The Money Tree

Safely Generating Income in Retirement

Weekly NP Strategy – FEB 10 Exp.

Posted by mounddweller on February 2, 2012

Fellow Traders,

I have posted the screener results for the Weekly NP Strategy here: http://finance.groups.yahoo.com/group/weeklyoptions/files/.  There were 65 trades meeting the selection criteria this week.  Unfortunately none of them appealed to me.  However, since we all have different objectives and risk tolerances they are there for you to check out.

I really stepped in it with my pick of ANF last week.  The company pre-announced an earnings short-fall today and the stock fell hard, dropping $6.73 to $40.40.  That is well below the $44 strike price which showed up in our screener results last week.

Folks who placed this trade now have 3 choices:

(1) BTC at a loss and walk away knowing you can’t win every trade, or

(2) Roll-out the puts to the regular MAR expiration or another month even further out.  Today, the FEB03 $44 puts closed at $3.60 and the MAR $44 puts were at $4.65.  This would give you about $1 net credit, about 2.25% for a month.

(3) Accept assignment and sell OTM calls at the $44 strike price.  The MAR $44 calls are at $0.88 bid.  The MAY $44 calls are at $2.13 bid.

I’m not very fond of #1.  ANF is a good company and will eventually recover.  I would select either #2 or #3.

Regards,

Troy

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

 
%d bloggers like this: