09 $0.19] -20 1/8/2018 (478) $-5,600 $2.80 $-0.14 $-2.20     $2.67 $-0.18 $270 4.8% $-5,330
Long Call 2020 17-JAN 15.00 CALL [BBBY @ $19.09 $0.19] 30 4/20/2018 (478) $13,950 $4.65 $1.15     $5.80 - $3,450 24.7% $17,400
Short Call 2020 17-JAN 22.50 CALL [BBBY @ $19.09 $0.19] -10 4/20/2018 (478) $-2,200 $2.20 $0.25     $2.45 - $-250 -11.4% $-2,450

Let's sell 20 of the BBBY Jan $20 calls for $1.50 ($3,000) in the LTP and also in the OOP

As a new trade on CAKE for the LTP:

  • Sell 10 2021 $45 puts for $5.30 ($5,300) 
  • Buy 25 2021 $45 ($13.80)/$60 ($7) bull call spreads for $6.80 ($17,000)
  • Sell 15 Jan $55 calls for $2.85 ($4,275) 

That's net $7,425 on the $37,500 spread and we have 8 more quarters to sell.  

In the LTP, our CMG position is:

Short Call 2019 18-JAN 460.00 CALL [CMG @ $465.60 $-0.02] -20 8/27/2018 (114) $-123,600 $61.80 $-24.50 $-139.69     $37.30 $-1.20 $49,000 39.6% $-74,600
Long Call 2020 17-JAN 460.00 CALL [CMG @ $465.60 $-0.02] 20 8/27/2018 (478) $203,000 $101.50 $-22.55     $78.95 - $-45,100 -22.2% $157,900
Short Call 2020 17-JAN 580.00 CALL [CMG @ $465.60 $-0.02] -20 8/27/2018 (478) $-97,600 $48.80 $-14.60     $34.20 - $29,200 29.9% $-68,400

No change to that one but note that we have an $89,500 position (current net of the bull call spread) that pays $240,000 at $580 so massive $150,000 upside potential above $460 and we're collecting $74,600 (current price of short calls) over the next 3 months on the short calls.  That's 83% of the cost of the spread!  Great for a new trade but margin-heavy and, if it goes wrong (only CMG blasting higher would hurt us) you have to have the firepower to DD on the longs, sell puts and roll the short calls.  

As a new play on GCI:

  • Sell 30 GCI April $10 puts for $1 ($3,000) 
  • Buy 50 GCI April $10 (0.95)/12.50 (0.20) bull call spreads for 0.75 ($3,750)
  • Sell 30 GCI Jan $10 calls for 0.75 ($2,250) 

That's a net $1,500 credit on the $12,500 spread so $14,000 upside potential but most likely we'll have to give some back to the short caller but, as long as GCI doesn't pop $12 in 3 months – we'll be in great shape.

In the LTP, we currently have 5 short GILD 2020 $70 puts we sold for $8.55, now $6.35. 

  • Let's buy those back and sell 15 of the GILD 2021 $67.50 puts for $8 ($12,000).
  • Buy 25 2021 $65 ($18.50)/80 ($11.50) bull call spreads for $7 ($17,500) 
  • Sell 15 Jan $77.50 calls for $3.30 ($4,950)

Ignoring the profit on the original short calls, the new trade is net $550 on the $37,500 spread with 8 more quarters to sell going forward.  

In the LTP, we have 20 short GPRO 2020 $8 puts at $3.75 and those are now $2.  We've been waiting for them to get moving and now it's starting.

  • Let's add 40 of the 2021 $5 ($3)/10 ($1.10) bull call spreads at $1.90 ($7,600)
  • Sell 20 Jan $8 calls for 0.45 ($900) 

?That nets us into the full spread $20,000 spread for $1,000 with 8 more quarterlies to sell.

M has come down far enough to be interesting but let's start small into earnings:

  • Sell 10 M 2021 $30 puts for $5.25 ($5,250)
  • Buy 15 M 2021 $30 ($9)/$40 ($5) bull call spreads for net $4 ($6,000) 
  • Sell 10 M Jan $35 calls for $2.70 ($2,700)

That's a net $1,950 credit on the $15,000 spread and we have 8 more volatile quarters to sell.  If it goes down – we have a credit, so we don't care and, if it goes up, we're happy to buy more longs and roll the short caller.  

  • We've been waiting for PSA to get back to $200 so let's sell 5 2021 $200 puts for $24 ($12,000) 

TGT is interesting as a short entry as I think the consumers are having trouble and it will start to show up this Q.  What makes them attractive is the high premiums we can collect for the LTP:

  • Sell 10 TGT Jan $85 calls for $6.20 ($6,200) 
  • Buy 10 TGT 2021 $80 ($17)/95 ($10) bull call spreads for $7 ($7,000) 

Just an initial entry and if they go down, we have a $15,000 spread for net $800 and then we'll sell some puts to roll down the long calls.  If they go up, we're happy to buy more longs and roll the short calls along.

In the LTP and OOP, THC did so well that we cashed them in but now back to a buy for the LTP:

  • Sell 10 Jan $28 calls for $3 ($3,000) 
  • Sell 10 2021 $23 puts for $5.50 ($5,500) 
  • Buy 15 2021 $27 ($10.50)/37 ($6.50) bull call spreads for $4 ($6,000)

Once again we have a net $3,500 credit on the $15,000 spread and 8 more quarters to sell premium.

That's a nice $101,875 we plan to collect by Jan expirations if all goes well (it won't).  If you take out the high-margin CMG's $75,000 – it's still a nice $26,875 to pay for all those Christmas gifts!


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