After two weeks of market gyrations is is good to have a week with no headlines.

The Nasdaq flash crash two weeks ago stirred up some animal spirits and actually caused some shuffling of market positions. Volume has been on the high side as the traders bought the dips and others liquidate positions. This is exactly what is supposed to happen when we get a bout of unexpected volatility.

The initial rebound failed, the second dip was bought and everything appeared to be on track for a return to the highs. The market exploded out of the gate on Monday morning and the Dow and S&P set new highs. Unfortunately, the short covering did not have any legs and the markets started to fade on Tuesday.

Wednesday's blowout biotech rally, also on short covering, added 3.77% to the Biotech Index and lifted the Nasdaq back to resistance at 6,245 where it stalled.




In theory, the market is positioned well for continued gains. However, the Russell rebalance at Friday's close could weigh on the small caps and that could restrain the rest of the market. Volume will be extreme on Friday and in the 11 billion share range.

The week before the July 4th holiday is typically positive. Some of that will come from gains in the Russell as portfolio managers finish equalizing their positions and adding additional shares of the newly added stocks.

After the holiday, the market tends to move sideways as managers raise cash for any buying opportunities in August/September, which are the worst months of the year for the market.

As premium sellers, we are reaching that point in the quarter where earnings interfere with the plays. This is the last week we can sell July premiums and get anything in return. Next week we will move to August options and since most companies report earnings between July 15th and August 20th, that kills about 75% of the potential candidates.

The best outcome we could hope for would be for the market to remain flat or higher through Friday and then rise next week before the holiday. That would get us almost to July expiration once we are past the holiday week.

There are no obvious events on the horizon that could pose a market hurdle. Unfortunately, ships still sink in quiet seas. It is the events that are unexpected that cause the most damage.

Enter passively, exit aggressively!

Jim Brown

Send Jim an email



Current Portfolio


The fourth column in the portfolio graphic is the earnings date. We will always exit a position before that date unless specifically mentioned otherwise in the play description.

Lines in blue were previously closed.

Current positions

Covered Calls


June Position Recap


Despite the monster loss on Silica, we ended the June option cycle with only a minor loss. At the same time the current July cycle is having a blowout month. That is the way it goes sometimes. The conditions that cause losses in one cycle set up the next month for good gains because the market is cycling back from the decline. The gaps down on SLCA, ILMN and EPZM were events that we could not have foreseen just like the gap down on Costco in the July cycle. Stuff happens and we just have to deal with it.




Current Position Changes


NFLX - Netflix (Long Put Closed)

The remaining long put position on Netflix was closed at the open last Thursday as recommended.

Closed 6/15/17: Long July $120 put, entry $.36, exit $.69, +.33 gain.
Previously closed: Short July $140 put, entry $1.90, exit $1.31, +.59 gain.
Net gain $.92



COST - Costco (Closed Put)

Costco crashed from $180 to $162 over four days as a result of Amazon buying Whole Foods. We were stopped out on the first day by the initial gap lower. Fortunately the long put is up 1,000% in value and we can escape with a breakeven.

Closed July $175 Put, entry $1.42, exit $5.50, -4.08 loss.
Close July $165 long put, entry .37, currently $4.10, +3.73 gain.



MU - Micron(Covered Call Expired)

Micron shares dipped at the end of the week to close just under our short $31 strike, which expired. With earnings next week we ned to exit this position rather than write a new call.

Expired June $31 call, entry .82, expired, +.82 gain

Close MU shares, entry $27.50, currently $32.01, +$4.51 gain

Previously closed, May $27 short call, entry $1.44, expired, +1.44 gain.

Net gain $6.77 at Wednesday's closing price.



New Recommendations


KITE - Kite Pharma (Short Put)

Kite closed at a new high on Wednesday after blasting off on earnings earlier in the month. With the biotech sector on fire, we could see this stock continue to climb.

Earnings August 7th.

Sell short July $80 put, currently $1.50, stop loss $85.35.



SWKS - Skyworks Solutions (Short Put)

Skyworks has had a nice calm uptrend until the Nasdaq flash crash. Support at the May lows held and it is currently consolidating.

Earnings July 27th.

