October expiration has passed, so it's time to analyze closed positions and think about new ones for November and December strikes.
Position Recap
The GE calls @ 18 expired worthless. So I keep 100% of the 0.15 premium. Not exactly juicy, but not too bad considering the stock hasn't done much but bounce around since I sold the calls in the middle of September.
The IWM trade flagged on September 2nd and taken on September 4th, brought in an 0.18 credit. These options also expired worthless allowing me to keep the full credit.
November's SPY 92/94 vertical spread is well out of the money. In fact, I tried to close this on Friday for 0.04, but didn't get filled. With the original 0.31 credit, that would've been a fast move. Usually things have to get way out of the money (since it's a spread) to be closed this quickly. Well, the SPY has done so, but not enough for the market makers to give me 0.04 to close the position. If there is another decent move up, I should be able to close it out, which would be nice.
The DEC XLF calls are showing a profit, but I'm getting less comfortable with these as time passes. These calls were essentially a way for me to lock in some gains on my underlying XLF shares. I felt pretty strongly that the financials were in for a set back. Due to earnings, volatility shot up on the XLF and for a short time, the position was at break even. The original credit was 0.41 when the XLF was around 15.35. The XLF is now around 15.15 with the calls trading around 0.18. I'm going to look to close this out around 0.10 and see if I can't catch a wave up and write some calls at 17 or 18 for December. Stay tuned on that.
Looking Forward
Writing calls against GE is my top priority. I don't like the credit offered for November at this point, I think the numbers weren't as bad as the market thought and shows some stability in the company. Maybe it won't happen this year, but I think people will slowly begin to buy up GE again. Hopefully it's next week and I can write a call or two.
The trading system that I write the verticals with isn't on a calendar, it's a mean reversion system, so it could flag trades at any time, but gets triggered on pullbacks. I'm comfortable enough with the wider strikes as I did with the 92/94 put credit spread on SPY. I'll stick with a 2 strike distance and see how that goes for awhile. So far the trading system is 3 for 3. Bill trying outguess the trading system is 0 for 1. Imagine that.
And I'm still paying for the sin of writing puts against C back in 2007. If you weren't with us, my puts were exercised @ 22.50. That's not a typo. So with credits since, my cost basis is still somewhere around $21 which is obviously nowhere near the $4.60 C trades at today. I never bought any more C because I had little faith in the price and my original take was that Citi was big enough to absorb the losses without too much of a hit. I was wrong and have been paying ever since. I decided that since I was wrong that I would not average a loser and held true to that. Now I feel that Citi is stabilizing in price and it's time for me to get some premium. I'll be looking at the $4 puts on another move down or a spike in implied volatility. The worst case is that I'm assigned at $4 which will lower my cost basis for C substantially and possibly get me out of this hole. It will be a happy day seeing C out of my trading account.
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