FINAL MCM AUGUST 2013 Disposition of open positions for Friday's expiration.
BTU -The BTU August 18/20 call spread is about $0.12 out of the money going into tomorrow's August expiration.
BTU is not the most volatile stock, however it has been bouncing in the money and out of the money about $0.03 to
$0.05 the last few days. We will need to watch it tomorrow.
BTU closed today at $17.88.
For those of you who are a little timid in regards to expiration Friday, you can put in a BUY STOP limit to close out above the current price of the BTU $18 call option ( it closed at $0.18 today ). You could place a BUY STOP above $0.18
(depending on how your risk tolerance is or at what price you would be willing to be STOPPED out if BTU makes a sustained upward move tomorrow, especially, if you feel concerned about BTU having some unusual movement tomorrow to the upside, or you can wait until the close and if BTU looks to close under $18 you will need to do nothing, as the BTU August $18 call would expire worthless.
However, remember if the BTU looks to close above $18, you will need to close out that position before the close.
If you are not going to be near your computer near the close, you might want to utilize a MARKET ON CLOSE order tomorrow sometime during the day, especially if you are not going to be near your computer or electronic device and see the close of the market tomorrow.
BBY - We have a iron condor on BBY on the call side 31/32 and the put side 28/30.
BBY closed $30.81, $0.19 out of the money,so the BBY 31/32 call spread posses the greater threat to us
and we should keep and eye on it tomorrow.
If BBY looks to close under $31 and above $30 no action will be needed tomorrow on BBY, as both sides
of the iron condor would expire worthless.
However, if BBY looks to close above $31,we would have to close out the BBY August 31 calls.
Also, if BBY looks to below $30 ( the least likely, we will have to close out the BBY August 30 puts.
So if BBY closes between $30 and $31, we need do nothing.
If BBY closes above $31 or below $30, we must close out the call side ( above $31) or the put side ( below $30 )
All the other call spread positions: JCP, KBH, LEN, APOL, MSFT, VERO, BKS are anywhere from 1.5 - 7 points out of the money and they all should expire worthless tomorrow.
OPEN Put credit spreads.
TEX - the TEX August 29/27 put spread, being $2.47 out of the money (TEX closed at $31.47 , should expire worthless tomorrow.
AN -The same holds true of the AN August 45/44 put spread, being over $1.49 points out of the money, and
without any unforeseen activitiy tomorrow, AN should also expire worthless tomorrow.
LULU Condor spread -We have a LULU 72.50/75 call spread and the LULU $70/67.50 put spread.
The stock closed at $72.22 today, and thus is $0.35 out of the money on the call side and $2.15 out of the
money on the put side.
The call side is our obvious concern.
If LULU looks to close over $72.50 tomorrow entering the close, you will have to close out the LULU August $72.5
before the close of the market tomorrow.
However, if LULU continues into tomorrow and closes under $72.50 the LULU August $72.50 calls will expire worthless
and you will need to do nothing with the call side.
Additionally, if LULU closes between $70 and $72.50 ,both the call and put side will expire worthless.
Since the LULU $70 put is over $2.15 out of the money going into tomorrow's action, you would only have
to close out that position if LULU looked to close under $70 ( at $72.15, that is the most unlikely scenario.
However, if LULU would look to close under $70, you would than have to close out the put side before the close and
of course the call side would expire worthless.
The best scenario would be for LULU to close as it did tomorrow. as it did today, between $70 and $72.50 and have both sides
MCD - We have a MCD August 97.50/100 call spread and a MCD August 97.5/95 put spread.
We will have to close out the one of the two sides.
Ideally, we would have liked MCD to close at as near as possible to $97.5 near the close tomorrow.
Depending on which side of $97.5 MCD closes, we will have to close out the $97.5 call or the $97.5 put.
( as it currently stands it looks decisively like we will have to close out the MCD August $97.5 put today, based
on the close today.) MCD closed at $95.34.
SAP -We have the same scenario with SAP on the SAP August 75 call and the August 75 put.
However, it looks more like we will have to close out the SAP August 75 call, as opposed to the August $75 put tomorrow. SAP closed today at $75.79, $which puts it $0.79 against us on the call side.
The same scenario holds true as for MCD, we would like SAP to close as close to $75 as possible tomorrow.
IN REGARDS TO THE BUTTERFLIES on MCD and SAP.
If during the day when you decide to close out your MCD or SAP positions, if the stock is trading near
The strike price of the short strikes ( MCD $97.5 and SAP $75 ), I mean $0.10 - $0.15 or so, you should close
out BOTH the call and the put sides for a NET DEBIT.
That is only if the stock price is very near the short strike prices.
If they are several points away , like the MCD you can just close out the side that is in the money and let the other
side ,hopefully expire.
