[Options] February Expiration Open Positions Review
As February gets under way, it’s time to review positions with February options that remain open (haven’t already hit profit targets or been stopped out).
Most trades I put on for All Star Options tend to have a minimum duration of 30 days (short premium plays) and often as long as 6-8 months (for long premium plays). As options approach expiration, greeks like theta and gamma start to become my enemy and whipsaw my P/L. Therefore, as options and spreads get into the expiration month, my best practice is to put each position on notice — it’s time to take action.
February positions closed at profit target: $GDX (1/16)
February positions closed at a loss: $SLB (8/13), $LGIH (11/6), $MDT (10/23)
Remaining Open Positions (in order of entry):
- $DHI Long Feb 55 calls: We entered this position in August at $1.60 per contract. We sold half of our position at $3.20 on October 17th. We're still holding our remaining position and the calls are currently in-the-money. The level I'm currently watching is 58.50. If $DHI closes below that level, I'll close my position and whatever I get for those calls represents our total profit in the trade. If we hold these levels, I'll next look to raise my stop loss level if/when $DHI breaks out to further new highs (above 61.77).
- $ABT Long Feb 90 calls: We entered this position in October at $1.20 per contract. We sold half of our position at $2.40 on January 22nd. Our timing on that exit was fortuitous as that date currently marks the high for the move. Unfortunately, our remaining calls are now out-of-the-money and theta is now our enemy. We're closing out these calls here (currently bid 45 cents) and whatever we get represents our total profits in this trade.
If anybody has any questions, hit me here.