February 26, 2020 Terry’s Tips Trade Alert – Honey Badger Portfolio

Though COST is up, delta remains high. With elevated option prices next week thanks to COST’s earnings on March 5, we can start rolling down and out our highest-strike options that have little extrinsic value remaining. This will increase theta and reduce delta:

BTC 2 COST 28Feb20 322.5 calls (COST200228C322.5)
STO 2 COST 06Mar20 312.5 calls (COST200306C312.5) for a credit of $5.85 (selling a diagonal)

BTO 1 COST 17Jul20 310 call (COST200717C310)
STC 1 COST 17Jul20 325 call (COST200717C325) for a debit of $7.15 (buying a vertical)

BTO 1 COST 17Jul20 315 call (COST200717C315)
STC 1 COST 17Jul20 320 call (COST200717C320) for a debit of $2.40 (buying a vertical)

BTC 1 COST 06Mar20 320 put (COST200306P320)
STO 1 COST 06Mar20 310 put (COST200306P310) for a debit of $5.90 (buying a vertical)

BTO 1 COST 17Jul20 320 put (COST200717P320)
STC 1 COST 17Jul20 325 put (COST200717P325) for a credit of $2.80 (selling a vertical)


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

Happy trading.

Terry