Sell short July $95 put, currently $1.00, stop loss $99.85.



New Covered Call Recommendations


BZUN - Baozun (July Covered Call)

Baozun dipped with the Nasdaq and is now recovering. They are breaking through the 2-week resistance and should return to the higher levels from before the crash.

Earnings August 15th.

Buy-write BZUN July $22.50 call, currently $21.58-$1.00, stop loss $19.45



Other Potential Plays (Spreads, Covered Calls, Naked Puts)


These are not official plays but a good place to start if you are looking for something else to trade.

July expiration is the 21st.



Existing Positions (Alpha by Symbol)

THESE ARE NOT CURRENT RECOMMENDATIONS. These are prior recommendations that are still active in the portfolio. Do NOT act on the plays described in this section. This is the archive of prior recommendations in the current portfolio.



AAOI - Applied Optoelectronics (July Short Put)

AAOI continues to defy skeptics and the stock seems to gain strength on every negative headline. With earnings expectations at $5 and a PE of 20 that would put the stock at $100 but nobody is projecting the price that high. They are not doing the match or they simply do not believe the numbers.

Earnings Aug 3rd.

Sell short July $50 put, currently $1.40, stop loss $59.50.


AMD - Advanced Micro Devices

AMD was left for dead multiple times over the last several years. They have reinvented themselves and are becoming an actual competitor for Intel and Nvidia. They beat on earnings and have several new products in the delivery stream.

Earnings May 2nd.

Buy-write Mar $14 call, currently $13.56 and $.80, stop loss $11.85
Gain if called $1.24

Update 3/22/17: AMD closed on Friday at $13.49 and we had sold a $14 call. That call expired worthless and we need to resell an April call. Shares ar moving slowly higher and you have the option of selling the April $14 call for 97 cents with AMD at $14.10 or selling the $15 call for 58 cents and hoping to get an additional 90 cents of stock appreciation over the next three weeks. I am recommending the $14 call because the higher premium provides a little more insurance against a dip. Support is $13.

Expired Mar $14 call, entry .90, expired, +.90 gain.

Sell short Apr $14 call, currently .97, stop loss $12.85.

Update 4/12/17: AMD took a beating from Goldman with a sell rating and $11 price target. Shares have declined to $12.75 and our short call is worthless. I am recommending we close the April call and sell a May call.

Close Apr $14 short call, entry .95, currently .08, +.87 gain.

Sell short May $13 call, currently $1.06, no stop loss.

Previously closed: Mar $14 call, entry .90, expired +.90 gain.

Update 5/3/17: AMD shares imploded after earnings and declined -$3.50. There was a minor rebound today but not enough to reflate call premiums. We have sold 3 calls on AMD over the last two months. I am recommending today that we close the current $13 call and buy a May $10 put to protect us from further declines. I believe AMD will turn around because of their new Ryzen 7 server processor. We just need to wait until the stock rebounds slightly to sell another call. We have received $2.70 in call premiums to date compared to the $3.39 decline in the stock price so we are still in good shape.

Close May $13 short call, entry .97, currently .04, +.93 gain.
Buy May $10 put, currently 35 cents, no stop loss.

Update 6/7/17: Our patience paid off and AMD is soaring again. We already wrote three calls on AMD and it is time to do it again. Shares have gained nearly $2 over the last week.

Estimated earnings July 31st.

Sell short July $13 call, currently 70 cents. No stop loss.


CLVS - Clovis Oncology (July Short Put or Put Spread 5/18/17)

Clovis has a decent chart with a rebound forming out of the early May dip. They posted a gain of nearly $1 despite the market crash.

I am reaching out to July strikes so I can get some decent premium well out of the money.

I like this as a naked cash secured put. The premium of $2.55 is excellent and it is $15 out of the money. If you want to turn it into a spread then add the $22.50 put as a long.

Earnings August 2nd.

Sell short July $35 put, $2.55. stop loss $41.45

Optional:

Buy long July $22.50 put, currently .85, no stop loss.
Net credit $1.70


CLVS - Clovis Oncology (July Short Put 5/25/17)

Option premiums are extremely high for Clovis because of the ASCO meeting next week. The bar is high and Clovis will be making four presentations on their main cancer drug Rucaparib. They are expected to show strong progress in the clinical trials. Shares are rising and closed at a 4-week high on Wednesday.

