Ringing The Register...

Ringing The Register... Hello Smart Option Sellers! In light of the Fed's big decision today at 2pm EST, it would make sense to lock in some gains here while we have them. Although this trade hasn't quite reached my 80% Rule threshold, it's still a smart decision to take the gains and keep some money on the sidelines in case we need it. There is one trade to lock in and one trade with an unofficial adjustment. Read on for details. Paypal (PYPL) We have a put-sell position in PYPL that is somewhat close to the 80% Rule threshold. Here's what you can choose to do: Note: you will only execute this trade if you already hold the put-sell position in your account. If you don't have the position, you can disregard these instructions. Buy back (buy-to-close) all of your PYPL February 15, 2019 $45 put options for a limit buy price of $.10 per contract or cheaper, GTC, as a closing transaction (buy-to-close). Currently, this put option has a market of $.08 bid/$.10 offer, so we should be able to get some right off the bat. Try placing a $.09 bid at first if you'd like, maybe someone will play with you. If not, you can go right to the $.10 price. Do not pay more than $.10 per contract on this one. Nike (NKE) Currently, we have a $62.60 strike put-sell in NKE that expires next month on January 18, 2019. We officially sold-to-open this position for $.26 per contract, and it's now worth $.67 per contract, putting us underwater at the moment. NKE stock is trading near $71.50 per share, still giving us $9 of cushion. NKE releases earnings after the bell tomorrow, Thursday December 20th. Some of you may be a little gun shy after seeing what happened after Big Lots (BIG) released earnings recently. Would there be a repeat performance for NKE? I'm inclined to say no, but of course no one can know for sure. A 10% to 15% drop in NKE stock would be extreme, as large gap moves like that typically don't occur for the retailer. But, if you are worried about such a scenario, here is an unofficial way to protect yourself. You can look to buy-to-open the December 21st or December 28th $60 to $62 put options as a hedge against the January $62.50 put-sell positions. These are the cheapest options on the board, but I wouldn't spend more than $.10 to $.15 per contract on these, considering that the January put-sell was sold at $.26 per contract. You don't want to give up all the potential gains of the January position by buying December put options that cost just as much. Depending on which December options you choose, they have an extremely short life span. You would be buying these for a potential extreme move lower in NKE after earnings are released on Thursday. If you buy the December 21st options, you will have one day of protection, whereas the December 28th options will give you an extra week of protection. Also, depending on which strike you buy, will determine how much gain or loss you can expect. If NKE ends up rallying after earnings, the December options will lose all of their value in a heartbeat, so take that into consideration. If you care to do it on your own, you are more than welcome to. This is an unofficial recommendation, and we will not be participating in this trade as a whole. If you care to do it on your own, you are more than welcome to. And remember, you would only consider this trade if you already hold the put-sell position in your account. If you don't have the position, you can disregard these instructions. I will give a NKE update on Friday, regardless of whether you enter this hedge trade or not. That's all for now. Try to get those orders in there before the Fed's announcement at 2pm EST and let us know how you do. Continue to hold all other open positions as-is. Regards,

Lee Let's Grab That Cash!

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