September Expiry: Profits and Fixes (SLV/UUP, POOL, APTV, EXPO, PAYX, MSA, VMI, LKQ, HD, TXT, FCN, UPS, KFY, FOXF, IBP, CROX, WMS, TTC, SAIA, SHOP)

Lots to take care of as September options come to rest.

But first a note regarding our editorial calendar.

The holy convocation of Sukkot begins this Monday eve and preparations for the event are manifold.

That means this coming Monday’s A Jew and His Money will not be published.  Hugh will return the following week, September 27^th.

A Jew and His Gold will arrive at your inbox next Thursday as per usual.

Chag sameach to all.

And now…

Away we go –

Our SLV/UUP trade (from July 22^nd) does not expire this eve, but it’s nicely profitable, so we’re closing it.

The letter was called The Day Herschel Lost His Cool, and it recommended you sell the UUP December 17^th 25/23 PUT spread for $0.33 and buy the SLV December 17^th 23/21 PUT spread for $0.89.  Total debit was $0.56.

The short UUP spread can be repurchased for $0.36 and the SLV sold for $1.28.

Do it, and you walk with $0.36 NET on $0.56 spent.

That’s a very respectable 64% in a brief two months.

And congrats to subscriber Brandon S. who went in with multiple units.

September Expiries

We start with our August 26^th missive, entitled Betting Against the Batflu Swimming Penchant, urged you to sell the POOL September 17^th 480/490 CALL spread for $3.70 and buy three (3) POOL September 17^th 440/430 PUT spreads for $1.15 each.  Total credit on the trade was $0.25.

And now?

Looks like price is destined to land between our two option sets, so there’s precisely nothing to be done.

Leave it be, and you walk with your initial $0.25 credit.

If something remarkable happens, we’ll address it next week in a BULLETIN.

Next up is our Trip to Sunny Dublin communiqué from July 19^th.  There, we recommended buying the APTV August 20^th 160/165 CALL spread for $1.15 and the APTV September 17th 145/135 PUT spread for $3.30.  Total debit on the trade was $4.45.

The August spread expired worthless, and it appears the September will now do likewise.

Moreover, you’ll recall that with August expiry we also added another APTV initiative – to sell the APTV September 17^th 145/150 CALL spread for a credit of $2.60 and buy three (3) APTV September 17^th 140/135 PUT spreads for $0.90 each.  Total debit on that play was ten cents ($0.10).

So, altogether, it appears we’re facing a drawdown of $4.55, with an outside chance things will still work out (we’d have to see a major loss on the major moving averages, and with futures flat as we go to press, that looks unlikely).

So we’re moving like this –

We’re selling the APTV November 19^th 140/150 CALL spread for a credit of $5.00 (13.20/8.20) and buying the November 19^th 150/140 PUT spread for $4.60 (8.90/4.30).

This is a covered position that reduces our debit to $4.15 and opens up the downside to a max potential gain of $5.85.

——————————————————–

Moving on to our EXPO initiative from August 9^th – the letter was called Exponential Gains Leading Inevitably to Soul Crushing Declines and the trade called for the short sale of EXPO at $115.04 and the purchase of a protective EXPO September 17^th 120 CALL for $1.90.  Total credit on the trade was $113.14.

And now…?

With price at $116.65 going into today’s action, we still like the downside potential here, but we need protection.

So we’re buying the October 15^th 125 CALL for $0.95.

That will give us another month, protect us from a cataclysmic loss and bring our breakeven to $112.19.

Best of luck with it!

Moving right along…

PAYX was the underlying of our July 15^th trade from Payroll Payday – BBQ Fish For Everyone.

The trick there was to sell the PAYX September 17^th 110/115 CALL spread for a credit of $2.40 and buy the PAYX September 17^th 110/100 PUT spread for $2.45.  Total debit on the trade was $0.05.

The trend on PAYX is lower and we expect further losses through today’s close.

Leave her be, and with G-d’s help we’ll expand the current $0.58 gain into something more meaningful.

Our bet on MSA, the details of which can be found HERE, are as follows – we’re holding the 155 synthetic short (expiring this eve) and a debit of $5.50.

Like PAYX, we’re in-the-money (stock is at $153.67) and the trend is lower, but it’s unclear if we’ll make back our original debit.

So we’re selling the November 19^th 145/150 CALL spread for $1.50 (10.20/8.70) to pull in some premium and make up the difference.

Hit it!

Our VMI trade, whose details are located HERE, has us holding a debit of $23.57 and six (6) long VMI 200 PUTs expiring tonight.

It appears certain the PUTs will expire worthless, but the bear story still holds, so we feel compelled to act aggressively (and prophylactically).

Like this –

Buy the VMI November 19^th 220 synthetic PUT for a credit of $22.60 (26.80/4.20) and you reduce your debit to $0.97 and open up full downside profit potential.

Consider the purchase of the VMI November 19^th 270 CALL for $4.50 to limit any runaway losses.

Our LKQ trade also needs work.  The details of that bet can be found HERE, but the bottom line is we’re short tonight’s 47.50/52.50 CALL spread and long three (3) 47.50 PUTs.  We also have a debit of $2.65.

So, with price now hovering at $52.24, we’re recommending the following –

Sell short one lot of LKQ shares for $52.24 and buy the LKQ February 18^th 55 CALL for $2.85.

That will bring your breakeven to roughly $42.50 (depending upon tonight’s close).

We’ll log the final numbers over the weekend to get precise figures.