Earnings August 2nd.

Sell short July $40 put, currently $3.20, stop loss $47.35.


CLVS - Clovis Oncology (July Short Put 6/7/17)

I know we already have two Clovis positions but the premiums are too fat to pass up. With the ASCO conference highlighting all the good cancer stocks, Clovis is breaking out to a two month high.

If you already have a Clovis position you might want to pass on this one. If we stack up several and have one big decline we can be stopped out of all of them at one time.

Earnings August 2nd.

Sell short July $45 put, currently $3.20, initial stop loss $51.65.


COST - Costco (July Put Spread)

Costco shares spiked on an earnings beat, rested one day and are heading higher. Analysts are giddy about Costco's prospects.

Earnings Aug 25th.

Sell short July $175 put, currently $1.55, stop loss $177.35
Buy long July $165 put, currently .45, no stop loss.
Net credit $1.10.


EOG - EOG Resources (July Put Spread)

EOG reported earnings this week and said it was going to increase production 18% and increase cash flow even at $47 oil. EOG is known as the "Apple of the oil patch" because of the apps they created for their workers phones. It is like having a control room in your pocket according to the CEO. Shares spiked to $95 on the news.

Earnings August 7th.

Sell short July $85 put, currently $1.02, stop loss $89.50
Buy long July $70 put, currently .30, no stop loss.
Net credit 72 cents.

Update 5/31/17: The sell the news event on the OPEC announcement caused oil prices to drop 5% on Thursday and stopped out the short side on the EOG position for a breakeven. The long side is still open and once oil prices begin to rebound we will sell a new put. I am going to make the recommendation now to reload the short with an EOG trade at $92.50.

Closed July $85 put, entry $1.18, exit $1.18, no gain.
Retain July $70 long put, entry .23, currently .08. No stop loss.

With an EOG trade at $92.50

Sell short July $85 put, stop loss $87.85.


EPZM - Epizyme (May/June Covered Call)

This is a crazy play but the premiums are there. The stock is $16.65 and the May $17.50 call is $1.65 with one day until expiration. If that premium still exists at the open on Thursday, I would sell the May call. If the call expires as expected, immediately sell the June $15 or $17.50 call depending on there the stock opens on Monday. If it is over $15.50 then sell the $17.50 call. If it is under $15.50 sell the $15 call.

Earnings August 7th.

Buy-write EPZM May $17.50 call, currently $1.65, stop loss $14.85.

If not called on Monday:

Sell short June $17.50 call, currently $3.00 if EPZM is over $15.50.

OR

Sell short June $15.00 call, currently $4.30 if EPZM is under $15.50.

Stop loss $13.85.

Update 5/23/17: This was a double play. The May premiums were still high last Wednesday and I recommended selling a May call at the open on Thursday and then reloading the call on Monday depending on where the stock was priced between the $15 and $17.50 strikes. The play did not go exactly as planned but it worked out in our favor.

The premiums collapsed from $1.65 to 30 cents at Thursday's open, which was not surprising because the stock dropped $2 at the open. The plan was entered at $15-0.30 using the $17.50 May strike. Unbelievably, the stock spiked to $18.50 on Friday and closed at $17.90 to call us out on the position for a $2.80 gain.

The plan was to reload the position on Monday. The stock opened at $17.85 and the $17.50 call at $3.30. As long as EPZM remains above $16 we have a great position in progress.

Called EPZM shares, entry $15.00, exit $17.50, +$2.50 gain.
Called May $17.50 call, entry .30, called, +.30 gain. Net gain $2.80

Position 5/22/17:
EZPM shares, entry $17.85, stop loss $14.85.
June $17.50 call, entry $3.30, stop loss $14.85

Update 5/31/17: Our luck ran out on EPZM. The stock finally picked a direction and it was straight down. We were stopped out of the second position on Tuesday for a minor loss. We still gained $2.05 on the combination of the two positions.

