Friday Q&A Hello Smart Option Sellers! Since Monday, we've had a great week in the stock market. The rally has taken the S&P 500 back up to all time new highs. We entered a new put-sell play on Monday on AMD, which has since moved slightly away from those who couldn't get filled. Interestingly enough, some of the chip stocks have meandered or even fallen over the last few days, which has pushed AMD's option price back up closer to the $.25 per contract mark. For those of you who might not have gotten filled, a bit more drop in the stock price could be your answer. Keep working the order "GTC". Other than that, we sit and wait for the next opportunity. Nothing wrong with keeping our cash at bay. Patience is the name of the game sometimes. Let's hit the few questions that have come in recently. Q: Hi Lee, I was wondering if you had any words of wisdom for me on something that just happened. Apparently, you had recommended the GPS naked put be rolled. I did not do it for whatever reason. I just got 5 contracts worth of shares put to me. Should I roll out to the Sept $18 strike on the rest of my June 21 contracts? If so, what net credit do you recommend? If you know recommend (unofficially) a different expiration and strike what would it be and for what net credit? I have 65 contracts of the current June exp remaining. I was thinking of rolling out and selling 70 contracts. Your unofficial recommendations and thoughts? Another update. Don’t know if you would agree that this was the best corrective action to take, but I rolled my 65 remaining June $20 contracts out to 65 contracts of the Dec 2019 $18 puts for a small net credit. Now I will go about selling covered calls on the 500 GPS shares I now own or figuring some other trade. Still interested in your thoughts. A: This was an email from a great Smart Option Seller member and was looking for advice on how to proceed. He had been assigned on some of his GPS $20 put options and was looking to roll the rest of the bunch, which he in fact did. For now, he controls 500 shares of GPS from $20 per share (currently near $18.20) and has sold covered calls against those 500 shares. This is a very smart idea, and one we will undertake if we are ever assigned. Selling covered calls brings in an extra layer of cash to help cushion any small downside that GPS stock may undergo in the near future. And if those call options expire worthless, this member can sell another round of covered calls and collect even more cash. In the end, he may be able to quickly cover any current paper loss until GPS recovers above $20. As far as rolling the rest of the 65 contracts, moving out to the December $18 puts was probably the best choice at the time. Officially, we have rolled to the September $18 puts, so essentially we have the same strike but with a different expiration date. Thanks for sharing your results. Q: I could not get in (AMD) yesterday but placed the trade at $19 instead of $18 after I noticed that the stock went up over 1 point today. I was able to sell at 0.26 per contract. I guess this might elevate my risk somewhat but I would not mind being able to buy shares at $19 if things collapse. Do you have any general comments about taking slightly more risk? A: I have no problem with this if you have no problem with it. As long as you are aware of the risk going in and are within your comfort zone, then more power to you. The only issue that might arise is if AMD ends up near $19 at expiration and you have to make a decision on what to do. Possible roll? Possible assignment? Possible close-out for profit or loss? Time will tell... Q: Lee, any update on Bitcoin? It's getting close to $10,000 again. Thanks! A: OMG! Yes, Bitcoin is closing in on $10,000 again. It's been incredible to watch over these last few months. Towards the end of 2017, Bitcoin looked unstoppable as it was drawing close to $20,000 per coin, and then it hit the wall. It collapsed back down to a low near $3,150 in December 2018 when the stock market was also falling. But it has since rallied over $6,000 per coin, giving it well over a 100% return so far this year. Should you buy some? Well, I can't make that call for you, but you know I've been talking about it for a long time now. You don't even have to buy a whole Bitcoin. You can buy fractional shares or for any dollar amount you wish. If you'd like to dip a toe, see the section near the end of the alert in which I've included a link to sign up at Coinbase. Ok, that's all for now. Continue to hold all other open positions as-is. Contact us here with fills, comments, questions or concerns. Have a great weekend! Regards,
Lee Let's Grab That Cash!