This is Santa Claus Rally Week (first 5 trading days after Christmas and the first 2 days after New Year’s Day) and so far, it has been an up-and-down market. With stocks trading higher today, maybe the rally will hold into the next week.

 

We have several positions to manage today. Here is the first of several alerts this week.

 

CLOSE TRADE/BUY STOCK

 

Cardinal Health (CAH):  77.90

 

Cardinal Health goes ex-dividend tomorrow (12/30). We were hoping Cardinal Health stock would rally again so we could close our 30 Dec 77.50 put for a bigger profit. We can still close the put position for around 0.45 debit and realize a 0.70 profit. And then we can enter a buy/write to earn our dividend by acquiring the stock and selling a covered call in the same trade.

 

ACTION 1:  Close the CAH 30 Dec 77.50 put for around 0.45.

Buy to close CAH 30 Dec 77.50 put 

 

ACTION 2:  Buy/Write CAH stock at market (around 77.90) and sell the 6 Jan (23) 79 call for a net debit of around 77.50 to 77.52.

Buy to open CAH stock at market (77.90)

Sell to open CAH 6 Jan (23) 79 call for a net credit of around 0.45 to 0.50

 

ASSIGNMENT

 

CF Industries (CF):  86.95

 

We were finally assigned CF stock in our Master Portfolio for the first time in 17 months of trading this stock. CF has traded in the 95 to 107 range for most of the last year, is now trading around $87. 

 

There are two sets of instructions for CF depending on your position:

 

ACTION 1: IF YOU WERE ASSIGNED CF STOCK, do nothing at this time. We will sell a covered call next Tuesday.

 

ACTION 2: IF YOU WERE NOT ASSIGNED CF STOCK, do nothing. Take assignment of the stock from the CF 30 Dec 99 put.

 

NOTE: It will be easier to get everyone on the same page, rather than try to roll out the 30 Dec 99 put for those who did not get assigned. The good news on CF, is we have a 38.50 credit in 2022 that we can use to manage selling covered calls in January.

 

TRADE ROLL

 

Dow Inc. (DOW):  50.51

 

Let’s roll our DOW 30 Dec 51 call out two weeks and collect a healthy credit.

 

ACTION:  Roll the DOW 30 Dec 51 call to the 13 Jan 51 for a 0.85 to 0.90 credit and a 1.7% return

Buy to close DOW 30 Dec 51 call

Sell to open DOW 13 Jan 51 call

Receive the latest news

Subscribe To Our Daily Newsletter

Get notified about new articles, special events, training, and much more

Like What You See?

Leave your info below to get more options and trading ideas to your inbox

Yes, send me news to my inbox.