Expiration of the August crude futures caused a spike in oil prices and a minor rebound in some energy stocks. Time for a reload.
Murphy's Law is alive and well. The unexpected spike in the crude futures on short covering ahead of expiration at the close today stopped us out of the Schlumberger call spread about 30 minutes after we entered it. I am reloading that position because the spike in crude was hopefully a one day wonder.
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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. For the plays where we will not exit I added the No-X designation in the portfolio.
Current Position Changes
SLB - Schlumberger
SLB spiked up to $85.29 on the expiration spike in crude futures. Our stop loss was $85.15. I believe this was a one-time event in crude prices and I am recommending we reenter that short strike. I raised the stop loss $1 to cover potential volatility.
Sell short August $86 call, currently $1.39, stop loss $86.15
Retain long August $90 call, entry .32, no stop.
Closed Short August $86 call, entry $1.25, exit $1.70, -.45 loss.
New Covered Call Recommendations
New Aggressive Recommendations
New Long Term Recommendations
Existing Play Recommendations
Links to original play recommendation
BHI - Baker Hughes (Covered Call)
XOP - Oil Exploration ETF (Bear call Spread)
JOY - Joy Global (Bear call Spread)
LULU - LuluLemon (Bear call Spread)
BOBE - Bob Evans Farms (Put Spread)
SPLK - Splunk (Put Spread)
ZOES - Zoes Kitchen (Covered Call)
GLNG - Golar LNG (Bear call Spread)
SLB - Schlumberger (Bear 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.