[Options] December Positions Review

Sean McLaughlin
November 30, 2020

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

As it turns out, we only did five trades in total with December options. Currently, we only have two open positions with December options remaining on the books, and only one of them requires any action. The rest have already hit our profit targets or stop loss levels. In the scoreboard below I denote the date we exited each position.

Here’s the scoreboard:

December positions closed for profits: $SNOW (11/19),

December positions closed at a loss: $IBB (9/8), $DHR (9/8)

Remaining Open Positions:

  • $XLE Long Dec 29 Puts -- Nothing to do here. This bearish play ripped in our face. But... at least we were able to sell half of our position at a double back on October 2nd. So, while holding on to some bearish lottery tickets here (currently a 3 cent bid in these puts), at least we know that the worst case outcome for this trade is a scratch. This is always better than a loss!
  • $DE Long December 210 calls -- This one is more like it! Big winner! We sold half of our position on August 21st to take our original risk off the table (like in XLE above). But unlike XLE, this one continued going in our direction. As I type this, $DE is trading north of $260 per share. We're going to keep a trailing stop behind the price action. Currently, the level I'm watching is $255. Any close below $255 and I'll exit the trade on the next trading day. I'll continue to look for opportunities to move my stop loss level up if/when $DE makes new highs. Let's hope it keeps going! We originally purchased these calls for $5.00 each. Gotta love this 10-bagger!

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

~ @chicagosean

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