May 18, 2020  Terry’s Tips Trade Alert #3 – Earnings  Eagle  Portfolio

 

TGT pays a $.66 dividend to owners of the stock tomorrow.  The extrinsic value of our short 155 calls is less than the dividend amount so holders of that call will have an incentive to exercise it and make us pay the dividend.  We will replace these calls with the same strike puts;

 

BTC 4 TGT 22May20 115 calls (TGT200522C115)

STC 4 TGT 19Jun20 115 calls (TGT200619C115) for a credit of $1.60 (selling a calendar)

 

BTO 4 TGT 19Jun20 115 puts (TGT200619P115)
STO 4 TGT 22May20 115 puts (TGT200522P115) for a debit of $1.63  (buying a calendar)

Be[Ta1]  prepared to change this (these) price limit(s) by $.05 or more in order to get an execution.

 

Happy trading.

Terry