[Options] October Expirations Open Positions Review

In no particular order,

• $XRT Long 45 Straddle: This trade has taken us on a wild ride. I entered back in April when all looked quiet and we sniffed that there was the potential for volatility ahead. Sure enough, we got volatility. In two separate pushes down, one in late May and a second one in mid August, it looked like this trade was setting up to be a homerun. Unfortunately for me, the sector seems to have found its footing and rallied back hard in September. This has left $XRT in no-mans-land for my position and I'll be closing it early next week for a loss.
• $T Long 33 Calls: This trade too had a wild ride, but at least it worked to our benefit. We've had to endure two scary short-term reactions to earnings calls since we put this trade on in early April, but each one eventually resolved higher. On July 30th, I was able to sell half of this position at a double (bought the calls at $1.00, sold half at $2.00). And since then, it has been a relatively delightful ride higher. The plan going forward is to hold my remaining calls until $T breaks a near-term support level. I'm currently looking for a close below $36.50 for my cue to exit. I'll move that level up if $T makes another run at a new all-time high above $38.75. Either way, when I exit these calls, whatever I collect will be pure profit, since I've already recouped my original risk capital when I sold half on July 30th. This is the very definition of a "free ride."
• $MSFT 145/155 Bull Call Spread: this position teased me a couple weeks ago when it looked like we might finally get the upside breakout we were looking for. Alas, it doesn't appear it was meant to be, and unfortunately I'm running out of time. Theta is my enemy now, holding out-of-money calls. I'll be closing this position on Monday, salvaging something, but still suffering a manageable loss.
• $TLT 134 Straddle: This trade has been a big winner. At first, I looked like a genius the week following my July 3 entry when we saw $TLT exhibiting signs that it may have been in a major topping pattern and a big selloff was coming. To my pleasant surprise, I was dead wrong, and instead $TLT next exploded higher! Nice problem to have when I'm long a straddle though. I was able to sell half of my position on August 14th for more than double what I paid for it (bought the straddle for $5.65, sold half at $11.90). With the remaining position, I'll be closing the OTM puts on Monday as theta is their enemy (currently bid 15 cents). For the calls, I'll look to close them on any $TLT close below $140.50. And I'll move this trailing stop up if $TLT resumes its move higher above $144. We're "free riding" this one too! :)
• $GLD 137/146 Short Strangle: This position is not yet at my profit target, but $GLD is sitting right in the sweet spot for my limit order to close this position for a $1.00 debit to get hit soon (I originally sold this spread for a $2.00 credit at entry). I'll hold out for my profit target for now. But if $GLD closes below $139.50 or above $145 before my profit target is achieved, all close it down and take whatever I can get (profit or loss). I won't want to hold any more as gamma will start to become my enemy making this position potentially too volatile heading into expiration.

There are a couple other positions open in $TSCO and $IAC where there's nothing really to do. The open options are likely going to expire away worthless. But the nice thing in both situations is that neither is a loss. $TSCO gave me an opportunity to sell half of my long calls at a double before it reversed (removing all my risk capital), and in the $IAC Risk Reversal, I was able to sell half of my long calls to pay for closing all the short puts. So no open risk there either.

If you have any further questions, subscribers can email me here.

~ @chicagosean

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