Trade Journal

I bought a call for COST, strike price 900 for June 21st expiration. The strategy behind buying these calls is this: earnings are due for Costco on Thursday and I expect good results. On top of that, COST has been one of my best long-term performers and I wanted to make some extra income from its strong trend.

AMD closed down yesterday and NVDA managed to close up. Yesterday was a down day for the market but these two hanging tough in the face of the sell-off means the momentum is strong.

I’m realizing that writing put spreads is the casino way. The stock market is one giant casino and if you sell premium you can make a lot of money in the #options markets. The trick is to have your ass covered and learn what to do if you get assigned.

For example, if you write a put (1 contract) for NVDA at an out-of-the-money strike price say $750, and then buy a put for $730, your only exposure is $20. If you get assigned at $750, you have to buy 100 shares of NVDA for $750, which will be $75,000 and you could be on the hook for $2,000 until the put at $730 kicks in.

That said, the strategy would be to sell a covered call since now you own the stock. That’s another way to make money on NVDA. So you write a bullish put spread - aka a vertical spread - (sell put at a higher strike price, buy a put at a lower strike price) and then sell it before expiration. Technically, you can assigned the shares at any time but my strategy would be to close out the the options two days before expiration.

This is not for the faint of heart and I need to educate myself on these vertical spreads.

Disclosure: Long NVDA, AMD, COST