exiting the Options Action Walgreens $WBA trade alternative

12 Jan - really think Options Action should have covered this trade this week since the stock got crushed. I don't follow the stock and outside of catching Mikes tweet on 8 jan I haven't looked at until tonight. worst case scenario happened. choice #3 from below would have been the right call. so if you are married to the stock /or are going for the full year of the Dogs of the Dow theory, mikes tweet is my suggestion as well. my alternative trade is also a loser. I take comfort in that per my initial notes below I would not have entered this at all.

Better course of action might be to sell the Feb 55 for $1.20 and hope stock works up a little to either resell something for March for $1 ish or to let the stock get called away for $5620 effective.. or just take your lumps and sell this POS and move on to the next one.

Mikes 8jan response to a viewer:

Carter can update his thesis on $WBA stock, however for the options piece one can cover/buy back the short January 60 calls for .06. If CBW suggests holding $WBA, may also consider "rolling"- selling Feb $57.5 covered calls @ 1.10

@OptionsAction

---------------------------------------------------------------------------------------------------------------

3 Jan - Options Action with an update on this trade, here is their clip Walgreens 3Jan . essentially said to keep holding. since the initial show the stock is up 70cents to 59ish. current values of the trades:

Mikes/Carters Buy 100shares and sell Jan2020 60 call at $1.10 for $5729, current value $5830 midpoint

MarkLexus alternative Buy 4 Jan2021 45 calls/sell 4 Jan2020 60 calls at $5428, current value $5600 midpoint

not much premium has decayed on the short calls since earnings are on 8Jan (that's why I rarely SELL premium weeks out that includes an earnings release) and 2weeks to go so both trades should appreciate as Jan opex gets closer. my thesis again was you are actually going to follow the dogs of the dow theory and hold the position all year not just for Jan opex. so let Jan short calls expire then resell Feb calls

-----------------------------------------------------------------------------------------------------------------
22Dec - mike khouw with a piece on Walgreens. this might be a first that the show recommends buying the stock first. going to suggest my go-to trade being a diagonal spread using deep in the money call. Carter Worth talked the dogs of the dow. so lets say you have $5800 ish in cash burning a hole in your pocket and you want to try the dogs of the dow method for 2020, instead of buying 100 shares and selling an upside call:

Buy 4 Jan21 45 calls for $14.67 (14.67 was midpoint as I typed) and Then
Sell 4 Jan2020 60 calls for $1.10 , assuming fills for $1357 per and $5428 total

keeping in mind earnings are before the Jan2020 opex. with this trade you are bringing in $440 in premium with breakeven at Jan opex at 61ish just like long stock/covered call but you also gain on the 4 long calls. can repeat the short sale process repeatedly.

given the following choices:

1- buy stock and sell Jan 60call
2- my buy 4 diagonal spreads
3- make no trade

I would chose number 3 and look to deploy that buying power elsewhere. I wouldn't look to enter a position on a stock that is in the red for the year with SPY being up so much. its in the red for a reason.

here is the video clip Walgreens clip