More Profit Time... And AA Results
More Profit Time! Hello Smart Option Sellers! If you've watching the stock market over the last few days, you may have noticed healthcare stocks (of all kinds) have been taking it on the chin. The catalyst was United Healthcare's (UNH) lackluster earnings report the other day, which started the flow of selling to hit other insurers, drug companies, and retail drug stores. No company was spared. On top of UNH's earnings dud adding fuel to the fire, have been the calls from some Democratic presidential hopefuls for the "Medicare for all" insurance system. This is leading some to believe that it will turn the whole healthcare industry upside down and wreak havoc amongst the whole sector. C'mon, really? We've seen this scenario play out before in many other sectors, specifically retail, when it was believed Amazon would take over the world. Sure, some stocks crapped out for a few days, then cooler heads prevailed, and the stocks turned back higher again. I believe this will happen too with the healthcare stocks. They are getting very oversold here and due for a bounce. But, you can never underestimate how far and for how long some of these ideas will spread, and the rout could keep going for a tad more time. So in that vein, we are going to take profits on one of our earlier healthcare picks. Bristol Myers (BMY) We currently have a put-sell on BMY which is very close to the "80% Rule" threshold. With much of the profits baked in, it's prudent to take profits here in case the selling continues for a bit longer. Here's what you can choose to do: Note: you will only execute today's 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 BMY June 21, 2019 $36 put options for a limit buy price of $0.10 per contract or cheaper, GTC, as a closing transaction (buy-to-close). Currently, this put option has a market of $.06 bid/$.09 offer, so we should definitely be able to buy it for $.10 per contract or less. And just like what we do when selling the put option, try to get filled here somewhere between the bid and ask price. Try placing your bid price at $.07 or $.08 per contract at first instead of going right to the $.09 offer. We don't want to scare away the sellers. Good? Alcoa (AA) Update AA released earnings after the bell yesterday and the results were a little underwhelming. The stock is down about $1.50 per share right now, currently trading at $26.25 per share. We still have our July $25 strike put-sell position. We are going to hold. For those of you who may have bought the April 18, 2019 hedge trade, here are your choices: 1. Sell it back to the market today if it has any value. If it is in-the-money by the end of the day, it will be converted to 100 short shares of the stock for each option contract you bought. Unless you want that type of short stock position in your account, it is a must that you sell the hedge trade for any value it has by the end of today. Remember, the market is closed tomorrow. If the option has no value by the end of the day, it will just expire worthless. 2. If you bought the hedge trade for next week's expiration (April 26), you can just continue to hold it until next week. 3. If you bought the April 18 hedge trade and it expires today, but feel that AA still looks weak going into next week, you can still opt to buy one of the next week's expiration too. Stick with the $25 put option at this point. This is optional and we officially will not be buying it. I'm getting a bit tired of AA not performing for us. It's been a grind watching this stock just meander and slowly go down. Not too fun on the psyche. Most likely we will jettison this position soon and take our small lumps. Ok, that's all for now. Get those BMY trades in there and let us know how you do. 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!