August Options Expiry – Summer Heat Edition (GO, CXM, NUS, PPC, AEO, ABBV, XOM, HSY, BMCH)

We’ll get right down to business, as there’s business to attend.

Our July 7^th trade featured GO, in a missive entitled The Grocer With Empty Shelves.

There, we urged the sale of the GO August 19^th 40/45 CALL spread for $2.45 and purchase of two (2) GO August 19^th 40/35 PUT spreads for $1.35 each.  Total debit was $0.25.

And now…?

GO trades at $42.23, which puts our short CALL spread $2.35 in the red.

ACTION: the stock is on the precipice, so we’re resetting a renewed, more leveraged trade at no cost.

Like this –

Sell the 40/45 CALL spread* for a credit of $2.30 (3.00/0.70) and buy three (3) September 16^th 40/35 PUT spreads** for a debit of $0.75 (0.90/0.15) each.  Total credit is $0.05.

[*Sell the 40 CALL and buy the 45 CALL.  **Buy the 40 PUT and sell the 35 PUT.]

With S&P futures slightly lower before the open, there’s a very good chance we’ll recoup today’s hurt in splendid fashion.

Our CXM bet arrived at your doorstep on the 30^th of June.  The dispatch was called Investors Give Sprinklr a Sodomite Punishment, and there we recommended you sell the CXM August 19^th 10/12.50 CALL spread for $0.70 and buy the CXM August 19^th 12.50 PUT for $2.55.  Total debit was $1.85.

Today, the stock opens at $12.01, putting us in the hole by some $1.50.

Here, too, though, we see a decline in the making, so we’re recommending you set a similar play to the above GO makeover.

Like this –

Sell the CXM September 16^th 10/12.50 CALL spread for a credit of $0.90 (1.75/0.85) and buy two (2) CXM September 10 PUTs for $0.45 each.  Zero premium is the result.

Again, with futures pulling back and CXM already in decline, we could see a quick and ample return from the above fix.

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Next up is our NUS initiative, whose details can be pulled up HERE.

In brief, we’re short the NUS 40/45 CALL spread expiring this eve and are holding a credit of $0.04.

NuSkin keeps making lower lows and lower highs, a sure sign of an issue in decline.

But with the stock now over $47, we’re going to be on the hook for the full measure of the short CALL spread.

That means we have to make like a bunny and… –

Set the December 16^th NUS synthetic short with a 40 strike for a credit of $6.15 (8.00/1.85).

That will flip our debit to a credit of $1.11 and open the downside to a potentially healthy take.

Breakeven is $41.11.

NEXT!

The particulars of our PPC trade are available HERE, and see us in possession of a short August 19^th 29/31 CALL spread and a long 31/29 PUT spread – both expiring tonight.  We also have a debit of $0.20.

The stock closed last eve at $30.38, meaning we’re looking at a potential debit on the affair of roughly $0.50.

That said, with futures still looking to open lower, we recommend you sell one PPC December 16^th 35 CALL for $0.55.

That wipes the debit clean, and gives us a nickel profit for our troubles should PPC close below 35 by expiry.

Our AEO covered write has a breakeven of $16.25 and an open short 16 CALL expiring this eve.

We still love the trade, but AEO closed last eve at $13.56, so we’re extending the affair for another three months with the sale of the AEO November 18^th 16 CALL for $0.68.

That re-jigs our breakeven to $15.57.

Stay tuned…

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Our ABBV trade sees us holding a debit of $4.86, one short 165 CALL and one long 130 PUT, both expiring this eve.

ACTION: with ABBV now at 141, both options are set to expire worthless.

But as the downside still beckons, we’re urging you to reset, as follows –

Sell the ABBV November 18^th 155 CALL for $1.81 and buy the ABBV November 18^th 120 PUT for $1.85.

That will add a nominal $0.04 to the debit, bringing it to $4.90.

But it also fully opens the downside to gains.

ALRIGHTY, THEN…

On to our bet on XOM, whose details are available HERE.

To sum it for you, we’re holding this evening’s 85 synthetic short and a debit of $2.28.

And…?

XOM closed last eve above $94, so even though oil is getting a thwacking – and should continue to do so – we’re on the hook for the full short CALL loss.

That will put our debit at approximately $11.25, and trigger us into taking the following remediative action:

Set the November 18^th 82.50 synthetic short for a credit of $11.85 (14.40/2.55).

That flips our debit to a credit of $0.60 and gives us three more months exposure to XOM’s downturn.

The troubled low-down on our HSY wager can be accessed HERE.

We’ve got a 170 synthetic short (expiring forthwith) and a debit of $1.48.

What to do?

Buy back the short CALL for $60 and set the January 20^th 165 synthetic short for a credit of $62.80 (66.20/3.40).

That converts our debit to a credit of $1.32 and gives us five more months to profit from HSY’s downside.

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Finally, we arrive at our BLDR trade, whose status is as follows –

We’ve got a credit of $2.59 and are holding two short 55 CALLs expiring tonight.

ACTION: the CALLs will end up in the money, so we’re urging you to buy them back for roughly $13 each and sell the BLDR January 20^th 55 CALLs for $16.40 each.

That pushes our credit on the trade higher, to $8.59 and affords us another five months of BLDR life!

When the G-d of Israel decides, no one will escape his fate.

Pray – but what’s more, act! – for His great Name’s sake.

Eschatologically yours,

Alan B. Harvard

Follow @HughLOHaynew