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TRADE BULLETIN – December Options Expiry: ACTION REQUIRED (WPM, WDFC ,IBP, BG, IAA, CROX, FBHS, DE, WMS, TTC, GLD, FIZZ, SHOP)

Posted on December 18, 2020

Right to it –

Our long/short WPM/GLD straddle from November 19th, the details of which can be found here, is coming due this eve with a debit of $2.83 and the WPM options still live.

Unless we get a big move from WPM before the close, we’re going to see a loss of between a dollar and two on the trade.

So we’re recommending the following – reset the trade with the December 31st expiry.

Buy the WPM 43 straddle for $2.80 and sell the GLD 177 straddle for $4.58.  In so doing, we reduce our current debit to $1.05.

Beyond that, we’ll see what WPM offers on the close.

You should feel free to sell on any surge that appears worth selling.  We’ll be entering Shabbat as markets open, so you’re on your own.

We’re logging the closing price and moving forward with the reset.

NEXT!

Our WDFC trade, launched November 6th, saw you selling the WDFC December 18th 260/270 CALL spread for $2.40 and buying the WDFC December 18th 270/250 PUT spread for $12.20.  Total debit on the trade was $9.80.

Going into this evening’s expiration, WDFC sits at $266.84, roughly halfway between our long CALL and PUT.

And that means we have to act.

We’re selling the February 19th 250 synthetic short – sell the 250 CALL for $22.00 and buy the 250 PUT for $10.00.  That puts us in a net credit position of $2.20 going into this evening’s expiry and still allows us to participate on the downside.

Place a STOP buy order on the shares at $280.  If it’s tripped, set a STOP sell at the same price.  STOPs must be open at all times in order to keep the trade square.

All the details on our IBP initiative can be found here.

In short, we have a credit of $1.09 on the trade, an open short 100 CALL and an open short 80 CALL coming due this eve, and last night saw us bought in at 106.

So –

  1. DO NOT RESET the STOP on the shares. That is, hold them.  They will be called away via the short 100 CALL expiring this eve.  That will change our existing credit to a debit of $4.91.
  2. Then, buy back the short 80 CALL at the close (or on weakness), and sell two (2) March 19th 90 CALLs for $18.20 each. That should revert the trade to a net credit position of roughly $5.00 on the close.

We’ll figure the exact tally after Shabbat.

Next on the slate is our BG trade, whose info is housed here.

To sum we’ve got a current debit of $4.35 and we’re holding a short 55/60 CALL spread that expires tonight.

Action required:

  • The spread will almost certainly close ITM this eve with a $5.00 debit.  Let it.
  • In the meantime, set the April 16th 57.50 synthetic short for a credit of exactly $5.00 (sell the 57.50 CALL for $7.60 and buy the 57.50 PUT for $2.60).

That leaves the downside open for profits.

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Details from our IAA initiative are found here.

In brief, we’ve a debit of $1.45 and we’re holding a 60 strike PUT that expires today.

If the market dumps today, you might fetch something for it, but we’re booking it as worthless, as per last night’s closing numbers.

The trade is still good going forward, though.

We recommend selling the January 15th 60/65 CALL spread for a credit of $2.80 (5.00/2.20).

That puts us back in the credit column by $1.35.

Fox in CROX

We opened a CROX trade on October 29th whose details can be accessed here.

The trade’s current status is as follows – we’re holding a credit of $8.68, one lot of shares (STOP bought at 64), and are short the 60 and 50 CALLs that expire this eve.

We’re therefore acting thus –

  1. Remove the STOP sell order on the stock (at 64). The shares will be called away by the open short 60 CALL, debiting us exactly $4.00 at the close and decreasing our credit to $4.68.
  2. Buy back the 50 Call as close as possible to the close (or on weakness) for something in the vicinity of $15.00, and reset the March 19th 50synthetic short for a credit of $15.05.

We’ll figure the exact tallies after Shabbat and set a new STOP buy order at the open on Monday morning.

FBHS is next.  Details on the trade can be found here.

To sum, we’ve got a current credit of $0.13, were bought in on the shares last night at 88, and are short one 80 CALL.

Action required:

  • Remove all STOPs.  The long shares will be called away at the close by the short 80 CALL for a loss in the $8.50 range.
  • Then reinstate the March 19th synthetic 80 short for a credit of $8.10 (11.40/3.10).  That will offset the debit and still leave the downside open to profits.

We’ll set a protective STOP buy Monday morning after making a definitive tally on the trade.

Running Deere-Like…

Our DE trade of October 22nd expires today with a $1.75 debit and our short 250/260 CALL spread in-the-money.

Recommended action: sell the March 19th 250 synthetic short for a credit of $13.35 (23.55/10.20).

That will move us immediately into the plus column by $1.60 and leave us to profit from any further downside.

After the Holy Sabbath, we’ll set a STOP buy on the trade.

On October 12th we opened a bet on WMS that’s described in full detail here.

We’re holding a $1.95 credit and a short 65/70 CALL spread that expires tonight.

With WMS sitting at $77.92 as of last night’s close, a debit of $5.00 is almost a certainty.

So, we’re moving like this –

Sell the March 19th 75 synthetic short for a credit of $2.40 (sell the 75 CALL for $8.10; buy the 75 PUT for $5.70).

That will leave us with a debit of $0.65 on the trade, but offer us full downside exposure on the stock.

STOP buy order to be entered Monday a.m.

Next up is TTC.  The details on the trade can be found here.

In short, we’re sitting on breakeven and holding a short 80/90 CALL spread that dissolves tonight.

With the shares currently at $93.33, we’re going to take the full $10.00 debit at the close.

So we’re acting as follows –

Set the synthetic March 19th 80 short for a credit of $9.70 (11.00/1.30).

That will leave us with a debit of $0.30 and exposure to TTC’s downside.

NEXT!

We’re short GLD shares with a breakeven of $169.95, and need only to buy a protective CALL.  Purchase the January 15th 186 CALL for $0.92 and our breakeven drops to $169.03.

Moving on to our FIZZ wager, whose details can be found here, we’re now in possession of a 70 PUT expiring this eve, and a debit on the trade of $14.95.

We’re recommending you sell the February 19th 70 synthetic short for $12.35 (14.60/2.25).

That will reduce our debit to $2.60 and allow us full participation on the downside.

STOP buy settings to be offered on Monday.

And finally…!

Our SHOP venture, whose details can be sourced here, now requires the following action.

With a credit on the trade of $13.60 and our three December 18th 820 CALLs in-the-money, it’s time to repurchase them and sell three (3) April 16th 840 CALLs for $364.60 each.

With S&P futures pointing flat to lower, we recommend you leave the repurchase of today’s expiring CALLs until the close (or on any show of weakness).

We’re booking the repurchase at last night’s closing prices.

All told, we buy another four months and add to our existing credit, bringing it to a sprightly $14.40

Chanuka is behind us, friends, but her miracles will carry us through the winter.

G-d is great.

.הוא היטיב, הוא מיטיב, הוא ייטיב לנו

Eschatologically yours,

Alan B. Harvard

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