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Zach Scheidt

Helping families build wealth so they can focus on what really matters

INCOME MODEL TRADE ALERT — MU

May 6, 2022 at 10:08 am by Zach Scheidt

Rolling our MU puts to a lower strike price and new expiration date.

[TRADING NOTE: As the broad market moves lower, some of our income stocks are trading below our strike price. This leaves some put contracts that expire in May under water with less time for the stock prices to rebound.

One strategy to manage these positions is to buy back our existing put contracts, and then sell NEW call contracts with lower strike prices expiring in June.

This leaves us more time for the stocks to rebound. And thanks to the market volatility, we’re getting more lucrative income payments from these new put positions. So expect to see a few of these similar trades over the next few trading sessions.]

~~

Shares of Micron Tech (MU) have pulled back with the overall market weakness. The good news is that our income strategy gives us some buffer for when stocks pull back.

Today, we’re going to use our parachute protection plan to buy back our original MU put contracts at a higher price. This helps to reduce our risk and protect your investment capital.

At the same time, we’re going to be rolling out a NEW income play for MU using a lower strike price. This creates more of a buffer helping to protect your wealth while giving us more income from this stock.

We’re buying back our original MU put contracts at a loss. But our second position should help to offset that loss and put us back on the road to growing your profits.

  • Buy (to close) our MU May 20th $72.50 put
  • Sell (to open) one MU June 17th $67.50 put
  • Limit: Net DEBIT of $0.85 or less
  • The new position will represent roughly 7.4% of our model.
    ~~~~~~~
  • 10:13 Executed
  • Bot MU May 20th $72.50 Put @ $4.19
  • Sold MU June 17th $67.50 Put @ $3.60
  • Net Debit: $0.59

*NOTE: If you don’t have a position in MU, simply sell the NEW put contracts to enter the trade. I recommend a limit of $3.85 or more for selling the new put contract.

  • Sell (to open) one MU June 17th $67.50 put
  • Limit: $3.85 or more

(Trade procedure: 5 minutes after this notification posts, I will enter the trade on my brokerage platform. Once filled I will edit this post to include execution prices.)

Please note: I am placing these trades in my own account. And while I notify the group of all trades 5 minutes before I place my own personal trades, this creates a conflict of interest. Please review all disclosures and agreements included with your subscription packet.

Filed Under: income trades Tagged With: $MU

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