March Options Expiry, and We Bag One For 460%. (CHD, K, VMI, FCN, XLF)

To begin, a Public Service Announcement from subscriber José L. in the Netherlands (N.B., we receive nothing from Interactive Brokers for the following)…

Incidentally, José struck gold on several trades over the last few weeks.

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“I bought the combo (via Interactive Brokers) as one construct rather than two separate vertical spreads.

In my experience this reduces transaction costs and provides a better fill.

Also, it reduces the risk that one is stuck with one trade filled and the other unfilled.  That’s particularly handy at the moment of closing-out.”

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Thank you, as always, José.

Many have inquired regarding which trade platform is most suited to what we do, and while we refuse to endorse any one in particular, we encourage you all to discuss the matter freely on the site.

With help from HASHEM, the G-d of Abraham, Isaac and Jacob, we turn to five trades that require your attention, all of which see options expiring this eve.

And we start with our CHD initiative, whose details can be found HERE.

Basically, we’re holding the March 18^th 90 synthetic short and a credit of $3.00.

And…

With the stock trading over $97, we’re forced to buy back the short CALL for $9.30 and set the CHD May 20^th synthetic short with the 85 strike (sell the CALL and buy the PUT) for a credit of $10.45 (11.90/1.45).

That will up our credit to $4.15 and keep us in play for another 60 days.

NEXT!

Our Kellogg’s trade arrived on November 18^th in Kellogg’s Caught Pouring Cat Juice in Its Grain Extruders.  There, we implored you to short K at $62.96 and buy the protective March 18^th 67.50 CALL for $1.10.  Total credit on the trade was $61.86.

Today, we feel the bet’s gone soggy, so we’re closing shop.

Buy back the shares for $61.04 and have done with it.

You walk with $0.84 on nothing spent – adjusted for minimal commissions makes for a win of 460%.

Not bad for a bowl of morning poison, eh?

The particulars of our VMI initiative can be sourced HERE.

In sum, we’re holding a debit of $4.85 and the 210 synthetic short that expires this eve.

The trade still has legs, but has yet to ripen to our satisfaction.

We’re therefore rolling it out today by buying back the short CALL for $30.50 and selling the VMI May 20^th 200 synthetic short for a credit of $36.10 (39.30/3.20).  That flips our debit to a credit of $0.75 and gives us two more months of cat life.

Our FCN trade’s details are found HERE.

In short, we’re in possession of a debit of $7.17 and the 135 synthetic short that withers tonight.

ACTION: we’re buying back the short CALL for $21.40 and selling the FCN June 17^th 125 synthetic short for a credit of $25.40 (29.50/4.10).

That reduces our debit to $3.17 and keeps the downside open to profits.

And Finally…

Our XLF initiative sees us holding one short lot of shares with a breakeven of $31.85.

XLF is trending lower but still has a short footslog before it hits our breakeven.

So we’re recommending you leave it be.

And may we all merit to greet the Day of Judgment clean, clean, clean!

Eschatologically yours,

Alan B. Harvard

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