Position 5/22/17:
EZPM shares, entry $17.85, stopped $14.85, -3.00 loss.
June $17.50 call, entry $3.30, stopped $.90, +2.35 gain.
Net loss 75 cents.

Previously closed:
Called EPZM shares, entry $15.00, exit $17.50, +$2.50 gain.
Called May $17.50 call, entry .30, called, +.30 gain.
Net gain $2.80


EXEL - Exelixis Inc (June Covered Call)

EXEL reported earnings of 5 cents that beat estimates for 1 cent. Revenue of $80.9 million beat estimates for $65.6 million. Shares spiked to $24 on then news then pulled back for a week. Now they are rising again. Decent support at $21.50.

Earnings July 31st.

Buy-write June $22 call, currently $22.12-$1.20, stop loss $20.85.
Gain if called $1.08.


FB - Facebook (July Put Spread)

Facebook shares imploded with the market but this is temporary. The company is growing earnigns at 35% and revenue at an even faster rate. With price targets at $175 the stock is not going to fall below support. There are too many investors waiting to add it to their portfolio on any dip.

Earnings Aug 2nd.

Sell short July $135 put, currently $1.68, stop loss $138.85
Buy long July $125 put, currently .55, no stop loss.
Net credit $1.13.


ILMN - Illumina (Put Spread)

Illumina reported earnings and revenue that roughly matched analyst estimates but the guidance was strong and the story was better. They recently spun off a company called GRAIL and profited from the sale of partial ownership. They launched a new product called VeriSeq for non-invasive prenatal testing in Europe. More than 135 NovaSeq systems were ordered in Q1 and they cost up to $1 million each. They guided for 10% to 12% revenue growth in 2017 and GAAP earnings of $5.26-$5.36. Shares have been moving up steadily since the April 25th earnings.

Earnings July 25th.

Sell short June $175 put, currently $2.20, stop loss $180.85
Buy long June $160 put, currently .80, no stop loss.
Net credit $1.40.

Update 5/10/17: Shares hit a new intraday high on Friday and then fell $10 in four days on no news. Sometimes traders just need to take profits. This stopped us out of the short side for a steep loss. If the shares start to rise again I will replace it with a new short.

Closed June $175 short put, entry $2.21, exit $4.20, -1.99 loss.
Retain June $160 long put, entry .81, currently .55, no stop loss.


ILMN - Illumina (July Short Put 5/31/17)

The company posted decent earnings but only met estimates. That is good for a decline every time. Shares have pulled back from $189 to $173 and a textbook support test and now they are rebounding.

Earnings July 25th.

Sell short July $165 put, currently $2.15, stop loss $171.85


LXRX - Lexicon Pharmaceuticals (July Covered Call)

Lexicon specializes in small molecule drugs for treatments of rare diseases, diabetes and pain management. They are presenting at the 77th American Diabetes Association conference next week and this should lift the stock higher.

Estimated earnings August 1st.

Buy-write Jul $15 call, currently $15.23-$1.75, stop loss $14.35
Gain if called $1.52.


MU - Micron Technology (Covered Call)

Micron reported better than expected earnings and raised guidance. Shares spiked then rolled over in the semiconductor meltdown last week. They are starting to rise again. The company said memory prices were up an average of 20% last quarter and they expected prices to continue to rise due to a shortage in the market.

Earnings June 22nd.

Buy-write May $27 call, currently $27.25-$1.25, stop loss $25.25
Gain if called $1.00.

Update 5/31/17: We had a May covered call on Micron that expired. Over the last week, the stock has rallied and I am recommending a new call to replace it. If you want to reach out to July, the premium is more than double.

Sell short Jun $31.00 call, currently 87 cents, stop loss $28.85


NFLX - Netflix (June Put Spread)

Netflix reported earnings last week and shares crashed back to $138 intraday on what some called weak guidance. They immediately rebound as analysts began to pound the table on the stock. Several days after earnings the CEO tweeted they had exceeded 100 million subscribers. They guided to add 3.2 million in Q2 and analysts now believe that was a lowball number. Multiple analysts have raised price targets to the $175 level.

Earnings July 17th.

Sell short June $140 put, currently $1.73, stop loss $143.00
Buy long June $130 put, currently .57, no stop loss.
Net credit $1.16.


