Updated: Dec 6, 2018
We were assigned SLV silver shares at 15.50 and it's currently trading at around 14.50. In this situation I usually just sell the covered calls immediately and keep the wheel going but in this case I'm going to let it go for a day or two and see if the price can recover a little bit first.
Our CVS trade worked again and we've built up quite a nice profit on that underlying this year. If the investing thesis hasn't changed I like to just keep things going so we'll go ahead and do another one this month:
The Trade:Basic "Wheel of Fun" Put <--- Video explanation
Sell 1 x 17 Aug 18' CVS 65 PUT Credit: ~ 1.80
Margin requirement: - 1 option contract = 100 shares if assigned - 100 shares of CVS @ 65 = 6,500 - This trade requires 6,500 in margin per contract
- The VTS Discretionary model portfolio is at 26,846.48 - 6,500 is 24.2% of the portfolio
* You can scale your trade to roughly 25% of your VTS Discretionary funds
Stop-loss: - We always use a 10% stop-loss on this type of trade - 6,500 per contract is what the trade is valued at - 6,500 * 10% = 650
* If we are down more than 650$ per contract we will close it
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