February 26, 2020 Terry’s Tips Trade Alert – Rising Tide 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, reduce delta and raise some needed cash:

BTC 2 COST 28Feb20 317.5 puts (COST200228P317.5)
STO 2 COST 06Mar20 310 puts (COST200306P310) for a debit of $1.00 (selling a diagonal)

BTC 2 COST 28Feb20 322.5 call (COST200228C322.5)
STO 2 COST 06Mar20 312.5 call (COST200306C312.5) for a credit of $5.80 (selling a diagonal)

BTO 4 COST 17Apr20 310 call (COST200417C310)
STC 4 COST 17Apr20 320 call (COST200417C320) for a debit of $4.75 (buying a vertical)

BTC 4 COST 28Feb20 320 call (COST200228C320)
STO 4 COST 06Mar20 310 call (COST200306C310) for a credit of $6.90 (selling a diagonal)

BTO 1 COST 17Apr20 315 call (COST200417C315)
STC 1 COST 17Apr20 325 call (COST200417C325) for a debit of $3.90 (buying a vertical)

BTO 1 COST 17Apr20 305 call (COST200417C305)
STC 1 COST 17Apr20 315 call (COST200417C315) for a debit of $5.40 (buying a vertical)


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

Happy trading.

Terry