The reaction by the market to this week’s events was expected and unexpected. The CPI report came in looking better and market traded higher. The Fed raised rates by 0.50 as expected and the market sold-off. And today is the “Triple Witching” day each quarter and the market is down again.
We have few last positions to manage before the weekend. Let’s get to them.
Blackstone (BX): 74.11
Blackstone continues to take hits in their real estate markets. The implied volatility remains high and the premiums are there but the stock is way underperforming. We will do a deeper review of Blackstone next week with an eye towards how do manage this position in 2023.
For now, our 16 Dec 98 call is way out of the money. Let it expire worthless and we will sell a call when the stock moves higher.
ACTION: No Action.
Cardinal Health (CAH): 78.43
Cardinal Health stock benefiting from the retreat to healthcare stocks. We can roll our call out two weeks and collect a solid credit.
ACTION: Roll the CAH 16 Dec 77.50 put to the CAH 30 Dec 77.50 put for a net credit of 1.10 to 1.15
Buy to close CAH 16 Dec 77.50 put
Sell to open CAH 30 Dec 77.50 put
CF Industries (CF): 94.34
CF Industries has taken its first hit since July of this year. There is still plenty of volatility in the options for us to roll our 16 Dec 99 put out two weeks and collect a solid credit. Let’s do it.
ACTION: Roll the CF 16 Dec 99 put to the CF 30 Dec 99 put for a net credit of around 1.00 to 1.10
Buy to close CF 16 Dec 99 put
Sell to open CF 30 Dec 99 put
IBM (IBM): 139.25
IBM stock has been trading independently of the tech sector until this week and our 16 Dec 144 put has gone in the money. Unfortunately, there is not enough volatility in the stock to roll this out and down for a credit. Let’s roll our calls out two weeks at the same put strike.
ACTION: Roll the IBM 16 Dec 144 put to the IBM 30 Dec 144 put for a net credit of around 0.45 to 0.50
Buy to close IBM 16 Dec 144 put
Sell to open IBM 30 Dec 144 put
Rio Tinto (RIO): 68.98
Rio Tinto stock has bounced back faster than expected even as prices in the commodity sector are coming in all over the place. We still think this stock will trade lower again, but we will need to roll our call out one more month and at a net debit to avoid assignment. The January monthly option has weird price strikes but there is plenty of trading volume to get filled.
ACTION: Roll the RIO 16 Dec 60 call to the 20 Jan 61.60 call for a net debit of -0.75 to -0.80
Buy to close RIO 16 Dec 60 call
Sell to open RIO 20 Jan 61.60 call
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