NFLX - Netflix (July Put Spread)

Netflix set a new high over $160 two days before the market crash. Shares dropped sharply to $153 and rebounded just as quickly. The stock as stalled about $158 as it consolidates the gains from the last four weeks. Rumors of interest by Disney, Apple and Amazon continue to provide support.

Earnings July 17th. Before expiration on the 21st.

Sell short July $140 put, currently $2.29, stop loss $148.85.
Buy long July $120 put, currently .53, no stop loss.
Net credit $1.76.


PXD - Pioneer Natural Resources (June Put Spread)

Pioneer reported earnings that beat on both earnings and revenue and predicted a strong increase in production the rest of the year. Shares rebounded back above prior support after crashing through on the sharp drop in oil prices the past Thursday. Pioneer is the cheapest producer in the Permian.

Earnings August 2nd.

Sell short June $160 put, currently $1.85, stop loss $165.85.
Buy long June $145 put, currently .50, no stop loss.
Net credit $1.35.

Update 5/31/17: Pioneer declined with the energy market on the big drop after the OPEC announcement. We were stopped out at $168.55. Since we still have a long July put I am recommending we reload this position with a PXD trade at $170.75.

Closed Jun $160 short put, entry $1.80, exit $1.26, +.54 gain.
Retain Jun $145 put, entry .50, currently .25, no stop.

With a PXD trade at $170.75
Sell short Jun $160 put, currently $1.20, stop loss $165.35.


SLCA - U.S. Silica Holdings (May Covered Call)

SLCA has found a bottom along with oil prices. Now that refineries are restarting and producing summer fuel blends, oil inventories will decline and prices should rise. This will continue to lift the energy sector. SLCA produces sand for fracking oil wells. Sand prices have doubled over the last 12 months and are expected to go up another 25% by fall. Some analysts are predicting a sand shortage late this year and early 2018. That will lift prices even higher.

Earnings May 24th.

SLCA has solid support at $43 when oil was crashing throughout March. If we are not called we will sell a new call.

Buy write SLCA May $50 call, currently $47.84-$2.25, no stop loss.
Net gain if called $4.41.

Update 4/17/17: SLCA shares imploded over the last week along with the price of oil. On Wednesday alone, crude prices fell -$1.83 to knock -$2.34 off the price of SLCA. I am not the least bit worried about SLCA long term. Sand prices have doubled over the last six months and they could double again over the next year. The decline in SLCA shares was directly related to the fall in oil prices and that trend is about over. Refiners are back at work and crude inventories are going to start declining rapidly as they gear up for summer blend fuels. I would not have any problem selling a call or put at this level at this point on the calendar.

We do not have a stop loss on the SLCA covered call because of the calendar bias for oil prices to rise starting in late April through July.

No change in the position.


SLCA - U.S. Silica Holdings (Short June Put)

We already have this as a covered call that is significantly underwater. However, they reported strong earnings this week and guided for 20% earnings and revenue growth for the foreseeable future. The stock is going to move higher as soon as oil finds a bottom, which is always does in late April, early May because of the demand cycle.

Strong guidance on earnings call. Earnings gudiance

I am recommending a slightly in the money put at $45 but the premium is $3.80. It is $1.94 in the money so the market maker cannot just put you the stock or he loses $1.86. If you were put, just repeat the process and you make $1.86 every time. Trust me, they will not put it to you. You have to be prepared in case they do but 99 times out of 100, they will not do it.

Earnings July 24th.

Sell short June $45 put, currently $3.80, no stop loss.

Update 5/3/17: Covered Call Update: Silica shares have collapsed. The stock has declined $11 in the last two weeks despite strong earnings and stronger guidance. Making the situation worse was a big earnings miss by Emerge Energy Services (EMES) reporting a loss of 38 cents compared to estimates for 34 cents. EMES misses estimates 58% of the time so a miss is not uncommon. However, it does impact the other two stocks in the sector, SLCA and HCLP. Emerge said total sand volumes rose 185% to 1,251,000 tons. We know from other reports that sand prices have doubled over the last six months and are expected to double again over the next six months.

