[Options] Positions with September Expirations Review

• $MCD September 175/200 Bullish Risk Reversal: This has been and continues to be a home run trade for us. We entered this position on March 25 for a $2.20 credit thanks to a well-timed gap down on our entry day. On April 18th as the stock was really beginning to break out, we were able to sell half of our long calls and use those proceeds to close all of our short puts (there was even a little credit left over). So now we're simply holding a half position of long 200 calls that are way in-the-money. In this situation, we treat our long calls as if we're just long shares of stock. Our plan going forward is to close these calls if/when a near-term support level in $MCD is breached. As of the time of this writing, our stop level is $213.75, which would represent both a break of the low on Aug 23 and a break below the 50-day moving average. If this stock continues to move higher, we'll trail our stop level higher as conditions warrant.
• $CSCO September 60/65 Bull Call Spread: Sadly, this one is a dud. We had a glimmer of optimism in mid-July when it looked like $CSCO might finally follow through on its springtime breakout attempt and make up for lost time. But it was not meant to be. Barring a miracle in the next couple weeks, these calls will expire worthless and we have lost the premium we paid at entry. Nothing to do here unless CSCO screams higher.
• $AXP September 105/125 Bullish Risk Reversal: This one showed so much promise. Sadly, while still technically a winner, the gains aren't what once looked like would be pretty impressive. We entered this position on May 15 at a 35cents debit. And immediately on the next day, we were offered the opportunity to sell half of our calls and used those proceeds to close our entire short puts position (similar to the MCD trade above). And we were then left with a half position of Sept 125 calls at a net cost near zero (the short-term goal). Things were looking great as $AXP raced towards 130 in July. Fast forward to today and $AXP has pulled back off its highs and our calls are now out-of-the-money. There is still some premium left in these calls and we'll look to close them when the market opens on Tuesday. Theta is our enemy here, so that's why we close. Whatever we can sell the calls for on Tuesday will represent our profit in the trade.
• $HON September 180 calls: This trade, too, is a dud. Our stop loss level of 160 was breached last week. But at that point, there was no premium left in the 180 calls so there was nothing to do. Looks like we'll take the full loss here unless a miracle happens over the next few weeks.
• $XLB September Iron Condor: This trade actually hit our profit target today after today's higher gap open (Friday Aug 30). We don't want to be greedy beyond here. Our goal in Iron Condors is always to capture 50% of the original premium we took in. In this case, we entered the spread on August 11th for a 95 cents credit. We closed it today at a 45 cents debit according to our plan. Winner.

All in, September has been a good expiration for us. Essentially, all of our profits are attributed to the MCD trade and all the rest of the winners and small losers more-or-less offset each other. And that's typically how it goes.

If you need any further clarifications, please email me here.

See you on our upcoming conference call next week.

~ @chicagosean

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