Position Update - GPS
Position Update - Gap (GPS) Hello Smart Option Sellers! As mentioned on Wednesday, GPS was reporting earnings last night. Since we hold a put-sell position on it, and the stock price (and retail clothing sector) has been falling of late, we wanted to take some defensive action on the trade. Earnings were mostly a neutral-to-slightly bearish event. Not too much of a big swing in price so far either way. As I type, the stock is near $17.50 per share, which still puts it about $.50 below our $18 strike price. The last two day's worth of price action was positive for the stock as it briefly managed to tag $18 per share. But once earnings came out, it pushed the price back in the $17+ range. We recommended taking a hedge trade in Wednesday's alert that could've been filled either on Wednesday or Thursday. Based on the prices that went across the tape, the fill came in at $.32 per contract. The details are below. Here's what we did: Bought (bought-to-open) the GPS August 30, 2019 $15 put options for an official buy price $.32 per contract as an opening transaction (bought-to-open). This position does not expire until next week, and if GPS stock remains anywhere above $15 by then, the trade will expire worthless. We took this trade as a protection against an all-out rout in the stock in case there was an earnings bomb. That didn't happen, so we will lose on that bet. Better to be safe than sorry. For now, we will hold the trade and see if GPS can muster the strength to stay elevated and possibly move back above $18 by the time expiration rolls around next month. We're still not out of the woods yet because if the stock remains below $18, we'll have to decide if we want to take ownership of the shares, or completely get out of the trade and possibly take a loss. I'm encouraged by the price action at the moment so let's see how it fares next week. Continue to hold what you have. For the rest of you who may have taken a different approach - like not doing anything, you are also free to continue to hold and we'll all re-assess next week. Good? Ok, that's all for today. Continue to hold all other open positions as-is. Contact us here with fills, comments, questions or concerns. Have a great weekend! Regards,
Lee Let's Grab That Cash!