May 19, 2020  Terry’s Tips Trade Alert  - Honey Badger  Portfolio

 

MSFT goes ex-dividend tomorrow with a $.60 dividend.  The extrinsic value of our short 182.5 calls is barely above that amount, and a slight drop might encourage owners of that option to exercise and force us to pay the dividend.  We will change to a same-strike put calendar;

 

BTC 5 MSFT 22May20 182.5 calls (MSFT200522C182.5)

STC 5 MSFT 05Jun20 182.5 calls (MSFT200605C182.5) for a credit of $1.10 (selling a calendar)

 

BTO 5 MSFT 05Jun20 182.5 puts (MSFT200605P182.5)
STO 5 MSFT 22May20 182.5 puts (MSFT200522P182.5) for a debit of $1.13  (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