The Chinese coronavirus is forcing Wall Street to turn sour on specific stocks. Fortunately, members of Option Strategies Insider are reasonably well protected from today’s volatility.
It’s too early to tell what the overall impact will be to the world, but I would like to be proactive where I can.
There is only one stock of our Ultra portfolio that’s getting hit. Looking at the positive, it’s one of our biggest winners, and even with the pullback, the position is still up substantially.
Even so, I’m looking at how we can thin out some of our risk, and I’ve decided to close Microsoft.
Being this is a bull call spread, meaning we bought the spread, and the stock is up significantly from where we purchased it, this slight pullback, due to the coronavirus, has caused volatility to spite.
We have lost $2.50 off Microsoft’s price, but because the coronavirus and the volatility spike, with an IV rank of 77, this volatility has increased the value of the spread, which counteracts some of the price drop.
Being so, I’m closing this 39-day trade with a modest 32% return while I keep a close eye on any other adjustments that may make sense during these volatile times.