November Options Expiry – The Whole Meta-Megillah (GPK, PZZA, AVY, CAR, AQUA, APTV, EXPO, TGT, HSY, VMI, SEE, WSO, HD, TXT, MSA, UPS, KFY, TPR, ESI, FCX, IBP, DE)

On October 21^st we issued a letter called Wrap it Up…, in which we recommended you sell the GPK November 19^th 20/22.50 CALL spread* for $0.70 and buy the GPK December 17^th 20 PUT for $0.75.  Total debit on the trade was a nickel.

Today, with GPK opening at $20.82, we stand to lose some $0.87 – barring any swift moves in either direction.

That said, recent momentum has been down, so our advice is to leave the spread through the close and sell the December 17^th 20/22.50 CALL spread for a credit of $0.85 (1.05/0.20).

That will reduce our current debit to close to NIL.

Final numbers will be known after the close.

NEXT!

On the 18^th of October Papa John’s Arrives Burnt hit your inbox, imploring you to sell the PZZA November 19^th 115/120 CALL spread for $2.90 and buy the PZZA November 19^th 120/110 PUT spread for $3.55.  Total debit on the trade is $0.65.

As of last eve’s close, we stand to lose the full five points on the CALL spread.

So we’re urging you to sell the PZZA December 17^th 125 synthetic short* for a credit of $5.55 (7.70/2.15) and buy a protective December 17^th 130 CALL for $5.60.

We thereby add a nickel to our original debit, bringing it to a total of $5.70, add a month’s play to the trade and stand to benefit from any downside that comes.

[*Sell the 125 CALL and buy the 125 PUT.]

Our AVY trade got to you on October 11^th in a communiqué entitled Avery Dennison Comes Unglued.  The bet was a sale of the AVY November 19^th 200/210 CALL spread for $4.80 and purchase of the AVY November 19^th 210 PUT for $10.90.  Total debit was $6.10.

As of yesterday’s close, the short spread is fully in-the-money, bringing our potential loss on the trade to $16.10.

Fix: we’re recommending you set the AVY April 14^th 210 synthetic short for a credit of $6.00 (17.40/11.40).

That will reduce the debit to $10.10 and leave the full downside open to profits.

We traded CAR on September 30^th in Avis/Budget a Lemon? Make Lemonade.  The rec was to sell the CAR November 19^th 115/120 CALL spread for $2.00 and buy the November 19^th 105/95 PUT spread for $3.00.  Total debit was a dollar.

We’re now on the hook for the full five points on the CALL spread, upping our existing debit to $6.00.

CAR has seen some of the most exaggerated price action we’ve ever encountered (including a $575 round-trip INTRADAY move).  But it appears reality is now setting in, so we’re moving as follows –

We’re recommending you consider setting the CAR February 18^th 260 synthetic short for a credit of $13.50 (62.60/49.10).

That flips our debit to a credit of $7.50 and gives us full downside participation through expiry.

Moving Right Along…

Torpedoing a Sinking Ship was our September 2^nd initiative, and it had you sell the AQUA November 19^th 35/40 CALL spread for $2.15 and buy the AQUA November 19^th 40/35 PUT spread for $2.50.  Total debit on the trade was $0.35.

As of the close, we’ll be on the hook for the full five points on the short CALL spread.

FIX: we’re therefore urging you to set the AQUA February 18^th 45 synthetic short for a credit of $3.35 (5.50/2.15).

That will reduce the debit to approximately $2.00 and leave the downside open to profits.

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We had two open APTV trades, whose details you’ll find HERE.  And we addressed their shortcomings by selling the APTV November 19^th 140/150 CALL spread and buying the November 19^th 150/140 PUT spread.  Our new debit (for both trades) then became $4.15.

At the close, our short CALL spread will expire ITM, upping our debit to $14.15.  So…

FIX: we’re recommending you set the APTV February 18^th 165 synthetic short for a credit of $10.70 (17.90/7.20).

That will reduce the debit to $3.45 and open the downside to full profits.

Details of our EXPO trade can be found HERE.  We’re short EXPO shares with a breakeven at $107.60, and we’re holding a protective long 115 CALL that expires this eve.

FIX: sell the CALL for $9.00 and buy the March 18^th 125 CALL for $8.50.

That will raise our breakeven on the short to $108.10 and protect us for another four months.

Our TGT initiative, whose details can be found HERE, has us short the TGT November 19^th 230/240 CALL spread and long the November 19^th 230 PUT.  We also have a debit of $1.87.

On the close, we’ll be liable the full ten points on the short CALL spread.

We urge you, therefore, to set the January 21^st 240 synthetic short for a credit of $11.90 (17.25/5.35).

That will flip our debit to a credit of a few cents (full details after the close) and open the door to full downside profits.

NEXT…!

Chocolate, the Drug That Humiliates… was our June 24^th bet on HSY.  The trade had you sell the HSY November 19^th 170/175 CALL spread for a credit of $1.40 and buy the HSY November 19^th 175/160 PUT spread or $7.00.  Total debit was $5.60.

Today, the short CALL spread is in-the-money, upping our debit on the trade to $10.60.

FIX: so we’re acting as follows – we’re setting the May 20^th 170 synthetic short for a credit of $8.80 (15.40/6.60).

That drops our overall debit on the affair to $1.80 and opens the downside to profit.

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Get the details on our VMI trade HERE.  To sum, we’re holding the 220 synthetic PUT that expires this eve and a long 270 CALL.  We also have a debit on the trade of $5.47.

