SBUX Trade Update 6.22.18

If you have been following along on my put selling journey, we have our first realized loss from selling put options.

This will happen but as you will see by selling options we reduce the trade risk and can live to fight another day. The goal is to have about 80-90% winning trades.

Starbucks SBUX has unfortunately closed below the recommended stop loss of $51 yesterday.

Take immediate action and sell all common stock owned and buy to close the August 17'18 57.5C call sold.

Originally by selling the SBUX put you would have been assigned shares at $57.50 per share. The effective cost is adjusted by the upfront premium payment of $1.24 plus the $1.71 received for selling the call option. Assuming we can exit for $50 per share and the call buy back costs $0.25... the expected loss is about 8% (=((54.55+0.25)-50)/57.5 far better than the 13% loss from just buying the stock outright at $57.5). This is a known possiblity of the put selling strategy. No investment strategy works 100 percent of the time but we can be successful through risk management.

Starbucks is still a great company and we will likely try and trade it again in the future when the stock price finds support.

Disclosure: I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article.