July 31 weekly Options expiration

I have 7 existing positions that include Options expiring today. Here’s the plan:

Caterpillar $CAT  I am long the 85/82.5 Put Ratio. I am short stock at $82.5 (hedge). I will let this trade auto-unwind for +2.50 (thus closing this Submarine Basket position). The Options Net final will be: $4.91

priceline.com $PCLN  I own the July 31w/Sep 1160/1230 Diagonal Call Calendar with short weekly $1140 Puts. I will take stock at $1160 with short September $1230 Calls (covered calls). The short weekly $1140 Puts will go poof. Options Net remains: $8.70 and booked stock gain remains: $4.22

Skyworks Solutions $SWKS  I am short the 110/115 Call Spread – which I will let expire. Options Net final: $10.51 and booked stock gain: $2.27

Financial Select Sector SPDR $XLF  I am long the ETF at $25.30 with short weekly $25.5 Calls (covered calls). Current Options Net: $.59. I will adjust to a future expiry

Earnings:

Baidu $BIDU  I am long the 200/210/220 Call Fly and short the $180 Puts. I will adjust the short Puts to a future expiry. The long Call Fly goes poof. Current Options Net: $.69 and booked stock gain: $11.33 (from the hedge)

United Parcel $UPS  I am long the 95/98/100 Call Fly and short the $93 Puts. I will: take stock at $95, adjust the middle of the Call Fly to a future expiry, StC the long weekly $100 Calls. Current Options Net: $.68 and booked stock gain: $1.47 (from the hedge)

LinkedIn $LNKD I am long the 230/240/250 Call Fly and short the $190 Puts. I think this whole trade goes poof today. Options Net: $.79 and booked stock gain: $36.225 (from tag along short in after hours 7/30)

 

– DM 9:00 AM CST

 

Bottom Fishing

Now that we are into the heart of Earnings season, my list of stocks that are getting beat up post-Earnings is growing. Although I have a full Submarine Basket at the moment – primarily where I would add new positions for these – I am considering creating a 2nd basket.

Here are just some tickers from the growing list of candidates:

$UTX
$LXK
$PII
$CAB
$COL
$TEN
$BIIB (I added to the Submarine Basket on 7/24)

There are also numerous pull-back candidates that are at interesting Buy points. Here are 2 well-known brands:

$FDX
$UPS

 

– DM 9:30 AM CST

 

A Bear Collar in United Parcel Service

I have had a position in the Submarine Basket since 01/23 for $UPS. Here is how the position looked into this week:

  • Short stock at $102.06
  • Short the February 06 weekly $103 Puts

Today I added the following to create a Bear Collar:

Long the February 06 weekly $102 Calls

Now let’s look at a few scenarios to see how the Bear Collar can work:

1) The stock closes at $100 this Friday (expiry). The Short $103 Puts would be assigned thus closing out the Short Stock piece for a -$.94 loss (if I don’t adjust the Short Puts, I likely would). The Long $102 Calls go poof. Overall gain/loss would be: -$.18

2) The stock closes at $103 this Friday (expiry). I would likely have adjusted the Short Puts to a future expiration (taking in a credit). The Long $102 Calls would be assigned thus closing out the Short Stock piece for a $.06 gain. Overall gain would be: $.82

3) The stock closed at $95 this Friday (expiry). The Short $103 Puts would be assigned thus closing out the Short Stock piece for a -$.94 loss. The Long $102 Calls go poof. Overall gain/loss would be: -$.18