I’m actually surprised this didn’t happen sooner. My JPM June 48 naked put was more than $10 in the money as far back as May 20th. Finally the inevitable happened and option was exercised and I was forced to pay $48 per share for $100 shares of JPM, about $9.50 more than the current price. I’m sitting on it for now with the view that JPM seems to be back in an upward trend. I plan to stay patient with it, at least through tomorrow. Once the August options are posted I might end up selling an option strangle on JPM. Just below $37 looks like it could act as support. I’m not rushing into this though because I still view JPM as a long term hold and don’t want to dump it too cheap. Yesterday, and so far today, it moved above its 20 day moving average and its trend line of lower highs. That’s enough to make me remain patient, but even in addition to that JPM has moved above previous resistance too. The $38.50 area (+- 10 cents) has been support in the past and after it broke it became resistance. Now that JPM is above that line I want to see if it holds as support again which would open the door to much more upside potential.
I have a mixed pile of June options expiring tomorrow.
- AVAV, two $25.00 strike puts – These options are out of the money for now, but close. I’ll take an assignment if it dips and write covered calls at the same strike.
- GES, two $45.00 strike puts – I keep expecting GES to have a sustained move higher, but it’s not doing it. I’m torn. I might write covered calls on my soon to be assigned shares or just take the loss and dump the position.
- INTC, three $24.00 strike puts – I’m not sure what I’m going to do on Intel yet. I like the company long term, but will have to wait for August options to post before deciding if I’ll write covered calls on these soon to be assigned options.
- ITRI, one $80.00 strike put – Itron is trading under $69 right now, but I still like it longer term so I’ll probably write August 75 covered calls soon, maybe tomorrow.
- MSFT, two $31.00 strike puts – The same thought process as INTC above.
- MS, one $29.00 strike put – I have a similar view on Morgan Stanley as I do on JPMorgan Chase. MS is near potential support and has plenty of upside potential after falling so far since I sold these puts. I’ll sit on the long shares, at least for a little bit longer.
- CSX, two $52.50 strike covered calls – CSX has been on a strong rally recently and my shares will be called away at the same price I bought them. I still like CSX and will probably sell new naked puts as soon as tomorrow afternoon, once I’m convinced my 200 shares will be called away the way the appear destined to be.
- LLY, three $33.00 strike covered calls – I’m close to break even on my covered calls. If my shares are assigned I’ll take a $2.00 loss per share (not counting premiums received) since I sold these calls lower than my original buy price. Support looks like it’s around $32.50 and LLY pays a 5.75% dividend yield. Those two factors alone make me want to roll these options out further. The August options aren’t posted for LLY yet, so I might close my June options tomorrow and then wait until Monday to sell new covered calls.
Somewhere in my internal debating I’m going to have to consider the possibility that this recent run up in the market might be ready for a break. The S&P 500 just fell back below its 200 day moving average, but it also looks like its 10/20 day moving averages are about to have a bullish crossover. Throw these two technical indicators into a quadruple witching for options expiration and the next couple of days should be fairly volatile.