Now I know what there is probably no Santa Claus, but I know
beyond any possible doubt, that Murphy exists.
Someone asked why I have been using a majority of the credit spreads
over the last year with only 2.5 strike price differences and no STOPS.
I need say no more, except VISA.
I am not thrilled about action of the stock, but we know that is the stock market.
However, the timing of the announcement by the government, on the next to last day of expiration
is what is amazing. When a sell off like this one happens. I usually go back and check
the daily volumes to see if there was any unusual option action in any option strike prices.
With the drop of VISA, both our positions are now in the money, so the maximum out of pocket exposure has the potential of being met.
Since, we have no more downside in regards to this issue, we can hold out
until tomorrow and close out probably both positions for somewhere between
$2.40 - $2.50 tomorrow.
The only hope we have is that this sell off was overdone and people
examine to see how much financial impact the Government ruling on fees to merchants
will impact the bank's bottom line.
So we will look to close this positions tomorrow and take our lumps.
For those of you who do not know whey VISA took such a hit today. The article
and information is discussed below.
VISA and Banking FIASCO.
NEW YORK (AP) -- "The Federal Reserve is proposing a 12-cent cap on the fees merchants pay for debit card transaction processing, a limit that could sharply cut into the revenue of major banks and card networks like Visa Inc. and MasterCard Inc. Such a cap would, however, help merchants by replacing the current system, where they generally pay between 1 percent and 2 percent of the dollar value of each transaction.
Fed staff members said consumers would not likely see a cap translate into lower prices except in some highly competitive markets, and may result in banks cutting back on debit card reward programs. The proposal, which must be finalized by April 21, is being made to enact a provision of the financial regulatory overhaul bill that became law in July."<
December Expiration wrap up.
This month centers around one issue. VISA.
We will need to close out VISA tomorrow and take our loss in the spread
unless we get an amazing bounce from today, which I seriously doubt.
With that out of the way we can revisit our other positions.
All of the other positions are anywhere from 5 - 22 points out of the money.
They should all expire worthless, however there is ALWAYS the chance of Murphy's Law making a "Special guest" appearance tomorrow. But I am going say it is not likely.
So the only thing that we need to deal with is our close out of the VISA spread which you probably have to close out for a NET DEBIT of $2.40 - $2.50 until we get a big jump up in VISA tomorrow, which I once again will state, which is highly
Just remember if any position that we are short should look to close in the
money tomorrow we need to close it out or we will get stock put to us at the
strike price we are short, even if it is only $0.01 in the money.
So any stock looking to close in the money, needs to be closed out tomorrow.
So the only real issue is closing out BOTH sides of VISA tomorrow unless something unusual happens and Visa bounces (which is not likely )
The MCM December portfolio will show a net gain, but VISA really
lowered the results....Priceless.
Additional January positions this weekend.
January Watch list this weekend and final December results.