Options Trading #16 - CVS Short Put

Updated: Dec 6, 2018


New VTS Discretionary trade:

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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