By: Steve Smith
I hope it was fun while it lasted, but it appears that GameStop (GME) and the whole r/WallSreetBets short squeeze plays are played out — running into the reality that there was a finite number of targets and a limited time frame for making this extraordinary gambit work.
And work it did, beyond anyone’s imagination. My hat’s off to all who got on board early and had the sense to exit last week. Especially yours truly, who laid out the exact gameplan, from the basic math behind the short float, to how to use out-of-the-money calls to inducing delta hedging to predicting the high price almost to the T. This is the r/WallSreetBets post from early September. Massive respect. Always Respect the Pump!
Ok, drifting away from the meme game, let’s go back to the Options360 Service approach of grinding out profits!
At the start of last week, Options360 had 5 bullish positions that had come under pressure during the recent market dislocation. The focus was making adjustments to reduce cost basis through rolls, or simply paring the positions. The names included Wal-Mart (WMT) and Morgan Stanley (MS) which have now stabilized, are back in the green with over 60 days left in the trade.
New trades include Facebook (FB), which started as a bull put spread. But as shares initially sank, I turned it into an iron condor. This was a defensive move but I was prepared and told Options360 Members to expect it — from the initial Alert on 1/28.
We are establishing a bull put spread (with the flexibility and willingness to turn it into an iron condor) looks attractive.
The position is now showing a small profit with time decay working in our favor.
Today, I added a bull put spread in Visa (V), based on their recent strong earnings report and major support at the $200 level.
I expect to make more trades in the coming days as the Reddit circus packs up the tents and we can get back to business as usual.