Trade Update - BIG & GPS
Trade Updates Hello Smart Option Sellers! We were pretty busy yesterday, as we made trade adjustments on BIG and executed a new put-sell on GPS. Let's go over the BIG trades as those are a bit more time sensitive. Big Lots (BIG) BIG released earnings this morning before the bell, and quite honestly, I'm surprised how the stock is moving at the moment. I didn't see much in the way of really positive news or really negative news, yet the stock is up close to $3 per share as I type. That's a bit of a shocker. Anyway, with yesterday's hedge trade, we were protecting ourselves in case of another earnings bomb. If the stock had dropped $10 today, we would've been prepared. But now with the stock rallying (at the moment), it would've been better had we done nothing. I don't regret making the the hedge trade one bit. It's always smart to defend your money. Here's what we did: Bought (bought-to-open) the BIG March 15, 2019 $30 put options for an official buy price of $1.15 per contract as an opening transaction (bought-to-open). This put option basically traded in a range yesterday between $1.00 to $1.30 per contract, with most filled near $1.15 per. So what's our next move? Well, with the stock rallying, the March $30 put has lost most of its value, so we don't need to do anything with it. Very short-term options are "hit or miss", as you have to be extremely precise with the stock's direction. Since the stock rallied on us, the March put option died very quickly. But we used it as a cheap way to gain some downside protection. At the same time, the July $30 has lost just as much value this morning, so we can see it as a wash. And if the stock continues to rally, the July $30 will continue to lose even more value, allowing us to recoup a good portion of what we lost on the initial January 2019 $32.50 put that we rolled from. Some of you may not have even been involved with the BIG trades, so much of this commentary doesn't apply to you. Anyway, continue to hold the March $30 put if you bought it yesterday, as you never know if the stock might collapse again before it expires next Friday. We will also continue to hold the July $30 put for now. For those of you who may have bought some of the March $35 or $37.50 call options - you can either sell them today and book either a small gain or loss, or continue to hold them until next Friday's expiration. If BIG continues to rally, you might be able to see a decent profit on them. My suggestion would be to hold until next week. To sum up: 1. We bought the March $30 puts and will continue to hold those. 2. We will continue to hold the July $30 put-sell. 3. If you bought the March calls, you can sell them today or hold until next week. Overall, the best bet would've been to do nothing, but I'm not upset. This is how we protect our capital to fight for another day. Gap, Inc. (GPS) We're filled on the new GPS put-sell trade from yesterday. Trades went across the tape at both $.25 & $.26 per contract yesterday before the stock started to rally. By the end of the day, the trade was unattainable. I hope no one sold for less than $.25 per. As of this morning, GPS stock is down again, and if you had your order in "GTC", then you are now filed. I see trades going across again at $.25 and $.26 per contract. Here's what we did: Sold (sold-to-open) the GPS June 21, 2019 $20 put options for an official sale price of $.26 per contract as an opening transaction (sold-to-open). Great job everyone. That's all for now. 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!