Also, Dan Loeb's hedge fund Third Point is shorting the frac sand distributors. Third Point said there could be a shift from northern white sand to abundant in-basin brown sand. They warned there were new sand reserves being developed and there were significant reserves on the sidelines that had been deactivated during the slump. SLCA debunked all those excuses in their earnings report. They said frac sand revenue rose 161% YoY and 41% from Q4.

Comments from the conference call: Our comments last quarter and other industry capacity expansion announcements have created questions for some investors over the potential future supply and demand balance of sand proppants and the implications for pricing and other industry dynamics. Let me take a few minutes this morning to share some thoughts on how we see this unfolding and why we believe that the sand proppant market fundamentals should say strong for the foreseeable future.

We believe our industry will remain tight in the near future due to 3 main factors: First, our industry must add capacity to meet customers' needs. Our internal estimates and current sell side reports estimate industry sand proppant demand to be about 75 million tons here in 2017, growing to over 100 million tons in 2018, with some estimates as high as 147 million tons.

Our industry will be short capacity and we cannot let sand become the bottleneck for the completions industry. Second, oil sand is not fungible within that 100-million-plus tons of projected 2018 demand. Unlike many industrial products, there is a lot of friction in the sand market for a variety of reasons, including logistics, quality differences and mesh sizes. Therefore, we're on average to see 20% to 25% more total supply than demand before our markets come into balance. So for example, if 2018 demand is 110 million tons, that implies that supply and demand balance around 135 million tons of effective capacity. Today, even after estimated reactivations of idle capacity, our industry will only have approximately 90 million tons of effective capacity, thus leaving a 45-million-ton shortfall versus projected 2018 needs. And third, even all the likely capacity additions that are being talked about are not enough. We think there could be an additional 10 million to 15 million tons of brownfield capacity added in the next 12 to 18 months, including our own expansions and perhaps as much as 20 million to 25 million tons of greenfield capacity being added locally in the Permian. All of which will be needed, if current demand estimates prove accurate. Even if our estimated 35 million tons of potential brownfield and greenfield additions come online, the market will still be short.

Full transcript HERE

I cannot fix the current covered call. I am recommending we close it but call premiums are depressed and I am not going to recommend selling a new $40 call today because that would lock in our loss on the first rebound. We need to wait for the rebound to inflate premiums then sell a new call in the $45 range.

We cannot buy a put to protect against further declines. The put premiums are too expensive. You could close the position, take the loss now and then buy back in when the stock rebounds.

Close May $50 short call, entry $2.40, currently .04, +$2.36 gain.
Retain SLCA shares.

Update 5/3/17: Short Put Update: If you read the prior commentary, you know the facts on SLCA. We have a June $45 short put that is under water. We sold it for $4.50 last week. I am recommending we turn this into a spread to protect against a further decline. This will reduce our eventual gain but it will ease the pain now.

Buy June $37 put, currently $2.55, no stop loss.
Retain June $45 short put, entry $4.50, currently $8.00.


TSLA - Tesla Inc (June Call Spread)

Tesla shares may have finally found a top. The earnings loss was significantly more than expected and shares declined to close at the low for the day. The $1.33 per share loss made people rethink what they were thinking with a $330 stock price.

Earnings Aug 3rd.

Sell short June $350 call, currently $3.75, stop loss $327.50
Buy long June $370 call, currently $2.00, no stop loss
Net credit $1.75.

Update 5/31/17: Last week it appeared that Tesla was about to rebound and I recommended we close the short call at the open on Thursday. That was the right call with TSLA shares rising $35 over the last week.

The long call is now profitable but with Tesla making new highs every day, I am leaving it open with a stop loss. Who knows, this could be a home run if the trend continues.

Closed Jun $350 short call, entry $2.44, exit $1.02, +$1.42 gain.
Retain Jun $370 long call, entry $1.00, currently $1.90. Stop loss $332.25.


WIX - WIX Com Ltd (July Short Put)

WIX is about to break out over the $80 level on its way to a new high. The short strike is $15 OTM with a decent premium. If WIX does break over $80, it could be a good run.

Estimated earnings August 9th.

Sell short July $65 put, currently $1.30, initial stop loss $72.35.


Margin Requirements:

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.