The market has been a mess for the past several months, as countless stocks have completely fallen apart. It’s been UGLY.
That being said, the Cabot Profit Booster held up fairly well this month, as I structured our trades defensively, and the large call premiums we collected offset the market’s decline.
Now, I’m not going to say every trade was a win, but given the S&P 500’s loss of approximately 13% in the last month, and the countless stock blowups, I am “OK” with our results from May. Let’s dive into the details.
Let’s begin with our Marathon Oil (MRO) covered call. Initially, we bought the stock for 26.5 and sold the May 26 call for $2.05.
Today the stock is trading at 28. My plan is to simply let this position play itself out. If MRO closes above 26 today (likely), we will walk away with a nice $155 profit, or a yield of 6.33%.
Moving on to Box (BOX). Last month we bought the stock at 32 and sold the May 31 call for $1.93.
Today the stock is trading at 27.5, which means the call we sold will almost surely expire worthless. Because the market is so weak, let’s close this trade today. To do so, you need to:
Buy to close the May 31 Call
Sell BOX Stock
Next up is United Airlines (UAL). Last month we bought the stock at 50 and sold the May 49 call for $3.30.
Today the stock is trading at 45, which means the call we sold will almost surely expire worthless. Because the market is so weak, let’s close this trade today. To do so, you need to:
Buy to close the May 49 call
Sell UAL Stock
Please note, if you don’t want to close the BOX and UAL trades today, and would prefer to let the calls expire worthless this afternoon and then sell the stock positions out on Monday, that is a fine choice as well.