The following actions should be followed in regards to the final day of the February option cycle.
The following issues should cause no concerns. They are listed as follows below:
AMAG, HOG, SID, MELI, CHA.
In addition: DE - even after upgrade today is still over $3.00 out of the money and CSTR
after its big run up yesterday has settled back and is still over $0.90 out of the money.
Both DE and CSTR should more than reasonably close out of the money, that is unless "Murphy's law" pays us an unkind visit as she has done with several issues this last week of expiration.
However, keep an eye on DE
and CSTR, just in case you need to act.
OSK has been close on several occassions to the strike price only to fail. Hopefully it will continue this trend for one more day. Keep an eye on this one, but with a little luck this one should also expire as the traders will try to hold close to the strike of $45 and squeeze the premium out of both sides of the puts and calls ( if there is any premium come tomorrow.)
Finally, we come to the problem issues JOYG, X, THOR and COCO.
All four (4) issues are in the money and within $0.50 - $1.10 from the strike price.
Fortunately, at least the way it looks before the opening tomorrow. The Feds rise of the discount rate has turned the futures to negative, with the DJIA futures off around 74 points at this writing.
If we get a down open tomorrow you might want to watch these and decide if you want to try and exit early or choose to wait out the day and close them with MARKET on CLOSE order, if you think the market will sell off
tomorrow based on today's Fed action.
No matter what your choice is, you must close out ALL short position that will be in the money by the close of the market tomorrow. No exception or you will be assigned stock if short the put or have stock called away if you
are short the call. If you want to wait until the end of the day, just be sure you have a MARKET on CLOSE order to close out any position that looks like it will close in the money.
The issues of concern are:
JOYG Feb 50 call which closed today at $1.30
X FEB 50 call which closed today at $1.14
THOR FEB 27.5 which closed at $0.975.
COCO FEB 15 Call which closed at $0.37
There is a chance that Fed discount rate could allow us some better prices to close out these short positions and possibly allow 1 or 2 of them to actually close below the short strike and out of the money ( would'nt that
Unfortunately, because of the short squeeze on MED this week. We are put in a defensive position to minimize losses to the portfolio. If you have all the positions, there is roughly $3,010 left in potential premium credit. However, that would mean all position would have to expire worthless, which is highly
unlikely. The potential debit if we had to close out the positions today would have created be, would be $3,900 and would have created a roughly $800 loss for the month.
Believe different subscribers have some and not all positions you might want to handle the exit and closing out or the afore mentioned positions based on the other positions that you may have from the expiring list above. However, we still have two things going for us tomorrow, a market
at the top of resistance and an after Market discount rate by the Feds. With a little luck this might give us a chance to minimize some damage from the 4 issues of concern above.
Caveat: Once again. be sure to close out any positions that may be in the money tomorrow with a market on close if you decide to hold to the close and see if the market sells off; your choice, but you must close out any option that is short and in the money going into the close tomorrow and that includes any issue that might be in the money, not just the 4 concerns above.
If you have JOYG, COCO, X and THOR you will need to determine how much additional risk you desire to take going into tomorrow. Just as COCO and JOYG went into the money today, they could come out or at least be cheaper to close out tomorrow, depending on how the market behaves in regards to the Fed action this afternoon. Please employ limits if we should gap down and more important be prepared to close any of those positions should gap down early on the opening.