What About BIG?
What About Big Lots (BIG)? Hello Smart Option Sellers! We currently have two put-sell trades (AA & BIG) that we "rolled" from previous positions to help give them more time to work. Rolling allowed us to take a current loss and potentially turn it it a larger gain a few months down the road. It also allowed us to stake out a more conservative position by engaging a lower strike price. BIG, in particular, is due to release earnings before the bell on this Friday, March 8. With the roughly $15 per share price drop it endured during the last earnings announcement, do we need to be concerned of the same scenario on Friday? If it happens again (or some variation of it), it would not be welcomed for our position. So, what should we do? I do like the company for sure, but it has undergone serious technical damage based on the charts. Here's a current look. The stock is sitting right near $32 at the moment, and we have the $30 strike as our put-sell position. The stock is also sitting slightly above it's 200-month moving average on the charts (roughly $30) - a line in the sand for many watchers. The question is - what if they drop a bomb like last earnings? This could take the stock down $5 to $10 from here, putting it anywhere between $22 to $27. That would hurt us. At the same time, with the stock sitting on support and having fallen a good ways, any positive earnings results could shoot the stock sharply higher. So again, what should we do? I have a few answers: 1. We could do nothing and hope the earnings are solid and the stock moves higher. This would be the best outcome. 2. We could close the trade now and take a loss, albeit not a huge one at all. 3. We could roll the trade again, but if the stock tanks, it wouldn't help much. It would just stretch out the anxiety and stress a few more months. 4. We could buy some nearer-term cheap put options that could cover us if the stock tanks. This might be our best all-around bet. 5. We could also buy some nearer-term cheap call options too, in case the stock rallies. I will have the answer(s) for everyone tomorrow morning. Please be on your toes and on the look-out for the alert, as you will need to get the trade done by end-of-trading tomorrow (Thursday). Waiting to do the trade tomorrow will give us the best shot at taking advantage of buying short-term options, if we decide to go that route. That's all for now. Stay sharp for tomorrow. Continue to hold all other open positions as-is. Contact me here with fills, comments, questions or concerns. Have a great weekend! Regards,
Lee Let's Grab That Cash!