SPWR/Rookie - Let's start with the assumption that buying 1,500 shares for $15.45 is perfectly acceptable:
- Sell 10 SPWR 2024 $22 puts for $9.25 ($9,250)
- Buy 20 SPWR 2024 $13 calls for $7.10 ($14,200)
- Sell 15 SPWR 2024 $20 calls for $4.60 ($11,500)
That's a net $6,550 credit on the $14,000 spread so net $20,550 (313%) at $22+ is nice enough but, while you wait, you can sell 5 or 10 short-term calls along the way. March $19 calls are 0.85 using 45 out of 717 days and selling just 5 of them is $425 so 10 sales like that (450 days) is $4,250 more in your pocket. So the worst-case scenario is you own 1,000 shares for $15.45 ($15,450) and your upside potential is to sell 10 short calls when it's up in the channel and make maybe $10,000 more along the way - what's not to like?
Of course, I said the same thing on Nov 3rd on SPWR for our Top Trade Alerts but it is with no shame that I pick them again at half the price!
At the time I said:
The leg I would add since the MTP is up 107% and has $167,589 out of $207,249 in cash is as follows:
- Sell 10 SPWR 2024 $25 puts for $6.25 ($6,250)
- Buy 25 SPWR 2024 $30 calls for $12 ($30,000)
- Sell 25 SPWR 2024 $40 calls for $9.25 ($23,125)
That's net $625 on the $25,000 spread so $24,375 (3,900%) upside potential at $40 and our worst case is owning 1,000 shares at $25.625/share, which is 22% below the current price. When you REALLY want the worst-case to happen – it's a good spread! This is too good not to take so let's put it in the Earnings Portfolio!
Why so aggressive on this one (usually we go a bit more in the money)?
