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TRADE BULLETIN: November Expiry Approacheth – Action Required (BG, IAA, CROX, FBHS, WMS, BJ, TTC, BBY, APPS, GLD, SHOP)

Posted on November 20, 2020

Lots of trades to cover, so let’s get right to it.

We start with our BG effort opened November 4th that had you sell the BG November 20th 55/60 CALL spread for $1.60 and buy the BG November 20th 57.50 PUT for $3.10.  Total debit was $1.50.

Futures are now pointing lower, so you might be able to pull something out of this as trading ensues.  But for us, Shabbat will be entering as New York opens.

So with BG now trading at $58.53, we’re buying back the short CALL spread for $3.70 and reinstating the trade a month out.

Sell the BG December 18th 55/60 CALL spread for $2.55 and buy the BG December 18th 57.50 PUT for $1.70.  Total debit becomes $4.35.  New breakeven arrives at 53.15.

Next!

Next up was our IAA effort from November 1st that had you sell the IAA November 20th 60 PUT for $4.60 and buy the IAA December 18th 60 PUT for $5.80.  Total debit was $1.20.

Ideal turn of events, actually.

Buy back the short 60 PUT for $0.25 and leave the December to ride.  Debit rises to $1.45.

FBHS was the underlying on October 26th.  The trade urged you to sell the FBHS November 20th 80/85 CALL spread for $2.70 and buy the FBHS November 20th 85/75 PUT spread for $3.10.  Total debit on the affair was $0.40.

With price now at $85.11 and futures pointing lower, we could be heading toward a breakeven on the trade.  But we’re acting, in any event, to stay safe.

In a most unorthodox fashion…

With FBHS ready to break, we’re setting a synthetic short on the shares at 80 using the December 18th expiry.

Sell the December 18th 80 Call for $5.90 and buy the December 18th 80 PUT for $1.45.  Your $4.45 credit will cover the greater part of any loss incurred from the short spread that’s expiring today.

You’ll also have to set a STOP buy order at $88 to curb any runaway loss to the upside.

Moving on, we arrive at our October 29th CROX bet that recommended you sell the CROX November 20th 49/55 CALL spread for $3.15 and purchase the CROX November 20th 55/47 PUT spread for $3.35.  Total debit was $0.20.

Max loss looks to be taken at expiry ($6.00), so we’re acting as we did with FBHS.

Set a synthetic short at CROX 50.  Sell the December 18th 50 CALL for $8.70 and buy the December 18th 50 PUT for $0.60.  You thereby flip your existing debit to a credit of $7.90.

Set a stop buy for the shares at $62.

Turning now to our WMS wager of October 12th, the recommendation was to sell the WMS November 20th 65/70 CALL spread for a $2.30 credit, then purchase the WMS November 20th 65 PUT for $3.10.  Total debit on the trade was $0.80.

This one’s very close.  With price now at $66.56, we’re tempted to let it go.  But prudence dictates we act as follows – buy back the 65/70 CALL spread for $2.00 and sell the December 18th 65/70 CALL spread for $2.75 (3.90/1.15).  In so doing, you flip your debit to a credit of $1.95.

If price dives, of course, leave her be.  Below 65 you start turning a profit.

Again, with Shabbat upon us in the Holy Land when the NYSE opens, you’re on your own.

BJ was featured in our September 27th directive, in which we suggested the sale of the BJ November 20th 45 CALL for $1.20 and purchase of the BJ November 20th 45 PUT for $6.40.  Total debit was $5.20.  We also have an open STOP buy order at $45.01.

Again, because Dow futures are now down 150 points, we’re assuming BJ will be pulled lower.

We’re going to roll this one out and leave the STOP in place.  Buy back the short 45 CALL and sell the long 45 PUT for a credit of $0.35.  Then reinstate the trade using the December 18th 45s.  Sell the CALL for $1.55 and buy the PUT for $2.15.  Total debit on the trade moves to $5.80.

The details of our September 17th TTC trade can be found here.  We now have a $1.25 credit on the trade and are holding a short November 20th 80/90 CALL spread.

Buy back the short spread for $10.80 and sell the TTC December 18th 80/90 CALL spread for $9.55.  That will leave you with a breakeven on the trade.

Our BBY trade details can be had here.  We’re currently sitting on an $0.83 credit and are holding a short November 20th 111/121 CALL spread.

The spread should be repurchased for $9.67 and the December 18th 110/130 CALL spread should be sold for $9.14 (11.20/2.06).  Your new credit is $0.30.

In a similar vein, we’re also holding a short 35/40 CALL spread on APPS and are sitting on a credit of $0.35.  Because futures are pointing lower, you may want to wait to buy the spread back – if you have to at all.  Your breakeven on the trade occurs at $35.35.  Below that, you start to make money.

Because were heading into Shabbat as the market opens, were booking it with last night’s numbers (you’ll very likely do better).

We’re buying back the spread for $2.70 and selling the January 15th 30/35 CALL spread for $3.30 (8.20/4.90).  We thereby add $0.60 to our existing credit, for a total of $0.95.

Best of British luck with it!

The penultimate trade for the day is our GLD short sale from September 7th, all the details of which can be found here.

Essentially, we’re holding a long 176.50 CALL (expiring today) with a $171.61 breakeven.  GLD is trending lower, but hasn’t broken.  And with the CALL expiring today, we need upside protection.

Sell the open CALL for $0.16 and buy the December 11th 177 CALL for $1.82.  You thereby lower your breakeven on the trade to GLD $169.95 (three percent below current price).

Finally, our SHOP endeavor plays out as follows.  We’re short three (3) SHOP November 20th 820 CALLs and have a dollar credit in hand.  Because they’re ITM, we recommend you buy them back for 148.50 and sell three December 18th 820 CALLs for 152.70 each.  You thereby gain a month and up your existing credit to $13.60.

And may you know only d’vekut all your days!

Eschatologically yours,

Alan B. Harvard

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