The Money Tree

Safely Generating Income in Retirement

CSCO – Expanded My Position

Posted by mounddweller on May 13, 2011

Fellow Traders,

My only trade today was to expand my position in CSCO.  You’ll recall I originally sold 5 puts at the $18 strike a few months ago.  Rather than have them put to me at expiration I have been rolling them out.  I am short the JUN $18 puts.  Had I been more on top of it I would have bought back those puts as CSCO approached $18 prior to its earnings announcement.   However, other distractions made me forget about their upcoming earnings release.  So today with CSCO now again trading below $17 I decided to expand my position and lower my average price if assigned by selling 5 JUL $16 puts at $0.33.

If I were to have all 1000 shares put to me after June and July expiration my net cost per share will be $16.27.  However, I have no intention of allowing that to happen.  My strategy with CSCO is to continue to roll the puts if they’re ITM at expiration until I can no longer do so for a net credit.  At that point I should have worked my average net cost down substantially and should do very well when CSCO eventually recovers.



One Response to “CSCO – Expanded My Position”

  1. dealmakr said

    Hi Troy,

    Also in the CSCO camp and am using the weekly series as well as the monthly series for hedging, will be adding a few this week also.

    Trading Position CSCO 05/13/11

    Added exposure prior to earnings with the outlook that even if CSCO missed the stock wouldn’t be hit too bad and would like to add a bunch if it pooched to 16. Bot back the 17 puts expiring on 5/13 for a small profit instead of taking an exercise to see what next week has in store with the market looking weak on Friday. Using the weekly series now for a bit more flexibility on positioning and have reduced the loss from writing back to a zero starting point. The May 18 calls should bingo next Friday and will be looking at new writes from both sides to generate some premium on this trading position.

    The trades posted here are used specifically in an options trading position and are not reflective of what also may take place overall in swing & daytrading CSCO where the profits / losses won’t be applied here and the size of the position much larger and the timeframe much shorter, but every type of trade has its own parameters for risk/reward.

    12/31/10 Sold 25 Apr 18 Put .42*
    02/23/11 Sold 25 Jul 16 Put .45
    04/11/11 Sold 15 May 18 Call .50
    04/12/11 Bot 1500 CSCO 17.58 (26370)
    04/12/11 Sold 10 May 18 Call .45
    04/13/11 Bot 1000 CSCO 17.28 (17280)
    04/25/11 Sold 25 04/29 17 Put .14*
    05/09/11 Sold 50 05/13/11 16 Put .05*
    05/09/11 Sold 25 05/13/11 17 Put .25*

    Closed trades Profit/Loss

    04/13/11 Bot close 25 Apr 18 Put .76 (850)
    04/29/11 Expired 25 04/29/11 17 Put 350
    05/13/11 Expired 50 05/13/11 16 put 250
    05/13/11 Bot close 25 05/13/11 17 put .15 250

    Total return on closed trades (0)

    Short 25 May 18 Call 1200
    Short 25 Jul 16 Put 1125

    Net Position Exposure

    Long 2500 CSCO avg/share 17.46 (43650)

    Stock closed 05/13 16.88

    Covered Calls 2500 shares
    Naked Puts 2500 shares

    Good Trading

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