Author: Bryan Halliday

We got filled on all of our covered calls on Monday except for NUE. We have changed game plans slightly as shown below. Buy to open: NUE Dec 20th (monthly) 175.00 strike call (ratio of 1) Sell to open: NUE Dec 20th (monthly) 180.00 strike call (ratio of 2) Credit:  0.12 – this order has filled We own 50 shares of stock. So, we will still end up “naked” 50 shares. However, this gives us even more room in the event of the stock spiking higher!

We have arrived at expiration. Below is a list of November monthly option expiration positions. Most of which will need no adjustment. EQT is listed below and will need to be monitored and potentially adjusted. Details shown below. AAPL 190-170-150 put butterfly will expire OTM – needs no adjustment APA 30.00 strike covered call will expire OTM – needs no adjustment CCJ 60.00 strike covered call will expire OTM – needs no adjustment INTC 26.00 strike covered call will expire OTM – needs no adjustment NUE 175.00 strike covered call will expire OTM – needs no adjustment OXY 52.50-57.50 1×2 call spread will expire OTM – needs no adjustment X 47.00 strike covered call will expire OTM – needs no adjustment EQT we really have two positions a covered call and a call spread. However, at this point we can think of the position as a simple spread. We are short 1 of the 42.00 strike call and long 1 of the 42.50 strike call. Here are the scenarios. EQT is below 42/share = do nothing as both calls will expire OTM EQT is above 42.50/share = do nothing as both calls will exercise against each other EQT is between 42.00 and 42.50 per share = buy back the 42.00 strike call and the 42.50 call will expire OTM. We won’t know for sure, which of these 3 outcomes will happen until the end of the day. We won’t be sending an additional newsletter but will simply follow that approach detailed above at the end of the trading session.

We have a few positions we are monitoring more closely into expiration tomorrow EQT, INTC and OXY. The rest are unlikely to need any adjustment. We took profits in our GLD put butterfly today. This trade was a little mis-timed in the short term. However, ultimately the trade played out somewhat as expected. Sell to close:  GLD Mar 21st (monthly) 235.00 strike put (ratio of 1) Buy to close: GLD Mar 21st (monthly) 220.00 strike put (ratio of 2) Sell to close:  GLD Mar 21st (monthly) 205.00 strike put (ratio of 1) Credit:  2.95 Profit of $0.90 or $90.00 per spread traded

Hello Investors,

We have decided to close the butterfly on AMZN for a small loss as discussed in class, details as follows:

Sell to close:  AMZN Nov 29th (weekly) 215.00 strike call (ratio of 1)
Buy to close: AMZN Nov 29th (weekly) 225.00 strike call (ratio of 1)
Sell to close:  AMZN Nov 29th (weekly) 235.00 strike call (ratio of 1)
Credit:  0.93 – order has filled
Taking a loss of -0.37 or -$37.00 per spread

We have hedged our EQT covered call first through buying a call spread. The call spread has been filled and we are in.
Buy to open: EQT Nov 15th (monthly) 42.50 strike call
Sell to open: EQT Nov 15th (monthly) 44.00 strike call
Debit:  0.73 – order has filled
Max risk = 0.73 or $73.00 (if the stock is below 42.50/share)
Max reward = 0.77 or $77.00 (if the stock is above 44.00/share)

We had placed a pending order to sell a put in EQT. The order has not filled at our credit price and we have decided to cancel the order going forward.
Cancel: EQT selling of the 42.00 strike put

We made the right call in exiting our long volatility trades earlier this week. Specifically closing the VIX and SPY trades. The volatility crush has even exceeded our discussed expectations. Today we are adding a couple of new trades as follows: Buying an AMZN call butterfly spread. This is a low probability trade. However, the stock has just triggered above an RSI 70 (gone into overdrive) and if momentum continues higher could be a great way to capture it. Buy to open: AMZN Nov 29th (weekly) 215.00 strike call (ratio of 1) Sell to open: AMZN Nov 29th (weekly) 225.00 strike call (ratio of 2) Buy to open: AMZN Nov 29th (weekly) 235.00 strike call (ratio of 1) Debit: 1.30 Max risk = 1.30 or $130.00 per spread Max reward = 8.70 or $870.00 per spread We also bought a put butterfly spread in MTCH. However, the way we executed into this trade was a little different. We purchased the January 22.50 strike put first for 0.07 per contract. Then we got filled on the upper 1×2 put spread for 1.06 debit. The liquidity in the lower strike puts is not great (wide bid/ask spreads). So, purchasing the 22.50 strike put was better than the 20.00 strike put. Because they were basically the same amount of money. We got that order filled first and then did the upper strikes together. That completed the butterfly. Buy to open: MTCH Jan 17th (monthly) 30.00 strike put (ratio of 1) Sell to open: MTCH Jan 17th (monthly) 25.00 strike put (ratio of 1) Buy to open: MTCH Jan 17th (monthly) 22.50 strike put (ratio of 1) Debit: 1.13 Max risk = 1.13 or $113.00 per spread Max reward = 3.87 or $387.00 per spread This trade is an uneven butterfly. There is 5.00 distance on the upper strikes and only 2.50 distance on the lower strikes. That means we don’t have risk (only reward) as the stock falls. Our risk is solely if the stock goes sideways/higher in price.