Let's take a quick overview of the current MCM February spread positions.
Current MCM February position analysis.
I will break the issues down into three groups.
Group 1: Positions that have only a few cents left in premium and are over 5 points or more out of the money and with just a little normality in market activity, these positions should expire worthless and should we need to take no action at this time, unless someone desires to close out these positions for a few cents to free up margin for new positions for March.
Those specific issues in the portfolio are as follows:
AMAG, CHA, COCO, CSTR, DE, HOG, MELI, NYT, SID
Group 2: Are Positions that have $0.25 - $0.60 left in premium and are between $0.95 - and just a little less than $5.00 out of the money.
These positions may or may not need some attention if we get any extended upward momentum in the markets in the next four (4) trading sessions. However, if the market shows any signs of normality over the next four (4) days. These positions could end up just playing out like the issues in group 1, However, they still need to be monitored and watched ddaily.
The issues in our protfolio included in this group are as follows:
JOYG, OSK, MED, X.
Group 3: These are the positions that will more than likely have to be dealt with in some capacity before the February 19th, expiration with some type of close out or stop.
These issues include the following:
THOR, MON (specifically the put side of the MON spread.
Regarding THOR and MON, we will give you instructions on when to act and how when that situation presents itself.
Recommended actions for Monday to prepare for Tuesday's opening.
We are recommending lowering the MON FEB 75 PUT from $2.30 down to $1.00.
Since it is one of the two only put spreads we have and is the most volatile and closest to the strike price on that put side. It would be smart to limit any downside risk to this issue in case of a market decline between now and Friday.
Remember we have the MON FEB 80/85 Call spread that should expire and unless something unexpected should happen to MON to the upside and even that might be a blessing as it could allow both the call and put spread to expire worthless, which would be our best case scenario.
But for the sake of safety, if this market continues lower, taking MON with it, a STOP out of $1.00 would not be too hard of a pill to swallow, since
we should offset some of that debit with the MON FEB 80/85 call spread which should expire worthless if the MON FEB put gets stopped out.
Once again, we are lowering the MON FEB 75 PUT from $2.30 STOP to $1.00 STOP.
In regards to THOR, we will continue to hold the position and look for a little pullback and some erosion of the currently in the money THOR FEB 27.5 call premium.
Remember we do have the THOR FEB 27.5/25 PUT spread on as well, so the closer to $27.50 we get, the better off we are going to be in determining how much premium we are going to have to close out by Friday or before.
We will keep you up to date on any action we need to take this week.
In addition, we we need to act during the day, you will be emailed with immediate action that needs to be done if it is determined that action needs to be done.