MCM OCTOBER 2012 FINAL DISPOSITION OF POSITIONS FOR EXPIRATION.
ABX - is the only position that we have in this portfolio that is in
the money going into Friday's expiration.
ABX is only $0.08 in the money as of today.
The Short October 39 put has a BID/ASK of( $0.31 - $0.33).
There are several ways to approach ABX tomorrow.
1. You can just close it out on the open, especially if it opens
flat to up tomorrow.
2. You can put in a STOP order above the market around $0.50 to close the
OCt 39 put, and hope that it is not triggered. If it is not than
depending on where ABX looks to close tomorrow you can close it out near the close or if you are not going to be near a computer, you can use a MARKET ON CLOSE order.
3. You can hold the short ABX 39 put and if it looks to close below $39
close it out at the end of the day or with Market on close order, however
if it looks to close above $39, you need do nothing as the 39 short put
would expire worthless.
We need to keep an eye on the following positions, even though
they are out of the money going into tomorrow.
POSITIONS TO WATCH in Portfolio #1.
OPEN Calls - The Oct $45 call is $1.02 out of the money, so we should be okay, but I have seen much stranger things happen not to believe that a $1.02
move could happen. Keep an eye on the position, hopefully it should expire
worthless. If the stock should look to close above $45 be sure to close it
out before the close of the market tomorrow.
OPEN Puts - The Oct $42.50 put is $1.48 out of the money, and once
again we should be okay, but the same holds true for the call side. If it
looks to close below $42.50 be prepared to close out the position before
the close on Friday.
Hopefully, it looks like the OPEN iron condor should expire worthless with
any type of a normal trading luck tomorrow.
MMR Calls - The least volatile of our position has moved into position where it need to be watched tomorrow. The MMR $13 calls are still out of the money, but only by $0.24.
WATCH MMR Calls and be prepared to act if necessary.
GG puts - This position is almost $1.00 out of the money, but after a $1.44 drop today, a similar move tomorrow might force us to act. I guess a lot will depend on gold prices tomorrow. If GG holds above $42, the puts will expire worthless, if not we may have to act before the close to close the
WATCH GG Puts tomorrow and be prepared to act if necessary.
All the other positions in Portfolio #1 should expire worthless tomorrow.
They would be: ANF, BBY, DECK, ESI, GMCR, HPQ call spreads.
URI, LLY Put spreads
Going into tomorrow's October expiration close we have to potentially act on two positions of concern.
AAPL (puts) - Our concern for tomorrow is that AAPL gapped down almost $12 points today leaving out puts seriously underwater.
If. by some small chance, AAPL can make a $12 point move up like it did down today, we could have the potential of closing out AAPL puts for something less than the maximum loss.
We also have to slightly concern ourselves with the potential of a $20 point up move on AAPL that could put our AAPL call spread in the money (That is hardly a likely scenario) but
it needs to be briefly discussed.
We might have to close this AAPL Put spread position out tomorrow for a
A NET DEBIT of $5.00. ( Currently $4.10 - $4.75.)
If AAPL by some chance gap opens to the upside we can probably wait a little
while and try and see where the BID/ASK would be trading before we act.
If it looks lke AAPl will not gap very high on the open, then we should
try to split the bid and Ask and see if we can get a fill, if not we might have
to close the spread for a NET DEBIT later in the the day for close a NET DEBIT
close to $5 if not for $5 before the close of the day.
The AAPL calls that we sold would than expire worthless reducing a little of the loss absorbed by the put spread on AAPL.
I never though I would say that a put side in AAPL would be the demon for the month.
Unfortunately, with AAPL reporting earnings next week, I had planned
to roll out the losing side ( put or call, looks like put ) to next
week with a weekly. However, after seeing what happen to the likes of
GOOG, I don't want to roll out any put position until after earnings.
Maybe after earning we might consider rolling out the AAPL Nov Put
spread or even an iron condor, but definitely not until after earnings next
Of course, we might just forget AAPL and move on.
NKE - is currently $0.07 in the money and if it looks to close above $97.50 we will
have to close the position out before the close tomorrow.
NSC - is around $0.80 out of the money and should expire worthless,
but the stock has been a little volatile lately, so let's keep an eye
on it as it is on the watch list going into tomorrow. Remember, if
it looks to close below $67.50, we will be okay, otherwise we might have
to act if the stock moves up more than $0.80 tomorrow.
All the other spread that are open look like they should expire worthless tomorrow.
CAVEAT: As always if at anytime and other position should look to close in the money
tomorrow. That position needs to be closed before the end of the day.
Even if the stock is only $0.01 in the money against our stock position, we will have to close it our or it will be assigned stock ( if we are short the put side)or have stock called away that we may not own and would have to buy in the open
Anyway, be sure if "Murphy's law" should show up that you close out any other short put or call that looks to close in the money before the market closes on Friday.
This is the last Watch list for the October 2012 option cycle. We
will begin following the MCM November watch list tomorrow after the close
We also will be adding additional MCM November recommendations this weekend.