Trading Activity

Cardinal Health $CAH  I have sold the long stock for +$2.61 and used some of the proceeds to BtO the Apr/Mar $90 Call Calendar. Options Net is: -$.85 (Fab 5)

AutoZone $AZO  I have StC the March $650 Calls for $24.40 avg. I set a Buy Stop at $666 (would be a hedge). Options Net is now: $24.32 (Earnings)

MercadoLibre $MELI  I have BtO the Mar 140/125 Strangle for a 2.25 debit (frees up some margin, defines Risk at $5 either way max). Options Net shrinks a bit to: $10.40 (Earnings)

 

- DM 10:00 AM CST

 

A review of McGraw Hill Financial – a look at the Option Collar

I received a question this weekend regarding the March $100 Collar that I have for a Long Stock position in $MHFI for the Fab 5 ($100 Roll). The question had to do with why I sold the Calls ITM (in the money). First, a quick review of all the pieces:

  • Long Stock at $92 (since 2/3)
  • Short March $100 Calls
  • Long March $100 Puts (the goal of a Collar is Put protection)
  • Options Net: $4.60

When you are dealing with $5 strikes it is always important to analyze the probability of where price will gravitate towards in any given expiration. Since I was not getting much premium for selling the $105 Calls (would have made the Collar at a debit) I elected to collect a LOT of premium for the Collar using the $100 strike.

When you consider the Options Net, I am “capped” at $104.60 ($100 strike plus ON) which is quite near the $105 strike – a nice place to Pin for March expiration. Of course anything can happen but I wanted the Put protection to lock in at least $8 of the gains.

 

- DM 9:20 AM CST

 

The Fab 5 update

$BG  I am Long the February 90/92.5/85 RRCS and Short Stock at $85 (hedge). Not a good Earnings report at all so clearly not going to do a $100 Roll for quite some time (price is under $82 right now)

$GPN  new this week: Long the stock at $90.15

$HYG  no material change

$MHFI  A positive reaction to Earnings, may get a Day #1 on the $100 Roll today

$ROST  no material change

Note: the $UNH position remains

 

- DM 12:45 PM CST

 

The Fab 5 update

I had activity in each position this week. Here is the Summary:

$BG  This is a new position as of 2/3: February 90/92.5/85 RRCS

$BMRN  This position was exited on 2/4. Overall Gain: $13.25 (but does not get the $100 Roll Complete status)

$HYG  This is a new position as of 2/3: Long the ETF at $90.40

$MHFI  This is a new position as of 2/3: Logn stock at $92

$ROST  I added a Long Stock piece on the break of $92 on 2/3. The Short Strangle remains

Here is the Summary:

02072015

Note:  The $UNH position remains

There is one empty slot to fill. Here are some candidates:

- DM 10:00 AM CST

The Fab 5 update

I have had some activity in the Fab 5 this week so I thought I would do a brief mid-week update:

Bunge Limited $BG  I have added a new position: Long the February 90/92.5/85 RRCS. Options Net: -$.42

BioMarin Pharma $BMRN  With the continued weakness I have BtC the February 100/105 CS. This position is now closed. Options Net final: $7.41 and stock gains remain at: $5.84

iShares iBoxx High Yield Corp $HYG  I have added a new position: Long the ETF at $90.40

Ross Stores $ROST  I have added Long stock at $92

 

- DM 9:00 AM CST

 

Trading Activity

Schlumberger $SLB  I have adjusted the Short Calls to the February 27 weekly $83.50 strike (covered calls). Options Net improves to: $1.44

Google $GOOGL  I have sold the Long stock piece this morning on the weakness. I remain Short the June $535 Calls. Options Net is still: $1.07 and stock gains improve to: $58.38

Netsuite $N  I have sold the Long stock piece for +$4.16 and have added a new trade: Long the February 100/105/110 Call Fly with Short $90 Puts. Options Net: $1.40

Polaris $PII  I have lowered the Buy Stop to $144.50 (the Short Strangle remains)

Skyworks Solutions $SWKS  I have added a Long March 80/75 PS for protection. Options Net shrinks to: -$.62

Avago Tech $AVGO  I have StC the April $100 Calls thus leaving a Short April 115/95 Strangle now. I have set a Buy Stop at $105. Options Net improves to: $12.92 and stock gains remain: $9.70 (long-term account)

Resmed $RMD  I have StC the April $60 Calls thus leaving a Short April 65/55 Strangle. Options Net improves to $3.74 and stock gains remain: $1.81

Cyber-Ark Software $CYBR  I have adjusted the Long February 40/45 CS (bottom of Call Fly) down to the 30/35 strikes for a $1.10 debit. The Call Fly is now split: 30/35/45/50. Options Net shrinks to: -$2.02 and stock gains remain: $3.20

Bed Bath & Beyond $BBBY  I have adjusted the Short February $77.50 Calls down to the $75 strike (covered calls, part of a Collar, Submarine Basket)

BioMarin Pharma $BMRN  I have StC the February 95/100 CS (lower part of Call Fly) thus leaving a Short 100/105 CS. I have set a Buy Stop at $98. Fab 5 position. Options Net improves to: $7.79

Ross Stores $ROST  I have StC the February $92.5 Calls thus leaving a Short 97.5/87.5 Strangle. Fab 5 position. Options Net improves to: $.92

 

- DM 10:00 AM CST

 

The Fab 5 update

I came into this week with 2 empty seats to fill but found no new trades to initiate. I closed the $AET position and had a Stop hit on the Long stock piece for $UNH (not an official position for the Fab 5 but the trade is still on). The Short March $105 Calls for $UNH remain with a Buy Stop set at $109.50 for now.

I am back to 3 empty seats to fill.

Here is the Summary:

01312015

Fab 5 Candidates:
$HYG
$VAR
$MPC

 

- DM 7:30 AM CST