The long CALL will expire worthless tonight, and the short CALL will end up in-the-money, upping our debit on the trade to $36.78.

FIX: to ameliorate the situation, we recommend you set the VMI March 18^th 210 synthetic short for a credit of $37.40 (42.90/5.50).

That reduces our initial debit to $4.85 and permits profits on any downside slide.

Watch SEE Stock Go Under The Knife was our June 7^th trade that had you sell the SEE November 19^th 55/60 CALL spread for a credit of $2.30 and purchase the SEE November 19^th 60 PUT for $5.40.  Total debit was $3.10.

We’ll be adding five points to our debit at the close due to the short CALL spread – bringing it up to $8.10.

We therefore recommend you set the SEE April 14^th 55 synthetic short for a credit of $9.20 (10.50/1.30).

That will flip the debit to a credit of $1.10 and give us an additional five months to realize gains on any decline.

Our WSO trade, whose details can be found HERE, has us holding one long WSO November 19^th 240 PUT and a debit of $4.05.

We still like the downside story, so we’re recommending the following –

Sell the WSO February 18^th 300 CALL for $11.40 and purchase the WSO February 18^th 290 PUT for $11.00.

That reduces our debit to $3.65 and opens the door to downside lucre!

Keep it up…

We’re short one lot of HD with a breakeven of $307.59 and are holding a protective November 19th 340 CALL that expires this eve.  Details of the trade can be accessed HERE.

At the close, our 340 CALL will fetch roughly $66.  Sell it, and buy the February 18^th 345 CALL for $62.50.  That will up our breakeven on the trade to $311.09 and give us protection for another 90 days.

Final, exact numbers available after the close.

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Our TXT trade’s particulars can be found HERE.  We’re now short one lot of shares with a breakeven at $70.01.  We’re also holding a protective 80 CALL that expires at the close.

The CALL will almost certainly expire worthless at the close, leaving us without protection.

We therefore urge you to purchase the TXT December 80 CALL for $0.85, thereby reducing our breakeven on the short to $69.16.

Details on our MSA trade can be accessed HERE.  In short, we’re holding the 145/150 CALL spread that expires this evening and a debit of $0.48.

We’re looking at another five points added to the debit due to the short CALL spread being ITM.

So we’re moving to fix as follows –

We’re setting the MSA March 18^th 150 synthetic short for a credit of $1.00 (8.50/7.50).

That dumbs down our debit to just $4.48 and gives us a clear path to profit on the downside.

NEXT!

Our UPS trade sees us short one lot of shares with a breakeven of $178.20 and holding a long 200 CALL that expires tonight.

We want to keep the trade in play, so we’re recommending you sell the CALL for roughly $6.50 and buy the UPS January 21^st 210 CALL for the same price.

That will extend the trade for an additional 60 days and offer us overhead protection, as well.

Similarly, our KFY initiative has us short one lot of stock with a breakeven of $54.08 and holding a long 80 CALL that expires at the close.

FIX: sell the 80 CALL before the close for roughly $2.00 and buy the KFY December 17^th 90 CALL for $1.25.  That ups our breakeven on the trade to $54.83 (full details only after the close).

That leaves the short open and operative and COVERED for another month.

 

Our TPR trade, whose details are found HERE, has us holding a $0.05 credit and the 35 synthetic short that expires today.

Upon expiry, the short CALL will put us in a debit position of roughly $10.90.

We’re therefore acting with the following fix –

Reset the TPR February 18^th 37.50 synthetic short for a credit of $8.00 (9.10/1.10).

That will reduce our debit to approximately $2.90 and extend the trade by three months (final numbers after the bell).

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You’ll find the particulars of our ESI initiative HERE.  To sum, we’ve got a debit of $2.35 on the trade and are holding the 20 synthetic short expiring this eve.

The short CALL will expire in-the-money, raising our debit to roughly $6.90.

We’re therefore recommending the following fix –

Set the ESI May 20^th 20 synthetic short for a credit of $3.60 (4.70/1.10).

That will put us in play for another half year, reduce our debit to $3.30 and give us full downside exposure.

Our bet on FCX sees us with a $0.54 debit and in possession of the 30 synthetic short that expires tonight.

The short 30 CALL will end in-the-money, upping our current debit to roughly $9.30 (final tallies will only be known after the close).

We’re therefore recommending you buy it back at the close – or on intraday weakness – and reset the synthetic short using the FCX February 18^th 34 strike for a credit of $4.59 (6.70/2.11).

That will reduce our debit to about $4.70 and give us full downside exposure.

Almost there.

As to our IBP trade, we’re now holding two short 90 CALLs expiring this eve and have a credit in hand of $6.83.

Fix: buy back the CALLs at the close (or on weakness) and sell two more January 21^st 90 CALLs for $46 each.

That will reduce our current credit to roughly $3.09 and give us two months of play.

Final tally on Monday.

Our DE trade’s details are available HERE, and can be summed as follows – we’re short two 320 CALLs expiring this eve and have a credit of $12.08 in hand.

With DE at $357.15 we’re urging you buy back the CALLs at the close (or on weakness) and sell two DE January 21^st 320 CALLs for $42.60 each.

That will raise the credit to roughly $22.00 and give us another two months’ play.

Final numbers after the close.

G-d save us from all Poalei Aven.

Eschatologically yours,

Alan B. Harvard

 

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