The market had its two best back to back days in six years but it was not investors buying stocks ahead of year-end. This was a major short squeeze from a very oversold market at Tuesday's close.
If this squeeze had come a couple days earlier we would have made some money on it. Instead we were stopped out of some positions on Tuesday when the market collapsed to two month lows. No use crying over spilled profits. We just need to reload in the coming days.
The purpose of this newsletter tonight is not to launch plays but close them. We have a lot of December positions, which expire on Friday. I am recommending we close all the remaining December positions at the open on Friday.
I am not going to list them all. If you have a December position open you should close it at the open to avoid being put the stock if it is underwater at the close.
The odds are very good we are going to see some profit taking on Friday. We don't normally see the Dow gain 600 points over two days without traders taking profits and that is especially true ahead of a weekend. We could go higher if there are some lingering shorts that need to cover but the expiration volatility normally occurs before Friday not on Friday.
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Long Term Positions
Current Position Changes
Close all December Positions
New Covered Call Recommendations
New Aggressive Recommendations
New Long Term Recommendations
Existing Play Recommendations
Links to original play recommendation
CLVS - Clovis Oncology (Aggressive Covered Call)
CLVS - Clovis Oncology (Update Existing Position)
CLVS - Clovis Oncology (Covered Jan Call)
HD - Home Depot (Put spread)
HOG - Harley Davidson (Put spread)
CSC - Computer Sciences (Put spread)
UNG - Natural Gas ETF (Put spread)
ACHC - Acadia Healthcare (Put spread)
BHI - Baker Hughes (Covered Call)
XONE - Exone Co (Put spread)
WWWW - Web.com (Put spread)
KORS - Michael Kors (Put spread)
VJET - Voxeljet (Bearish call spread)
MSFT - Microsoft (Put spread)
LNG - Cheniere Energy (Short Put)
APOL - Apollo Group (Put spread)
INTC - Intel Inc (Put spread)
CDK - CDK Global (Short Put)
VIX - Volatlity Index (Bearish call spread)
There are several different formulas for determining margin requirements for naked put writing. These are normally broker specific and some can require larger margin requirements than others.
Here is the most common margin calculation for naked puts.
100% of the option premium + ((20% of the Underlying Market Value) - (OTM Value))
For simplicity of calculation simply use 20% of the underlying stock price and you will always be safe. ($25 stock * 20% = $5 margin)
Prices Quoted in Newsletter
At Option Investor we have a long-standing policy prohibiting the editors and staff from actually trading the individual recommendations in order to conform to SEC rules concerning trades.
The prices quoted in the newsletter are the end of day prices in most cases.
When discussing fills or stops the prices quoted are the bid/ask at the time the entry trigger or exit stop is hit. This is NOT a price that someone on staff actually got using a live order.
For entry/exit points at the market open the prices quoted will be the opening print. The majority of the time the readers are able to get a better fill than the opening print because of market maker bias at the open.
For trades with an opening qualification the prices quoted will be the bid/ask at the time the qualification was met.
All of these rules normally produce worse prices than an active trader would normally get. Because they are standardized there may be some cases where a price quoted was better than an actual fill. If you received a price that was dramatically different than what was quoted please let us know.