Good morning!
Inflation Hedges/8800 - I like WPM and GOLD as they can both be played for the long-haul.
- Sell 5 WPM 2023 $40 puts for $9.25 ($4,625)
- Buy 10 WPM 2023 $35 calls for $13 ($13,000)
- Sell 10 WPM 2023 $50 calls for $7.50 ($7,500)
That's net $875 on the $15,000 spread so there's $14,125 (1,614%) of upside potential and the worst-case scenario is owning 500 shares of WPM for net $41.65 - about the current price. Let's put that in the LTP.
- Sell 10 GOLD 2023 $23 puts for $5.15 ($5,150)
- Buy 20 GOLD 2023 $20 calls for $5.65 ($11,300)
- Sell 20 GOLD 2023 $27 calls for $3.25 ($6,500)
That's a $350 credit on the $14,000 spread so the upside potential is $14,350 (4,100%) and your worst-case scenario is owning 1,000 shares for net $22.65 - about the current price. Since GOLD has huge short-term premium, let's add them to the Butterfly Portfolio with a double-helping (20/40/40) of the above and then we'll take our net $350 credit and generate this 39-day income:
- Sell 15 GOLD March $21 puts for 0.54 ($810)
- Sell 15 GOLD March $25 calls for 0.42 ($630)
That's $1,440 in premium collected in just 39 of the 711 days we have to sell. Not bad for a boring play!
DBA is the food ETF but it suffers from decay, so not good for the long-term.
- OIH is still cheap at $183 and pays huge on the put side so, for the LTP, let's sell 5 of the 2023 $130 puts for $20 ($10,000) just to generate a bit of income. If OIH stays over $130, that will pay for all the gas we spend money on for the next two years!
VLO is another favorite of ours that's down in the dumps. This one is also for the LTP:
- Sell 5 VLO 2023 $50 puts for $9.50 ($4,750)
- Buy 15 VLO 2023 $60 calls for $13.50 ($20,250)
- Sell 15 VLO 2023 $80 calls for $7 ($10,500)
That's net $5,000 on the $30,000 spread so $25,000 (500%) of upside potential on that one where we were a bit more cautious with our put sale.
