One position expired over the weekend.
music selection: “Too Bad About Your Girl” — The Donnas
weigh-in: 210.0 +1.0
A covered call in Altria (MO) expired out of the money over the weekend. I am writing a new covered call to earn additional income while I wait for the price to recover. I sold MO190628C00056000 for 9 cents a share. Honestly, MO has been very disappointing and my bull call spread is also now threatened as well. The trade will be in force for 32 days and yields an expected 1.83% annualized.
I like Delta Airlines (DAL) right now. They were cash flow positive during the 2008-2009 financial crisis and are probably the second best run airline after Southwest (LUV). But DAL is better priced at the moment. I am writing an Iron Condor. Basically a combination of a bull call spread with a bear put spread. I have written both haves on other names recently and wanted to combine the strategies to play both ends against the middle. Basically, I’m betting that this capital intensive 35 billion market cap company will trade within a tight range over a short period of time. That is usually a pretty safe bet.
I entered a combo order to buy DAL190719C00050000 and DAL190719P00060000. At the same time, I sold DAL190719C00052500 and DAL190719P00057500. I got the entire spread for a net debit of 3.89 per share. The shares are currently at 54.12 and the spread pays its maximum profit of 111 per spread at prices between 52.50 and 57.50 53 days from now. That is 28.5% or 197% annualized. The trade has 2.98% downside protection and 6.23% upside protection before profits begin to be threatened. If one wing of the condor is threatened before expiry, I will attempt to trade around the position.
Devour your prey raptors!