Raw Transcript: How a 7% Loser Turned Into a 6% Winner in 12 Months with Options

Today we are going to shoot from strength. So I want to do it right here, right now together. We are going to look at this Starbucks position, right? We are going to go back in and we are going to dissect and examinate. Examinate. No, definitely not. You can examine. You could even investigate. You most certainly cannot examinate. But that's what we're going to do for the next 16 to 19 minutes. So we're going to go into Starbucks. We're going to examinate every every single Hey, I've got three small kids, man. They're examinating a lot of stuff. I can assure you of that. We're going to look at and kind of break down every single transaction in this trade since we put this on. Now, I know we could go into the chains. We could do it super simple. We could do all those kinds of things, but man, what would we do with our lives for the next 17 minutes? Like, you guys think this content is just going to create itself? Like, there'd be 16, 17 minutes of dead air. We're going to spend it together unpacking all there is to unpack here with this uh this Starbucks position. We're doing it all, man. We're doing dividends. We're doing commissions and fees. Like, we're going to do everything to arrive at a final basis for this uh for this trades. Okay. The first thing I want to do because the Starbucks price is going to be moving around quite a bit. So, let's lock this down right now. Let's just call it 8550 just to give us a nice round number to work with. I understand it's 85.44. So maybe we're 6 cents off when this whole thing is over, but let's call it 85.50 as the current price of Starbucks as we work through the math, we break out the final Jeopardy pen and we do all there is to do with this uh with this basis. Okay, so let me delete all that. Let's go into and [clears throat] oh, by the way, if you're brand new to the show, this is your first time, welcome aboard. Uh I really have enjoyed this project because I feel like this is something that a lot of long-term investors are either doing or looking to start doing with their long-term investments. It's like they want to continue to hold the shares, but they're looking for ways to kind of, you know, trade actively around that core position, if you will. And this has been a great case study for the last year. And let's see where we're at when all the dust has indeed uh settled. You can see right now we have 100 shares and we have a long call, a deep in the money call that we bought as kind of a, you know, kind of a DCA, a dollar cost averaging substitute because I didn't want to fork over the buying power to buy additional shares. So, we did this, we did this guy instead. So, okay, let's go to the activity page. And I see you guys in the chat, by the way. You know, while I'm doing all this, please, for the love of the algo, put it in there. put examinates, put everything you can think of in the chat because this needs to be seen and heard by uh by more people. Okay, so let's start [clears throat] with this was the original trade. I mean, here it is, man. 9218, right? December 27th, 2024. So, almost exactly one year ago, this was when this project began. So, what we're going to do now, I've got my pen and my paper in front of me. I am going to we're going to be walking through and talking through all the different things that we've done along the way. I'm going to jot them all down and then we're going to tally them up at the end old school style. We're going to pretend like it's, you know, 2003, maybe even 1996 for my '90s kids that might be watching the show. We've got all this technology at our fingertips with order chains and Allison chains and analysis tabs and whatever. Man, let's just grab a Final Jeopardy pen and uh and get to work. Okay, so we bought the shares for 9218. >> Mhm. And then a little while later, about a month later, you can see that the premium uh the short premium uh component uh part of the project began. So we sold a call against those shares for 93 cents. We bought it back for 16. So this is going to be let's call this we'll call this our first premium trunch. So this is our first premium trunch and it looks like if my math is correct, we picked up 77 cents. So 77 cents. Boom. And the project is now underway. I hope you have your electrolytes handy because this guy is going to be a doozy. Okay, so then uh on the same day, we decided to sell another call against these shares. Now, I don't have a chance to go back and see what the price of Starbucks was at that time and all those kinds of things, but you can see uh well, actually, because these trades are so long ago, uh you can't see the time stamp, but I did all of these trades on the show. So if you go back into the from theory to practice archives on the tasty live show network and you kind of dig back into you know January 21st, March 11th, etc. and so on and so forth, you will see all of these trades happening on the show. So you can see the price of Starbucks and you know just to remind us we went through everything. We went through a huge rip higher in Starbucks and then obviously a crash boom bang lower in Starbucks. So it's been a really really nice kind of broad swath of different uh stock prices that we've had to contend with. But this second premium trunch, we sold it for $160. We bought it back for 31 cents. So again, I'm no Jacob Prman. That looks like about a$129. So we've got 77 cents, $1.29. Okay. And now this little collection of trades. Let me grab a different color. Actually, let's grab magenta. So this was our first earnings bonanza, right? This was our first little slew of earnings trades for Starbucks. Now, to be fair, I'm going to include everything. Like we're going to include all the premium that we sold against it. We're going to include all the earnings trades that we did. Even