It’s expiration week and we are going to roll quickly if the markets start to tumble but hopefully we’ll hold up and start consolidating around 13,700 for a nice breakout next week.
As I was saying in comments yesterday, there is no clear-cut rule for handling a roll, we need to examine each positions and decide what to do with it so let’s just do that:
- BA Jan $100s basis .05, now $8.60
- Sold Jul $100s for $2.50, now $2.40
- Whenever we have a basis of .05 it means we have successfully sold enough against it that we are operating on pure profit. Once we get to .05 I can, obivously, no longer credit the basis so all sales go to cash.
- That means that the sold position has 2 functions, to PROTECT my $8.60 in profits and, hopefully, to generate an income. Since my caller’s premium evaportates faster than mine, this is a win because my calls are up $2 (30%) since 6/14, when I sold the July $100s
- Again, this goes back to what really baffles me when people freak out about the caller going in the money – your leap goes up too, you can’t win at both ends. Also, I would like to point out that on June 27th the Jan $100s fell to $5 so the only reason I even own them now is BECAUSE I sold those Julys (and boy do I wish I had DD’d then!)
- Anyway, BA is forever and we’ve been waiting for them to break $100 for a while so I’m not inclined to sell Augs unless they fall below $100 where we have lots of time to sell the now $4.15 Aug $100s if we need to.
- I’ve got my eye on the ’09 $115s, now $8.95 as a pre-roll, but I’d like to sell Septembers against them and they haven’t printed them yet.
- Sold Jul $100s for $2.50, now $2.40
- BSX Jan $17.50s, basis $1.35, now .90
- Sold Jul $17.50s for .38, now .05
- We are just trying to get even on this one but they just settled their Guidant claims for relative peanuts ($195M for 4,000 claims) so this thing MIGHT take off, worth waiting and seeing.
- Sold Jul $17.50s for .38, now .05
- CAT Jan ’10 $90s, basis $15, now $14.95
- Sold Jul $85s for $2, now $1.75
- This was a brand new play on Friday after cashing out the wildly successful ’09 play. With CAT at $85 of course I scalp the $2 premium for 1 week. I don’t care which way this thing goes, I get $2 from my caller.
- I do expect it to flatline at $85 for the week but, if it burns me, the Aug $90s are $1.28 while the $85s are $3.15 so my bad case is they finish at $90 and I will give my caller back his $2, sell the Aug $90s for at least $3 and give that to my caller while my ’10s appreciate and I still have 29 months worth of rolls to go!
- Sold Jul $85s for $2, now $1.75
- CC 40 Jan $22.50s basis $1.10, now .05 and 40 Jan $17.50s basis ..70, now .65
- Sold 40 Jul $15s for $1.10, now .15
- We are on plan here, just trying to make our money back on the $22.50s. This is something I talk about a lot – forgetting why you entered a trade. Mission accomplished if the July’s expire worthless and we can get out of the $17.50s even!
- I think they will turn but not soon but I don’t see risking selling the Aug $15s but I’m in no major hurry to dump the $17.50s although this may be an ’09 play if we see some good reason to get back in it.
- Sold 40 Jul $15s for $1.10, now .15
- CHK Jan $37.50s, basis $2.10, now $2.65
- Expecting a bit of a run so no hurry. Aug $37.50s are .82 and at $1.50 they are a must sell. This can still be entered as a new trade but then I’d sell the Augs. XXX
- COF Jan $75s, basis $6.60, now $6.80 (average)
- Sold Jul $75s for $2.05, now $1.75 (average)
- This little money machine is having growing pains from the NFB acquisition and the usual sub-prime concerns but they have $4.5Bn in cash and $124Bn in Long-Term investments against just $85Bn in Current Liablities for an NTA of $10.3Bn and a forward p.e of 9 vs. C, who has an NTA of $70Bn and a forward p/e of 10.5. With C having a cap of $260Bn and COF having a cap of $31Bn I’d say COF is undervalued by at least 10%, maybe 20% ignoring growth.
- Add to that the fact that all banks, including C are down about 10% for the year with the dollar down 12% against the Euro and COF should make a nice takeover target for a European or Asian bank.