All of the remaining open call spread positions in Portfolio #2 ( ACN, DRI, AXP, KMP, AGN )are all anywhere from 4 - 8 points out of the money and should all expire worthless tomorrow, unless an unforeseeable event should transpire.
OPEN put spread positions.
WDC - The WDC 65/60 Put spread is a 1.02 points out of the money, so unless we have a follow up tomorrow, of today's action ( which by Murphy's law is always possible), our WDC 65/60 put spread should expire worthless tomorrow with a little luck.
However, let's watch this one out of the corner of our eye and be at least prepared to act if today's action
OUTR - The OUTR August 60/57.5 put is 3.30 points out of the money with OUTR closing today at $63.30.
So it is very likely that the OUTR put spread will expire worthless tomorrow.
EXPIRATION CAVEAT REMINDER:
As usual, if for any reason any of these issues look to close in the money before the close tomorrow, if they
are not closed out and are even just $0.01 in the money they will be assigned, meaning, if you have short puts, you could have stock put to you that you probably do not want and if you are short calls you could have stock called away from you that you probably do not have.
We will be adding several more position for the September expiration in both portfolios this weekend and we will begin following the MCM September portfolio positions in the watch list starting Friday after tomorrow's August option positions go off the board.
The MCM Septebmer watch list and portfolio will begin posting after tomorrow's close.
MCM SEPTEMBER 2013 RECOMMENDATIONS.
We are recommending the following credit spreads to the September expiration cycle.
We are recommending credit spreads for our Portfolio #2 in
the following issues.
APA - Apache Corporation, an independent energy company, explores for, develops, and produces natural gas, crude oil, and natural gas liquids. It holds interests in asset base of 12.3 million gross acres located in Central United States, the Permian Basin, and the Gulf Coast onshore and offshore areas of the United States; in an area of 7 million gross acres in the provinces of British Columbia, Alberta, and Saskatchewan; and in an area of 9.7 million gross acres located in Western Desert, Egypt. The company also has interests in 30 exploration permits, 17 production licenses, and 13 retention leases that cover a total area of 7.9 million gross acres located in offshore Western Australia; 32 concessions, exploration permits, and other interests covering an area of 4.4 million gross acres located in 4 hydrocarbon basins in Argentina; and has interests in various properties located in the United Kingdom North Sea. As of December 31, 2012, it had total estimated proved reserves of 1,441 million barrels of crude oil, condensate, and natural gas liquids; and 8.5 trillion cubic feet of natural gas. The company was founded in 1954 and is based in Houston, Texas.
GMCR - Green Mountain Coffee Roasters, Inc. engages in the specialty coffee and coffeemaker businesses in the United States and Canada. It sources, produces, and sells approximately 225 varieties of coffee, cocoa, teas, and other beverages in K-Cup and Vue single serve packs; and coffee in traditional packaging, including whole bean and ground coffee selections in bags, and ground coffee in fractional packs. The company sells these products to supermarkets, club stores, and convenience stores; restaurant and hospitality industries; and office coffee distributors, as well as directly to consumers through its Website. It also sells at-home and away-from-home single cup brewers; accessories; brewing equipment; and coffee, tea, hot cocoa, and other beverages in single serve packs to retailers, department stores, and mass merchandisers, as well as directly to consumers. In addition, the company produces and sells other specialty beverages, including hot apple ciders, hot and iced teas, iced coffees, iced fruit brews, hot cocoa, and other dairy-based beverages in single serve packs. Green Mountain Coffee Roasters, Inc. was founded in 1981 and is based in Waterbury, Vermont.
IOC - InterOil Corporation operates as an integrated oil and gas company in Papua New Guinea. The company operates in four segments: Upstream, Midstream, Downstream, and Corporate. The Upstream segment engages in the exploration, appraisal, and development of crude oil and natural gas structures in Papua New Guinea. The Midstream segment produces refined petroleum products, such as jet fuel, diesel, gasoline, naphtha grades, and low sulfur waxy residue at Napa Napa in Port Moresby, Papua New Guinea for the domestic market and for export. This segment also engages in the development of liquefaction and associated facilities in Papua New Guinea for the export of liquefied natural gas. The Downstream segment markets and distributes diesel, jet fuel, avgas, gasoline, kerosene, and fuel oil, as well as branded commercial and industrial lubricants, including engine and hydraulic oils in Papua New Guinea on a wholesale and retail basis. This segment also provides bulk storage, transportation distribution, aviation, wholesale, and retail facilities for refined petroleum products. The Corporate segment operates two vessels that transport petroleum products within Papua New Guinea and for export in the South Pacific region. The company provides petroleum products to retail service stations operating under the InterOil brand name and under independent brands; supplies petroleum products as a wholesaler to commercial clients; and operates aviation refueling facilities in Papua New Guinea. InterOil Corporation was founded in 1990 and is based in Cairns, Australia.
We are recommending the following specific credit spreads.
Call Credit spreads = Bearish call spreads.