📈 Trade Management Update: Navigating This Unusual CFLT Buyout Situation

IBM drops a $31 cash buyout — here’s what it means for our covered call and the Wheel Strategy setup

Hey traders and investors —

I want to walk through what’s happening with my Confluent ($CFLT) position because this is a rare setup where a cash buyout completely changes the mechanics of a normal Wheel Strategy trade. Even experienced options traders get tripped up when a deal hits like this.

So let me explain it cleanly, using my actual trade numbers.

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🔍 How This Trade Started

I originally entered CFLT by selling two cash-secured puts, and both were assigned.

I collected:

• $0.99 per share × 2 contracts = $198 total CSP income

That dropped my true cost basis to:

So I own:

• 200 shares at a cost of $22.01

• Total cost: $4,402

From there, I wrote a covered call:

• Short 2× Dec 19 $25 calls @ $0.30

• $60 in premium collected

Everything was standard Wheel Strategy execution… until IBM stepped in.

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💥 IBM Announces a $31 Cash Buyout

This immediately launched CFLT into the high $29s and pushed my covered calls deep in-the-money. And when a stock becomes a cash-acquisition target, the behavior changes:

• The stock trades like a $31 cash voucher

• Options lose almost all time value

• Deep ITM calls become almost entirely intrinsic value

• Early assignment becomes extremely likely

• Your upside is hard-capped unless you close the call

This is normal in M&A — it just doesn’t happen often.

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📊 The Two Choices From Here

Let’s break down the math using the correct cost basis and all premiums collected.

You have:

• Cost basis: $22.01

• CSP premium: $198

• Covered call premium: $60

• Cost to close calls right now: $960

• Buyout price: $31

Here are the only two outcomes that matter.

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🟢 OPTION 1 — Buy Back the Covered Calls and Let the Shares Be Cashed Out at $31

This unlocks the full buyout value.

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🔴 OPTION 2 — Do Nothing and Let the Covered Calls Get Assigned at $25

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🔥 THE DIFFERENCE BETWEEN THE TWO OPTIONS

1,096−856=240 1,096 - 856 = 2401,096−856=240

That’s the real incremental upside you unlock by closing the call and letting the buyout play out. $240 more profit.

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🎯 My Take

This is one of those rare Wheel situations where a cash acquisition throws a normal covered-call cycle.

Both outcomes are profitable.
The choice simply comes down to this:

✔ If you want the maximum profit:

Buy back the covered calls and let the $31 cash payout happen.

✔ If you want the simplest profit:

Let assignment take place at $25 and move on.

Either way, the system worked.
The CSP income + CC income + share appreciation all combined into a solid win.

This is why I like teaching the Wheel Strategy — you get paid in multiple ways, and even when the market throws a curveball, you still come out ahead.

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*Disclaimer: The examples in The Options Oracle are my opinion, not financial advice