I continue to trade market neutral with my options positioning.

music selection:  “Oh No” — The Commodores

weigh-in:  209.0 +2.0

With the market at all time highs and political challenges on the horizon, I am trading market neutral.  Each week I open two new options trades.  One is bearish and one is bullish.  I open both of these net debit spreads in the money so I have some protection if the underlying makes a move against me.

First is a bull call spread in Target Stores (TGT).  The initial retail intelligence for the Christmas shopping season is Amazon is the big winner with omni-channel retailers like Target and Wal-mart a close second.  I bought TGT200221C00115000 for 13.088 a share and simultaneously sold TGT200221C00120000 for 9.346 a share.  My net debit is 3.742 a share and the trade is expected to be in force for about 82 days.  I enjoy 4.01% protection against a downside move and expect the spread to be worth 5.00 a share at expiry.  Against my cost basis of 3.742, that is a 34% return or 150% annualized.  Only a sudden shift in consumer sentiment can derail this trade.

I also am opening a bear put spread in Uber (UBER).  I have a long dated put for a long term trade but want some short term exposure for income as well.  I sold UBER200117P00032000 for 3.25 a share. I simultaneously (using a combo order) bought UBER200117P00033000 for 4.05 a share.  My net debit is 80 cents a share and my max loss is 80 dollars per spread.  The trade will be in force for about 47 days and enjoys 7.60% protection against a move north.  Against my cost basis of 80 the 20 dollars in expected profit is good for a 25% return or an impressive 194% annualized.  Uber continues to burn through cash and is engaged in a margin squeezing price war with competitor Lyft.  Both companies will be losers of that price war.

Wal-mart stores reported good Black Friday sales but my long calls are not performing as expected.  They and Amazon are expected a strong Cyber Monday so I’m going to hold both calls one more day to see if I can turn a quick profit, else cut my losses and run.

Devour your prey raptors!


New trades with yields up to 194%

Never miss another opportunity to devour prey!

2 thoughts on “New trades with yields up to 194%

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