Options Expiration – November 2012

My November options provided little excitement today and that’s a good thing.  I came into the day cautious about a couple of my positions (CVS and TLT), but they worked out as I planned, worthless.  Here are the details on the four options positions I had that expired today:

  • AMT – Short 20 November $60/62.50 put spreads – AMT finished the day at $73.86, leaving my short $62.50 puts far from being assigned.  In fact, the stock never gave me much reason to worry the entire time I held the position.  I thought about renewing the spread for January, but with so much uncertainty in the markets right now, I decided to hold off a little longer.  Now that the day is done, I’m already considering taking the small risk on Monday.  I think I could get the same $0.12 again and might even be able to do better if I’m patient.  AMT gained $1.51 today and could pull back some on Monday to give me a great entry point.
  • CVS – Short 20 November $44/42 put spreads – CVS had a bumpier ride during my run with it.  I closed my hedge for a loss of $110.39 10 days ago, but should’ve held on and would’ve made $320+- from it.  I still finished the series of trades with a profit since I took in $209.62 originally for the spread that expired today.  The $430 missed opportunity stings, but I thought I was doing the right thing at the time and would probably play it the same if I had to do it over.  CVS didn’t play out completely like I thought it would.  It worked out for me, but has been on a consistent slide for days and even traded as low as $44.33 this morning before rebounding to $44.80 by the close.  That made me second guess not closing it at the beginning of the week for a penny when I had the chance.  It worked out, so that’s good, but it could’ve been much better and much worse.  I still like the stock and might get back into it, but I need to see more than today’s gains before I’m comfortable with a new trade.
  • IWM – Short 3 November $82 puts – IWM was my losing position for today’s expiration.  I’m letting the options be assigned, so I’ll be taking a realized gain on the options, but then I’ll be sitting on a paper loss on the shares I’ll own.  IWM closed at $77.48 today, which means I could’ve closed the options for a loss of around $775.  Knowing this assignment was coming, I bought a couple of puts this week on IWM and have a $50 paper profit on those so far.  I had more than a $200 unrealized profit at some point yesterday.  I’ll close the long puts at some point and might sell some covered calls too.  Since I’m not fully invested right now, I don’t want to limit the gains on the few shares I have.  That and the small premiums for out of the money IWM calls makes me hesitate on selling covered calls.
  • TLT – Short 10 November $127/129 call spreads – TLT is always fun for me to work because there are so many different ways it can play out and many of those paths can be profitable for me.  Less than a month ago, TLT was trading close to $120 and I thought I was golden.  That quickly changed as TLT edged higher since then.  Today it reached as high as $127.19 (19 cents in the money), before dropping back to close for a loss on the day at $126.37.  I might have done better to have had the short call options assigned.  TLT could be at a near-term peak if politicians continue to play nice with fiscal cliff discussions.  Once I was confident TLT wouldn’t be assigned, I entered a new limit order to sell a new December spread with higher strikes and a better return.  That order didn’t hit.  I’ll be back on Monday to try it again most likely.  If TLT pops higher, I’ll want to jump on the elevated prices that I don’t expect to stay that way for too many months to come.  If TLT drops, I’ll want to get my order in while the spread prices are still worth selling.  The order I tried had a $129 short strike.  I’ve sold the $127 strikes in the past couple of spreads I’ve written on TLT.  Doing the same for December could produce a huge gain for me, but I could see bond prices rise into the end of the year and I don’t want to be short TLT at $127 if things get ugly.  $129 isn’t much higher, but has rarely been seen by the ETF.  Going short the volatile ETF at such a high price could give me much more opportunity for gains as TLT falls.  Then again, I’d be happy to just take the spread profit and move on again.  I’m getting a little ahead of myself now.  I need to make the new trade before I start planning my realized gains.

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