September OPEX – The Turmoil Proliferates (ATI, BTI, HRB, POST, COOP, CXM, BITO, VMI)

We’re jumping right into September expiry with a back-to-school splash that would make a Harvard upperclassman blanch.

We start with our ATI initiative from August 15^th.  The letter was called Turning Their Weapons Against Them, and it urged you to short ATI stock at $31.41, buy the September 16^th 35 CALL for $0.50, and sell the September 16^th 27.50 PUT for $0.40.  Total credit on the affair was $31.31.

And now…?

As we write, ATI is at $30.59, but looks like it still has downside.

So we’re leaving the short open and recommending you reinstate the options to mitigate any potential loss.

Like this –

Buy the October 21^st 35 CALL for $0.65 and sell the October 21^st 27.50 PUT for $0.60.

That moves our breakeven to $31.26 and leaves the downside open to profits (while protecting us against any runaway loss).

Stay tuned, you 10,000 men of Harvard.

NEXT!

On August 11^th we smoked the BTI pipe in a missive called Get Some Tobacco, Your Weight Loss Wonder Cure!  The trade recommended you sell the BTI September 16^th 40/45 CALL spread for $1.10 and buy the BTI September 16^th 40 PUT for $1.05.  Total credit was $0.05.

And today, the stock is trading at $39.36, meaning our PUT is in-the-money.

How far she dumps is anyone’s guess.

ADVICE: sell on any intra-day weakness, or, in the event of a steep decline at the open, leave it run until the close.

And best of British (Tobacco) luck to ya.

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Our HRB bet was delivered on July 25^th in a dispatch called ‘Cause I’m The Tax Man.

There, we elbowed you into selling the HRB September 16^th 38/42 CALL spread for $1.25 and buying the HRB September 16^th 37/33 PUT spread for $1.25.  Net zero premium was the result.

And now, she’s like this…

HRB closed last eve at $44.98, meaning we’re likely going to be on the line for the full value of the short CALL spread at the close.

We’re therefore advising thus –

HRB is on its way to 40 quick, and thereafter to 36.  So, we see great value in extending the trade and cashing in on the slide.

Like this –

Set the HRB October 21^st 41 synthetic short for a credit of $3.90 (4.50/0.60).

That will all but erase the debit (reducing it to just $0.10) and leave us exposed to profit on the downside.

Set a STOP buy on the shares at $49.10 to avoid any runaway loss.*

*Should the STOP be tripped, you will have to reinstate a STOP sell at the same level.  And if that order is filled, you’ll have to reinstate the original STOP buy again at $49.10.  An open STOP at that level should be in place until the trade is closed.

Ditto for our POST trade, which landed in your inbox on July 21^st.

The communiqué was called They’re at The Post – and They’re Soggy, and it suggested selling the POST September 16^th 80/85 CALL spread for a credit of $2.20 and buying the POST September 16th 85/80 PUT spread for $2.70.  Total debit on the affair was $0.50.

And today, with the stock trading at $87.23, we’re going to expire with a debit of $5.00 from the short CALL spread.

Again though, POST is hanging on to its current price level by a thread.

So…

We’re recommending you –

Set the POST January 20^th 80 synthetic short for a credit of $7.20 (10.70/3.50).*

That will flip the debit to a credit of $1.70, and open the way to a profit.

N.B.: Set a STOP buy on the shares at $92 to avoid any runaway loss.*

*Should the STOP be tripped, you will have to reinstate a STOP sell at the same level.  And if that order is filled, you’ll have to reinstate the original STOP buy again at $92.  An open STOP at that level should be in place until the trade is closed.

Moving on!

Our July 11^th letter was On the Mortgage Thievery Front, and it featured our COOP trade.

The idea was to set the COOP September 16^th 40 synthetic short for a debit of $3.00 (and place a STOP buy on the stock at $40).

And now…?

With COOP at $44.34, our shares will very likely be called away and we’ll be sitting on a $3.00 loss.

So…

We’re recommending you –

Reset the COOP October 21^st 40 synthetic short for a credit of $4.20 (5.30/1.10).

That will reverse our debit to a credit of $2.20 and pave the way for a profit on the trade.

N.B.: Set a STOP buy on the shares at $48 to avoid any runaway loss.*

*Should the STOP be tripped, you will have to reinstate a STOP sell at the same level.  And if that order is filled, you’ll have to reinstate the original STOP buy again at $48.  An open STOP at that level should be in place until the trade is closed.

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Our CXM initiative, whose details can be found HERE, sees us holding a debit of $2.77 along with a short 10/12.50 CALL spread and two long 10 PUTs expiring this eve.

CXM plumbed as low as $10.34 yesterday, but whether she’ll continue her decline today is hard to say.

So, with CXM now trading at $10.71, we’re recommending you set the CXM November 18^th 10 synthetic short for a credit of $0.65 (1.40/0.85).

That reduces our debit to $2.15 and leaves the downside open to profits.

We penned Bitcoin Was Never Money, But Was Always Worth a Trade on June 20^th, urging you to buy the BITO September 16^th 14/18 CALL spread for $1.10 and sell the BITO September 16^th 11/6 PUT spread for $1.11.  Credit on the trade was a penny.

BITO closed last eve at $12.16, and it appears our options will expire worthless.

Chalk it up as a penny earned.

Now in the Docket…

Details on our VMI bet can be pulled up HERE.

In brief, we have a credit of $2.94 and a synthetic short with a 195 strike expiring this evening.

And…

At the close we’re going to be on the hook for a loss on the short 195 CALL.

So…

We’re recommending you buy back the CALL and sell the VMI March 17^th 195 CALL for $83.

That will expand our credit to $4.18 and give us a little more time to knit.

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And that’ll do it.

May the Good Lord grant us a large dose of chesed and rachamim, because we’re ALL doing better than we deserve.

Eschatologically yours,

Alan B. Harvard

Follow @HughLOHaynew