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SUMMARY
TJ provides a comprehensive update on recent portfolio moves, discussing trade adjustments, risk management, and premium collection strategies. The session covers positions in CleanSpark, Micron, Amazon, Palantir, SoFi, BMR, and ESG, highlighting disciplined decision-making and future outlooks.
MAIN POINTS
- Sold 500 CleanSpark puts at $12, targeting a cash grab with a comfortable acquisition price at $10.
- Scaled up Micron (MU) put positions at $500 and $350 strikes, collecting significant premiums despite a current unrealized loss.
- Trimmed Palantir positions and adjusted protective puts due to a drop in implied volatility rank, locking in profits and reducing risk.
- Added 20,000 shares of ESG, bringing the total to 100,000 shares and discussing expected annual dividend income.
- Compared risk-reward between Micron at $350 and Palantir at $80, favoring Micron for new capital allocation.
- Explained optimal timing for rolling covered calls, emphasizing the importance of strike or breakeven breaches over days to expiration.
DETAILED ANALYSIS
The portfolio update began with an overview of the day’s performance, noting a red day primarily due to SoFi’s underperformance. A significant move was the sale of 500 put contracts on CleanSpark at $12, representing a short-term cash grab strategy with a comfortable fallback acquisition target at $10. This approach reflects a willingness to take premium while maintaining discipline on entry price for underlying shares.
The rationale for aggressively selling puts was to recoup premiums given back earlier in the day, which was part of a broader effort to reduce buying power usage from 63% to a more manageable 58%.
Micron (MU) was a focal point, with the position scaled up by doubling puts at the $350 strike, in addition to existing $500 puts. This resulted in a total of $112,000 in collected premiums, though the position is currently down approximately $6,600. The strategy relies on the belief that Micron at $350 presents a strong value, and there is an intention to potentially scale up to 500 contracts if favorable conditions persist.
The approach is opportunistic, leveraging both short puts and, when the stock becomes overextended, naked calls. This mirrors a previous successful campaign in Palantir, where patience and strategic scaling led to outsized gains.
Amazon saw the addition of 250 naked calls at the $325 strike to achieve a 2:1 put-to-call ratio. While not an optimal move by traditional standards, this was driven by a desire to balance risk and capitalize on Amazon’s recent rally. The willingness to roll calls to higher strikes if needed demonstrates flexibility and a focus on premium collection while managing downside risk.
Palantir positions were trimmed, with 1,000 puts and 1,000 calls removed and 500 additional protective puts added. The decision was influenced by a decline in implied volatility rank (IV rank) to 19, reducing the attractiveness of selling premium. The adjustment lowered notional risk and ensured that 25% of the position was covered to the downside.
This disciplined approach prioritizes risk management over maximizing exposure, with the intent to scale back up if IV rank rises and premiums become attractive again.
Other notable moves included closing naked calls in MicroStrategy (MSTR) after reaching a 50% profit threshold, and resisting the temptation to sell calls on SoFi despite underperformance, citing the risk of missing out on potential upside from sudden price jumps. In BMR, calls were closed at 85% profit, freeing the stock to run without further risk.
The addition of 20,000 shares of ESG brought the total holding to 100,000 shares, with expectations of annual dividend income ranging from $325,000 to $393,000, depending on interest rate fluctuations. This provides a significant stream of mailbox money to offset portfolio fees.
Throughout the update, there was an emphasis on transparency, discipline, and adaptability. The portfolio manager highlighted the importance of managing buying power, scaling positions based on volatility and opportunity, and maintaining a long-term perspective on core holdings. The session concluded with a discussion on the optimal timing for rolling covered calls, prioritizing strike or breakeven breaches over arbitrary expiration timelines, and a brief personal anecdote underscoring the importance of discipline both in trading and personal life.
LINKS
- Tastytrade referral link for trading platform signup.
- StreamYard streaming platform with a $10 discount offer.