Profit Time!...And Covered Call Results - GPS
Covered Call Results - Gap, Inc (GPS) Hello Smart Option Sellers! We successfully sold our first-ever covered call yesterday. How exciting! With GPS stock moving higher about 30 minutes after the alert came out, higher fills were recorded for the rest of the day. Depending on when you executed your trade, some of you most likely received higher fill prices than earlier participants. Fill prices early on were in the mid-to-high $1.40s per contract whereas by the end of the day, fills were in the mid $1.60s per contract. Most of them centered around $1.55 to $1.60, so we'll take the official mark at $1.57 per contract. If you didn't place your order yesterday, you can still do so at even better prices this morning. I'm seeing fair value right now around $1.75 per contract. This is because GPS stock is heading higher as I type. As mentioned yesterday, the news that Chinese trade delegates cancelled their mid-west farm tour last Friday caused the stock market (and GPS stock) to drop unexpectedly. Now that it's been revealed that our U.S. trade counterparts asked for the delay, the market is moving higher once again, taking GPS stock with it. Obviously, as stocks move up, call option prices move up as well. Sometimes timing can be critical when trading options, and in this case, had we known stock prices were going to snap back higher, we could've held off on the covered call until today, which would've allowed us better prices. But, such is life. It's unfortunate though that our President seems to have the power to cause unexpected and unwarranted major market gyrations just because he sends out a tweet. Makes all of our jobs that much harder. Anyway, we're in the covered call trade, and will watch how it progresses. Here's what we did: Sold (sold-to-open) the GPS December 20, 2019 $17 call option contracts for an official sale price of $1.57 per contract as an opening transaction (sold-to-open). It's better that the stock goes up. This will make our lives easier. We definitely don't want a reversal to the downside much below $16.50 or so. GPS releases their next earnings results around the third week of November, so that'll probably be the next time we need to address the position. For now, we hold. Profit Time! One of our current put-sell positions has reached the "80% Rule" threshold - so you know what that means? Time to take profits! Sysco (SYY) SYY stock currently trades near $79 per share and we hold the November 15, 2019 $55 put-sell. With the stock now $24 above the strike price, it has given us an opportunity to lock in the gains. Here's what you can choose to do: Note: you will only execute this buy-back 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 SYY November 15, 2019 $55 put option contracts for a limit buy price of $.05 per contract or cheaper, GTC, as a closing transaction (buy-to-close). Currently, this put option has a market of no bid/$.10 offer, with many contracts already trading at $.05 per over the last two days. We should be able to buy these at $.05 since there is no bid currently showing. If you don't get filled today, be patient. It will happen. Do not pay more than $.05 per contract. Good? Get those orders in there and let us know how you do. That's all for now. I continue to search for quality new plays and will be in touch when something triggers a move. Continue to hold all other open positions as-is. Contact us here with fills, comments, questions or concerns. Regards,
Lee Let's Grab That Cash!