Disposition for Friday expiration of January positions.
All of our positions should expire tomorrow worthless under normal conditions except we need to watch the following three (3) positions of which it is likely we will have to act on at least one (1).
Positions of concern.
PM - Since we have a iron butterfly on this position we will have to cover
either the Short PM 57.5 Call or the more likely the short PM 57.5 put.
Subscribers have the option of waiting to the close and if PM looks to close
below $57.50 ( the most likely scenario ) you can put in an order to BUY to CLOSE
the January PM 57.5 put MARKET ON CLOSE.
However, I am suggesting you might want to put in a limit at $1.00 initially today
to see if we can get out for that price on the opening and not go through the
uncertainty of where PM is going to close later in the day.
You might also want to consider putting in STOP on the option if the stock trades
below $57.40, that way you avoid the potential risk of the stock's continued dropping to and even lower price and having to close out the short PM 57.5 put for a price higher than $1.00 if things do not go our way tomorrow later in the day.
The other option is if PM goes up tomorrow and threatens the PM short 57.5 call, we would then have to act on that side of the market as the put would then expire, but we would have
to close out the short 5PM Jan 57.5 call. That is the least likely scenario. But it still
needs to be consider as a possible option.
The bottom line with this stock is that one of the short 57.5 call or short 57.5 put will
have to be closed before the close tomorrow. That can be decided at the close
if you are not sure that one side has an advantage over the other before that time occurs.
MO - has really attempted to hold on for us and with its close today at $24.04 and low volatility we can hold off from any action until the close tomorrow. In otherwords, we
need do nothing, unless at the close, MO looks to close below $24. If that is the case, we will need to close out the short MO January 24 put at the Market on close. If MO appears to be above $24 we need do nothing to the short MO 24 put.
KO - has about $0.43 of wiggle room above our short KO $62.50 put. We just need to be sure that KO closes above $62.50 tomorrow and no action will be necessary, however if
KO should drop below $62.50 and looks to close below that price tomorrow, you will need to close out the short KO 62.50 put before the close of the day, or with a MARKET ON CLOSE order, if you are going to be away from your computer or just want to wait to the last minute.
In regards to our other positions CMI, CLF, NFLX (puts), VFC, PRU, CELG, MHS, CREE they should all expire worthless, unless a visit from "Murphy's Law" should happen upon us tomorrow.
Just as a general thought always remember even if any short option closes only a $0.01 in the money against you, you will be either assigned stock ( if short the put ) or have stock called away, that you don't own ( if short the call ).
CAVEAT: Any January short option position in the money must be closed before the close of the market tomorrow or they will be exercised or assigned.