Friday Update - Correction
Editor note: There was a typo in the prior alert about the GPS strike price being $16 instead of $18, as seen in the third paragraph below. We apologize for the mistake. Friday Update Hello Smart Option Sellers! Let's go over some position housekeeping before the long holiday weekend kicks in. As a reminder, the markets will be closed on Monday. Obviously our put-sell position in Gap, Inc. (GPS) is at the forefront of many of your minds, as it is a position that has been requiring much of our attention of late. It's a little weird though at the same time, as the stock is only $2 below the $18 strike price. Have you ever been this worried before when a stock you owned fell $2 below your purchase price? Many stocks move $2 or more intra-day, yet we're getting into a tizzy over this one for some reason. I understand that the Smart Option Seller service is geared more towards only collecting the upfront cash, while taking potential ownership is a distant afterthought. But I've been preaching for years now that the day may come when we find ourselves in a position of possibly having to buy the stock. As long as we're comfortable with the company itself, then owning shares can lead to much larger upside potential compared to the $.20 to $.25 profit we typically make on the put-sell alone. Are we still comfortable with GPS as a company? I'm not ready to throw the towel in yet, so we're going to hold. As far as what we've done - we bought the $15 put option as a hedge against last week's earnings in case there was a price meltdown. That didn't completely happen, as the stock still remains right near $16 per share. Those put options looks like they will expire worthless today. And of course we still have the September 20, 2019 $18 put-sell in the portfolio. So we will let the $15 put disappear from our account and continue to hold the $18 put-sell through the weekend. As we are getting closer to expiration in a few weeks for the $18 put, we must be prepared for possible early assignment if you in fact have the put-sell position. Early assignment is not a guarantee, but I don't want anyone to be surprised if it happens between now and September 20th. Please make sure you have the funds available in your accounts to cover the cost of buying the shares. If the stock doesn't rally much over the next few weeks, assignment is almost a surety. This may be the very first time in Smart Option Seller's existence that we buy shares of a stock, and I mentioned it in the last alert. If you have no desire (or the funds) to possibly cover the cost of the shares, then you will need to take action. That action can be in the form of rolling the trade, possibly to the March 2020 $16 put options. Or, you can completely close out the current September position by buying it back at its current price of roughly $2.10 to $2.15 per contract. Officially, we will be holding the trade through the weekend and see what happens next week. The rest of our trades are in perfect shape, so we'll hold as-is on those. That's all I have for today. Continue to hold all other open positions as-is. Contact us here with fills, comments, questions or concerns. Have a great long Labor Day weekend. Regards,
Lee Let's Grab That Cash!