though those might not necessarily be connected to the original position, I want to be fair. I want to be fully transparent with all the things that happened in Starbucks for the last 12 calendar months. So, we are going to include all of the earnings trades for better or worse. So, you can see [clears throat] we had three earnings trades on for Starbucks back on April 29th of uh of this year. So, we did a a long call spread, this 209 guy right here. So that's this guy right here. We did a short put, which is this guy right here. And then of course, we did an expected move butterfly. Now, if you look at the three different components, you have to kind of find their corresponding counterpart later on, like in terms of the the actual uh activity tab here. So this 209 call spread, this guy goes up right here to 244. So it looks like I made 35 cents on that call spread. Again, I'm no Julius Spina, so you've got to allow me a few cents around the edges, but I think that's a 35cent profit on the call spread. Okay, what about the short put? So, the short put, we sold it for $310. We then bought that guy back. We have to go all the way up to here. We have to go all the way up to this $108 debit if I'm not mistaken, right? We sold an 80 put. You can see that right there, right? And then we bought back that 80 put. You can see that right there. So, those two guys are going to be connected. That looks like we made $22 on that trace. We will write down $22 on the short put. Okay, beautiful. Now, what about the butterfly? H, it appears that we may have lit a stack of cash on fire. It's not the first time and it certainly won't be the last. So, with this with this butterfly, that's how you know this is authentic, by the way. Right. If you are brand new to the show, I do this quite often. This is one of my most favorite activities to light stacks of cash on fire around earnings with expected move butterflies. And so we did that right here on April 29th. We have this butterfly for $138. And then you see later on this guy gets connected to this little 14 center right here. And I had to think about this as I was kind of prepping for today's show and I'm like, oh, I think I vaguely remember kind of what happened. Most of the butterfly was worthless because we basically missed the move. But this extra call or I shouldn't say extra but one piece of the butterfly the 85 call actually let me grab let me grab the glacier free. So this 14 cents right here that's going to be this 85 call that's also this 85 call that's part of the butterfly. And so because that butterfly was set to expire and I was able to you know pick up 14 cents on that uh the call part of the butterfly. I just decided to the short call part of the butterfly I decided to just close that guy down and keep my 14 cents. And so when I look at the overall butterfly $138 we bought it for we reclaimed 14 cents so we lost $124. So the butterfly minus124 okay so that is the first earnings bonanza it will not be the last over the course of this uh this little project. Okay so now so now we've caught up to the earnings bonanza and we left off. Let me clear all that away just to give us kind of a a clean slate. So now we are right here on the uh the timeline. So on June 12th we decided to sell premium again. This is going to be our third trunch of premium. So we sold the call for $133. We bought it back for 29. That looks like we made $104. So third premium trunch $104. Okay, perfect. The fourth premium trunch is going to be the next little sequence of trades. We sold this guy for $1.90. We bought it back for 93. It looks like we made about uh Oh, wait. No, hold on, hold on, hold on. We uh That's not right because that's a butterfly. Hold on, hold on. Let me scroll up on the screen. It's going to be uh Bear with me for one second. Yeah, yeah, yeah, yeah. So, we sold this guy for $1.90, but this guy, let me grab a different color here again. I would have LMTs handy. I would have a ghost handy. Like, you need something. You might even want to go natty light ice at this point because we're only about 40% done. If I go to this guy, this is actually another butterfly that we put on for earnings. So, we bought this butterfly for 93. The premium that we sold just before it. So, this $1.90, this guy gets connected to this 35 center right here. So, you can see right here, 105 short call, 105 call bought back, right? So those so that's going to be your fourth premium trunch $1.90 bought it back for 35 we picked up $155. Now what about this earnings butterfly? Well if you look if you scan the you know the the the the layout what you see is no corresponding butterfly. You see no bought back butterfly. You see no profits taken on this butterfly. So what does that mean? That means it went out to pastor. What does that mean? That means it is no more. Much like my guy Philip Rivers, like he's over and done with and this butterfly met the same fate. And so we bought this guy for 93 cents and we did not get anything back. So we lost 93 cents on the earnings butterfly. Okay. Now we now we uh we resume our premium collection process. So this is going to be your fifth premium trough 85 cents. We bought it back for 56 cents. Fifth premium troughs, we made 29. The sixth premium troughs, we sold it for a dollar. We bought it back for 31. And so we made 69 cents on that guy. And then we had another earnings uh trade on 1029, right? You can see we did 429, we did 729, we did 1029. So if nothing else, it's quite fun if I don't say so myself. But this one, we actually were able to make a few shekels on the trade. We bought the butterfly for 204. We sold it out for 231 the next day. It's not much, but hey, it's 27 cents. So we made 27 cents on that earnings butterfly. And then of course the last trade here is the dollar cost average substitute or synthetic that we did with the deep in the