One more day down and our profits are increasing with the market in decline.
Our hero IOC dropped another -3.48 today to $65 to close an even $20 away from out short strike. The low on that strike today 55-cents and I am making 50-cents our exit target for Friday. If we can exit this play for 50-cents we will have a $2.50 profit.
Fuel Systems also declined but seems to have found support at $37. I lowered the stop on it again just in case. Oil and gas have fallen so hard over the last couple weeks there could be a short covering rally on Friday. I would prefer not to give back our gains.
I did manage to squeeze in a couple new positions. I probably looked at over 300 stocks tonight and it was tough finding anything that had any February premium left and a decent play.
Check for new stops on existing positions.
MTH - Meritage Homes (Naked Put Write)
Meritage Homes posted a profit on Tuesday and went through the normal volatility but started rising again on Wed/Thr. I would not normally write a put in a down market but the $20 put is worth 70-cents today and is $2 OTM on a rising stock. With few other put writing opportunities I think it is worth a shot.
Sell Feb $20 Put MTH-OD currently $.70, Stop at MTH $20.50.
Chart of MTH
TWC - Time Warner Cable (Naked Call Write)
TWC posted earnings on Thursday with revenue that only rose +1.6%, the smallest increase in two years, and guided lower. The company lost 105,000 video customers and those that remain are buying fewer premium channels and movies on demand. If the market continues to be weak TWC should decline. The stock had rallied on a Barron's article saying it could rally +30% "IF" they declared a dividend, announced a stock buyback and saw earnings improve. So much for improving earnings with the lower guidance.
Sell Short Feb $45.00 Call TWC-CI currently $1.35, Stop TWC at $46
Chart of TWC