We have four put options expiring at the end of today, three of which are well out-of-the-money and should expire worthless. Remember, that’s a good thing since we sold these puts and have already collected the option premium so after today we are no longer at risk of having to buy the stock.

Since these three trades worked out so well, we are going to repeat them with a few minor adjustments as explained below. You may notice that all three of these trades involve strike prices in excess of $60, so the potential cost of having the stock put to us is higher than our most recent trades which I have limited to strike prices below $40. I’ll have another sub-$40 strike price trade next week for those of you that would rather wait for one that involves less capital.

As for the fourth option expiring today on Bed, Bath & Beyond (NasdaqGS: BBBY), it is below our strike price of $20 so the stock will be put to us at that price. Keep in mind that we collected a premium of at least $1.25 when we sold those puts, so at a share price of $18.75 we are effectively at breakeven on this trade. Similar to what we did with Spectra Energy Partners (NYSE: SEP) last month, I intend to wait a few weeks to see if BBBY rebounds close to $20. If it does, then I’ll write a covered call against it to make this trade profitable again.

If you’d rather not own BBBY stock at all then you can buy the same option back today to close out your position in it. You will incur a slight loss to do so, which can be more than offset by selling any of the put options listed below. In that sense, you can think of this as rolling the trade out of BBBY into one these others.

However, I’m fine holding BBBY for a while. The implied volatility on its options is high enough for us to write a nice covered call down the road, and in the meantime we may collect a dividend payment or two depending on how the timing works out.

Here are instructions for the new set of trades effective this Monday. Keep in mind that you should wait until after the current options have expired at the end of today before writing the new options just to be sure nothing crazy happens later today that could result in having the same stock put to you twice. Also, you may have to wait a few days to get filled on some of these trades. The stock market has rallied recently and has gotten a little ahead of itself so I’m expecting a bit of pullback during the second half of this month to trigger our limit orders. 

Trade 1: Sell a Put on Abbot Laboratories (ABT)

We first sold a $55 put option on ABT in May when it was trading near $61. Since then, it has risen a bit so we are going to sell the $60 option this time.

How to Make the Trade:

• Trade: Sell to open the November 16, 2018, $60 put option on Abbot Laboratories (NYSE: ABT).
• Symbol: ABT181116P00060000

Allocation: Sell one put for every 100 shares of Abbot Laboratories you would be pleased to buy at $60 per share. Investors should set aside $6,000 per contract sold to buy the stock in case the option expires in the money.

• Prices:
  • Limit Order Price: a credit of $1.00 or more.
  • Tell your broker: “I want to sell a put on Abbot Laboratories stock. Specifically, I want to ‘sell to open’ one November $60 Put for a credit of $1.00 per share or more.”

Trade 2: Sell a Put on American Electric Power (AEP)

Similar to Abbot, American Electric Power has also risen in value since the first time we sold this put so we are raising the strike price for this trade to $70.

How to Make the Trade:

• Trade: Sell to open the November 16, 2018, $70 put option on American Electric Power (NYSE: AEP).
• Symbol: AEP18111P600070000

Allocation: Sell one put for every 100 shares of American Electric Power you would be pleased to buy at $70 per share. Investors should set aside $7,000 per contract sold to buy the stock in case the option expires in the money.

• Prices:
  • Limit Order Price: a credit of $1.50 or more.
  • Tell your broker: “I want to sell a put on American Electric Power stock. Specifically, I want to ‘sell to open’ one November $70 Put for a credit of $1.50 per share or more.”

Trade 3: Sell a Put on Prologis (PLD)

Unlike the other two stocks, PLD has not gained any ground since the first time we sold a put on it so we are going to use the same strike price as last time. This trade illustrates the beauty of this strategy; the stock has gone nowhere, and we have already made money on it once and are about to go it again!

How to Make the Trade:

• Trade: Sell to open the November 16, 2018, $60 put option on Prologis (NYSE: PLD).
• Symbol: PLD181116P00060000

Allocation: Sell one put for every 100 shares of Prologis you would be pleased to buy at $60 per share. Investors should set aside $6,000 per contract sold to buy the stock in case the option expires in the money.

• Prices:
  • Limit Order Price: a credit of $1.00 or more.
  • Tell your broker: “I want to sell a put on Prologis stock. Specifically, I want to ‘sell to open’ one November $60 Put for a credit of $1.00 per share or more.”

Further Instructions Regarding all Three of these Trades:

• • If the option price changes, you can adjust our recommended limit based on the midpoint of the bid/ask spread, which you should be able to see when entering the trade. Just make sure the potential credit is at least equal to the Limit Order Price specified above.
  • Place your limit order on a “good ’til canceled” (GTC) basis and be patient.