money call uh that we bought for 2670. Okay. So the premium capture. [clears throat] So all the premium capture everything that I just did. In fact here I'll even let's go back to well actually no no. So before we do that let's go to the uh let's go to the history tab. So, if I go to the history tab, because I want to bring up, let's see here. I want to bring up my dividends and I want to bring up uh my commissions and fees. I want to bring up everything. So, first and foremost, so you can see I have the date set 1220 uh 2024 to to present day 12:30, 2025. So, this is going to give me the full gamut of everything that's happened with Starbucks. Okay. Well, you can see commissions and fees $24. And so, let's make sure we write that down because I want this to be inclusive of everything that we've done in this trade. So, commissions and fees, $2426. Okay, so 2426 commissions and fees and and we did quite a bit, right? And so, again, this is a testament to we're not paying anything on the closing commissions. Like, that's gone. You got a little fees in there because you still got to pay the man a little bit at the end of the day, but this is still that's pretty good. I mean, you only you can be the judge of that, but I think that's pretty decent given all the activity that we had we had in there. So, $24 commissions and fees. Let's go back though to [clears throat] I want to change this to uh the dividends. So, what dividends did we collect as a long-term investor in Starbucks now? So, here you go. So, we picked up $61, $61, $61, and $62. So, we picked up $245 on a per share basis. It's obviously $245, but I'm trying to convert this all to a per share basis. So, we picked up $245. Okay. So, now if you were to I'm not going to write it on the screen because it's just too much to scribble. And you got I mean, we went through every little transaction that was in the activity page. We're already almost at the halfway mark of the show. That's crazy. I actually can't believe that we're almost done with half half of the show. Let's go ahead and So, we've got the premium, all the premium capture. We've got that premium capture. We've got all the dividends. That's a nasty looking D. Not unlike that nasty looking capture up there. But that is capture. Penmanship has never been a strong suit of mine, especially not with a mouse and a final Jeopardy pen here. Live only on the Tasty Live Network. premium capture, dividends, we've got our commissions and fees, and then we've also got the share price, and we've got our little DCA action. Okay, so the premium capture, if you add up all of the different, you know, premium TR one, premium TRO 2, including all the stacks of cash that we lit on fire for earnings, what it what it amounts to is plus $610. That's not too shabby, man. Like, that's pretty solid. Pretty solid indeed. Okay, so plus $610. The dividends, again, I want this all on a per share basis. So, $245 would obviously be $245. So, $245. My commissions and fees. So, my commissions and fees were again $24.26. Let's just call it $25 so that I can make this a little bit easier when I go to fit this guy in on a per share basis. So, that's going to be minus 25 cents per share, right? It's $25 total. There's 100 shares in the overall package. So, it's minus 25 cents uh per share. The share price difference, again, I'm using 8550 mainly because I already did this before the show and I don't want to change my numbers now. It looks like we bought the shares at 9218. They're currently selling for $85.50. So, that means we lost $668. And then for the dollar cost averaging, let me bring up my uh my Starbucks. I I'll get this out of the way in a second, but if you look at the mark price of the call option, it's 3072. Let's just call it 3070 because that's going to be a lot easier to work with since we bought it for 2670. It's currently marking for 3070. That means that we were able to bring up Let me erase Hold on. Let me erase that and that. That means we were able to to clear $4 on the DCA. That's a plus sign, believe it or not. Plus $4. Okay. So, if you look at all of this together, [clears throat] all of that together is plus $562. Okay, so let's recap. This is everything. This is everything in the Starbucks project for the last 12 months. We made $562 on Starbucks on this position. Look at Starbucks. It is down to85.5085.40 whatever. That is actually a drop. I calculated calculated this before the show. That is a drop of 7%. 7 and a4%. So the stock went down by 7 and a4%. But using all the things at our disposal, not just short premium, although look, that was actually the biggest component right of the group. This had the biggest impact on our overall profitability on this trade. But using everything at our disposal, dividends, dollar cost averaging substitutes, everything that is at our disposal, we were actually able to make $5.62 on a 9218 basis is a return of plus $6. I'm sorry. 6%. 6.1%. 6.1 6.1. So, we made 6% on a stock that went down by over 7%. And how did we do that? We did that by leaning into all the things that are available to us at our disposal. The main one being selling selling premium along the way. So, selling premium, selling calls when the stock goes up. When the stock goes down, we didn't do anything. That's why when you look at the activity tab, you see lots of long gaps between some of the premium trunches because Starbucks was rallying. I'm sorry, Starbucks was going down. So, we wanted to keep the clean delta to the upside. So, that way when it rallied, we sold the calls into strength and we got rewarded for doing that. And so, this is the 12month case study in Starbucks. We took a 7% drop in the stock and we turned it into a 6% profitability profitable trade uh at the end of 12 months. So hopefully that was helpful for you guys. I mean, that was something I've been wanting to do for a while.