Option Investor

Portfolio Management

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Make Way for New Plays!

One of our new subscribers commented on the dilemma we face when the MCM Portfolio is near the margin/collateral limit well before the expiration date for the current month. Obviously, this condition presents two problems:

1) We are unable to take advantage of favorable opportunities in the upcoming expiration period until the existing positions expire (or are closed).

2) We are unable to offer candidates for readers who have recently subscribed to the newsletter and want new plays to augment their existing portfolio positions.

Indeed, that's the current situation so we are going to suggest some "early-exit" trades for readers who want to free up account capital. We recommend closing the short options in Navistar (NYSE:NAV), Xilinx (NASDAQ:XLNX) and, if possible, Mohawk (NYSE:MHK) for $0.05 per contract. Not only will this activity "lock-in" profits, it will also improve the overall return on investment (ROI) in these positions as the expected time frame has been substantially shortened with only a minimal reduction in projected gain. In addition, the reduced margin will allow us to publish some additional candidates as we make the transition to the next group (month) of positions for the MCM portfolio.

MCM Staff

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