Moving on to Home Depot Meets the Wrecking Ball, which arrived at your inbox on May 20^th, you’ll recall the trade urged you to sell the HD September 17^th 305/320 CALL spread for $6.90 and buy the HD September 17^th 320/300 PUT spread for $10.40.  Total debit on the trade was $3.50.

Today, we’re on the hook for the full cost of the short CALL spread, and are therefore acting as follows –

We’re shorting a lot of HD at $336.39 and buying a protective CALL – the HD November 19^th 340 CALL for $10.30.

That gives us a credit on the trade of exactly $307.59 (and that’s our breakeven).

Our TXT trade, whose details are accessible HERE, has us holding one short 65/70 CALL spread and a long a 55 PUT, both expiring this eve.  We also have a debit of $0.65.

As TXT is in the middle of a burgeoning downdraft, we want to give her time to complete the move – and profit from it.

So we’re doing like this –

• Sell the long 70 CALL early (if it has any value),
• Repurchase the short 65 CALL toward the end of the session (or on any intraday weakness), and
• Sell the TXT October 15^th 65/70 CALL spread for $2.70 (4.60/1.90) and buy the TXT October 15^th 65 PUT for $1.15.

Depending on where TXT closes this eve, our new debit should be in the neighborhood of $2.00 with full exposure to the downside for another month.

May it be His will that we make off like Reish Lakish!

Consultants of Swing was the extraordinarily clever name we gave to our April 19^th FCN trade.  The recommendation was to sell the FCN September 17^th 135/140 CALL spread for a credit of $2.70 and buy the FCN September 17^th 135/120 PUT spread for a debit of $4.90.  Total debit on the trade was $2.20.

And now…?

This one’s borderline.

Below 135, we start turning a profit.  Above, we bleed.

Current price is $136.58, and immediate direction is unclear.

Again, futures are flat, but we’re risk-takers by nature.

Our feeling is therefore to leave it be, and sell the FCN October 15^th 135/140 CALL spread for $2.00 (4.10/2.10), thereby reducing any potential loss we might incur.

Final numbers will determine our fate.

Details next week.

Moving on to our UPS initiative, whose details are located HERE, we find ourselves sitting on a debit of $9.50 and holding tonight’s short 190/195 CALL spread and five (5) long UPS September17th 180/175 PUT spreads.

With UPS now at $192.97, it’s likely we’ll suffer a small loss at the close.

We’re therefore urging you to buy back the short 190 CALL at the close (or on any intraday weakness), and short the shares immediately thereafter.

We’re booking the short using last night’s numbers ($192.97).

In addition, buy the UPS September 24^th 195 CALL for $1.45 as protection against a runaway loss.

That will put is in a NET credit position of $182.12, give us another week to participate in the full measure of UPS downside.

———————————————–

Details for our KFY trade can be found HERE.  Bottom line is we’re short the shares at $67.38 and holding a protective 70 CALL that expires this eve.

Our NET credit on the affair is $55.88.

Because we’re loathe to leave the short unprotected, we’re buying the KFY October 15^th 80 CALL for $0.60.

Our new credit is therefore reduced to $55.28 (our breakeven).

We have a debit of $6.40 on our FOXF trade (whose details are available HERE) and are holding the 125 synthetic short that expires this eve.

FOXF is now in the midst of a weak spell we believe will be ongoing, but the short 125 CALL needs a fix.

At the close (or upon intraday weakness), buy back the 125 CALL and sell the FOXF December 17^th 120 CALL for $26.90.

That will reduce our debit on the trade to close to NIL and will leave us open to profit on the downside that awaits.

The low-down on our IBP bet can be obtained HERE, but the synopsis is like this – we’ve got a credit in hand of $7.83 and are short two (2) 90 CALLs expiring this eve.

Buy back tonight’s CALLs at the close or on weakness, and sell two (2) IBP November 90 CALLs for $29.50 each.

That will reduce our credit to $6.83 and give us another two months to fight.

CROX trade details are HERE.  We’ve got a current credit on the trade of $15.14 and are holding two short 70 CALLs expiring this eve.

Similarly, buy back the CROX 70 CALLs and sell two (2) January 21^st 70 CALLs for $87.30 each.

That will reduce our credit to roughly $14.50.

Our WMS initiative has us holding a debit of $1.78 and two (2) short 90 CALLs expiring this eve.

WMS broke this week and is headed lower fast.  Buy back the CALLs at the close/on weakness and sell three (3) WMS October 15^th 100 CALLs for $11.10 each.

That will flip our current debit to a credit of $5.80.

Ditto regarding our TTC endeavor, whose details are HERE.  We now have a net credit of $3.15 and are holding this evening’s 75 synthetic short.

Buy back the short 75 CALL (at close/on weakness) and sell two (2) December 17^th 85 CALLs for $17.30 each.

That builds our credit to $8.15 and gives us another quarter for the declines to run their course.

Our SAIA trade sees us holding two (2) short 170 CALLs and a $6.00 credit.

As per the above, buy back the short CALLs (at the close/on weakness) and sell three (3) December 17^th 195 CALLs for $54.10 each.

That will add $8.30 to our credit, for a total of $14.30 and an additional quarter to profit.

And finally, our SHOP trade gives us a $1.40 credit while we hold three (3) short 860 CALLs expiring tonight.

Buy them back at the close and sell three (3) January 21^st 860 CALLs for $618.50.

That will bring our credit to $8.90 and give us four months to stuff it in our pockets!

May the G-d of Israel firm your sukkah through the winds and madness of these current days.

Eschatologically yours,

Alan B. Harvard

 

Follow @HughLOHaynew