- Conclusion: We keep selling calls because the Aug $75s have a $2.50 premium but let’s just do a 3/4 sell as it’s plenty of protection. When the sector starts recovering I want to take the ’09 $80s for $10.40 as a pre-roll on 1/2 and then get a little more agressive with the front-month sales.
- Sold Jul $75s for $2.05, now $1.75 (average)
- GDX Jan ’09 $43s, basis $4.50, now $6.30
- I hate it when this happens, it took off so fast I never filled my order so I just have 5 contracts (I know, wah wah…).
- Selling the Aug $42s at $1.30 is the right thing to do but my heart’s not in it for $650 so I will roll down to the ’09 $40s, now $7.55 and DD for 10 at a basis of $6.55 and then I will be very happy to take $1,300 for selling 10 Aug $42s. This is an XXX as a new play too as being behid $1 is no big deal over 17 months.
- GE Jan $37.50s, basis .85, now $3.55
- Sold $37.50s for .65, now $2.13
- Ouch! Nothing to do here but bite the bullet and roll to the Aug $40s, now .70 but no hurry as my guys have no premium and can only protect me while the Aug calls, hopefully gains a bit of value before I sell them.
- Will be pre rolling to the ’09 $40s for $3.97 which will let me keep selling short calls agressively against the ’08s without worrying about a big pop.
- Sold $37.50s for .65, now $2.13
- 20 GM (late Aug?) Jan ’08 $35 puts, basis $2.60, now $3.10
- Sold 10 Jul $35 puts at $1.70, now $.20
- The premiums make this a great income producer but I have this fear of something horrible happening to this stock, like reality, and it dropping $5 in one day so I’m only selling 1/2 against it but that’s still a pretty good income.
- Aug $37.50 puts are $2.12 and I’ll roll to 10 of those if it holds $36.50 through the week, otherwise I’d rather sell the $35s if I can get $1.35+ for them.
- Roll to ’09s cost $2, no hurry on that but I’ll pre-roll to the ’09 $30 puts, now $3.35 if they build up some downside momentum or perhaps pre-earnings. This makes an XXX play for a new entry since you can sell the current $35 puts for $1, that’s 30% of your money back in a month and if you just sell half it’s still 10% back.
- Sold 10 Jul $35 puts at $1.70, now $.20
- INTC Jan $25s, basis $1.96, now $2.63
- Hey it’s INTC, making 30% is big stuff! Still, feeling a little nosebleedy up here so I’ll have a hair trigger on selling the Aug $27.50s for .50 or better. If it turns the other way, they Aug $25s are $1.50 with a .50 premium so I can sell 35 out of 50 of those and have pretty good downside protection and little change on my upside.
- We would need a real Nasdaq breakout for me to move to the ’10 $30s, now $3.55 but maybe 1/2 (25) as a pre-roll if we hold $26 for the week.
- ISE (7/26) Jan $45s, basis $6.10, now $21.10
- Sold Jul $65s for $1.25, now $1.38
- They are trading at less than their $67.50 bid price from Eurex and we have virtually no premium so it’s really just a question of how much money are we making per month selling calls. Since we can roll to the Aug $70s for $2.95 the answer is 10% a month and these kinds of deals take forever to close so we roll ’em, roll ’em, roll ’em...
- The Jan ’09 $65s are $4.40 and you can sell the same Aug $70s against them for $2.95 for a $1.55 debit spread with no margin requirements so that’s going to be an XXX for 5 in the $10KP. The big risk is that the deal closes and we get $2.50 but our caller gets nothing at $67.50. There could be another offer and you can cover that with some Jan $70s at $1, maybe 3, but I’m not going to.
- Sold Jul $65s for $1.25, now $1.38
- JNJ (7/17) Jan ’09 $65s, basis $3.85, now $5.70
- Sold Aug $60s for $3.40, now $4
- Nothing to do here, this one went up faster than expected so we wait and roll but with just .50 in premium left on the Augs, this can get pretty tedious. On the whole we’re rooting for JNJ to have a nice pullback to $62 so we can take this guy out. The Aug $65s at .68 are not worth the roll, especially when you consider that you are giving up $4 of downside protection on a profitable position.
- If it takes off on earnings, I will have to take my lumps and roll to the Aug $65s in the initial excitement just to grab the premium, then we will have a good 6 months of rolls before we catch up.
- Sold Aug $60s for $3.40, now $4
