Adjusting our RKT trade from the Morning Report:
Here's one we can play with. Rocket Mortgage (RKT) was added to our Future is Now Portfolio as a Top Trade Alert on October 29th. The stock has tanked on rate worries and a sharp slowdown in mortgage applications, but I do like them for the long haul. Our current position is:
| RKT Long Call | 2024 19-JAN 13.00 CALL [RKT @ $12.21 $0.00] | 25 | 11/1/2021 | (707) | $16,500 | $6.60 | $-3.19 | $6.60 | $3.41 | $0.00 | $-7,975 | -48.3% | $8,525 | ||
| RKT Short Call | 2024 19-JAN 20.00 CALL [RKT @ $12.21 $0.00] | -25 | 11/1/2021 | (707) | $-10,000 | $4.00 | $-2.28 | $1.72 | $0.00 | $5,700 | 57.0% | $-4,300 | |||
| RKT Short Put | 2024 19-JAN 15.00 PUT [RKT @ $12.21 $0.00] | -10 | 10/29/2021 | (707) | $-3,750 | $3.75 | $1.88 | $5.63 | $0.00 | $-1,875 | -50.0% | $-5,625 |
So we have a $4,150 loss and we spent $2,750 initially so we can close the trade down for a $6,900 loss or we can spend $2.59 ($6,475) to roll the 2024 $13 calls to the $2024 $8 calls at $6 and we can recoup some of that outlay by selling 10 of the June $13.89 calls for $1.10 ($1,100). That would leave us in what is now a $30,000 spread that is $10,000 in the money for net net $8,125. Better to spend $3,975 to reposition the trade favorably than dump it for $6,900 and the fact that we can generate $1,100 using 126 of the 707 days we have to sell indicates that, even if the stock stays flat – we should be able to grind our way back to even.
