CVS was trading at $46.15 when I bought the put spread on it with strikes above my short CVS put spread. This morning they announced an earnings beat with strong guidance for the full year. That earnings release pushed the stock up to $47.78 at the open and then within a few minutes it started sliding lower. Before the markets opened, I planned to dump my long spread on the news. The price was jumping around so much in the first 10 minutes that I didn’t even bother to enter an order until CVS was well off its highs. While CVS was trading at $46.80, I sold my five CVS November $46 puts for $0.23 and bought my five CVS November $45 puts for $0.09 and received $67.21 net after commissions for the $0.14 spread. I ended with a realized loss of $110.39 on this part of the trade.
If I had waited another 30 minutes (or maybe less), I could’ve gotten more than double that amount and possibly more than the $0.34 I paid for opening this hedge. I didn’t want to risk CVS bouncing back up and missing the chance to get much out of it, but the opposite happened. Either way, I don’t expect the stock to fall below $44 before my options expire at the end of next week.
AAPL has been the most interesting trade I have in play right now. If it stays as it is, I could “win” on both the short and long put spreads. With so much time (8.5 days) before the options expire, I’m not comfortable claiming a victory on this trade yet, but I’m also not nervous enough to close either side yet. The rest of my November options positions don’t look too dangerous for me, but a lot can change after today’s election. I expect that whichever candidate wins, the market will digest it quickly and will most likely move higher once this unknown input is known. The fiscal cliff issue will be the biggest risk to the end of the year and it might make me hold off on selling a new TLT call spread after my November contracts expire. Of course, if the election winner isn’t clear by the time the markets open, there will be a decent sell-off. I don’t expect that, but if it happens, it’ll be a buying opportunity.