[Options] November Positions Review

Sean McLaughlin
November 2, 2020

As November gets under way, it’s time to review positions with November 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.

This month, we have four open positions with November options remaining on the books. All the rest have already hit their profit targets or stop loss levels. In the scoreboard below I denote the date we exited each position.

Here’s the scoreboard:

November positions closed for profits: $FB (8/26)

November positions closed at a loss: $VIRT (8/10), $UNH (8/25)

Remaining Open Positions:

  • $HD Long Nov 280 Calls -- Good news/Bad news. We entered this trade back on June 29th and things were looking great until the end of August. Along the way, we were able to sell half of our position in accordance to our plan on 8/7. And we're glad we did because now $HD is trading in the neighborhood of $274 a share and our remaining calls are out-of-the-money. Since theta is the enemy of long OTM calls as we approach expiration, we'll be closing them here (currently trading around $6.50) and this represents our profit in the trade. Winner and we'll take it!
  • $ABT Long Nov 110 Calls -- A similar story as HD above. We entered this trade on July 27th and on 8/27 we benefitted from a big opening gap higher. We sold half of our position for more than double (looking in guaranteed profits, nice!). Since then, the stock has languished and our remaining 110 calls are currently out-of-the-money with $ABT trading in the neighborhood of $107/share. So we'll be closing our remaining calls down here. They are currently trading around $2.25 per contract. And this exit will just add to our existing profits in the trade.
  • $MSFT Long Nov 220/260 Bull Call Spread -- We had a bunch of close calls with our $200 per share stop loss level, but it never quite triggered, giving us hope that MSFT would find it's legs. Unfortunately, it never came to pass and this spread is currently out-of-the-money. We'll be closing it down here to salvage whatever we can. Looks like we can get about $1.25-$1.35 to close it now.
  • $WMT Long Nov 145 Calls -- We entered these calls on 8/24 and our timing couldn't have been more fantastic. Three days later the stock ripped higher and we were able to sell have of our position at a double on 8/27. Unfortunately, the stock peaked out on 9/2 and has been languishing ever since. Our 145 calls are currently OTM as the stock is trading around $140 per share. So we're going to close this position down now and whatever we get for the sale represents our total profits in the trade. The calls are currently bid $2.50, so this will still be a nice win.

If you have any questions about these trades, email me here.

~ @chicagosean

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