Locking It In
Locking It In - Kellogg (K) Hello Smart Option Sellers! Our put-sell position in Kellogg is expiring this Friday and it has finally reached the 80% Rule threshold. That means it's time to take profits. Even though there are only 3 days left until expiration, and it seems like a surety that Kellogg stock won't retrace back down to our $55 strike, we never want to take chances. 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 K January 18, 2019 $55 put options for a limit buy price of $.05 per contract, GTC, as a closing transaction (buy-to-close). Currently, this put option has a market of no bid/$.10 offer, so I feel pretty confident that we should be able to buy these at $.05 per, considering it has already traded at $.05 today a number of times. If you don't get filled right away, just keep your order working "GTC". If you want to hang on until Friday and see if it will expire worthless - you are more than welcome to do so. Officially, we will be following our plan and closing it out today. And just like last week when we closed out of the Nike put-sell trade early - the reasoning is still the same. You might think - what's the point of paying $.05 per contract and spending a commission if it's (possibly) going to expire worthless? Here's why we're going to close it out now: 1. We're following our plan (80% Rule). 2. We've seen how fast stocks can drop. I'd hate to give back a profit. 3. Some brokers don't charge a commission on options priced $.05 or cheaper. Get those orders in there now if you wish and let us know how you do. Alcoa (AA) Quick note on AA. They report earnings after the close tomorrow (1/16). We currently have a put-sell position in the July 2019 $25 strike that we rolled into from the January 2019 $28 strike. AA stock is at $29 per share at the moment, and I had mentioned recently in one of the last alerts how we could've sweated it out by waiting to see if AA would finish above $28 by this Friday. We rolled the trade a few weeks ago only because the stock fell to $25 and it was time to get defensive. But now it has rallied back. These are the scenarios we face at times on whether to let the market play out, or to roll the trade. Anyway, with earnings tomorrow, the stock could move a good deal. I'm just not sure if it will be higher or lower. If it's lower, it could be prudent to take a quick unofficial stab at buying some cheap put options to protect the downside. Officially, we're going to hold the position as-is, but if anyone wants a cheap hedge trade, here's what you can choose to do: Buy (buy-to-open) any of the AA January 18, 2018 $25 to $27 put option strikes for a limit buy price of $.20 per contract or cheaper (buy-to-open). To clarify, you can choose either the $25, $25.50, $26, $26.50, or $27 puts for purchase between now and tomorrow's close. Do not pay more than $.20 per contract for whichever option you choose. We will find out after the close tomorrow how AA stock should react. A few things to note if you enter this trade: 1. It is unofficial, so we won't be tracking it. I will still comment on how to proceed, though. 2. It is a buy trade, not a sell trade. 3. You must make the trade before end-of-day tomorrow 1/16/19. That's all! Continue to hold all other open positions as-is. Contact me here with fills, comments, questions or concerns. Regards,
Lee Let's Grab That Cash!