Update: May Expiration - Here Are Your Details Inside

May 15, 2020

Happy May Options Expiration Friday!

We have two option positions that expire today.

There’s nothing you need to do, but I will address those in a few minutes.

We’re seeing odd price action today because it’s monthly options expiration, which is like a leaf blowing around.

This happens because option positions that expire in-the-money on today’s market close need to be rolled forward or closed.

All three major indices are ending the week lower as financials continue to weigh on the S&P 500.

Looking at the market Vs. the economic impact of the virus is the complete opposite.

Layoffs continue with another 3 million reported this week, bringing the total to 33.5 million Americans without work.

Ending the shut down is long overdue, but it feels like we are living in an episode of the Twilight Zone.

Earlier, I read an article that a Michelin 3-Star restaurant will sit mannequins at tables to make social distancing less lonely.

That disconnect is due to the fed flooding the markets with money and purchasing assets.

That’s why when it comes to being active in the markets, we must do our best to ignore the noise and our opinions.

Winning is the only thing that matters!

With this week’s weakness, the fear gauge for the S&P 500, known as the CBOE Market Volatility Index (VIX) is holding at 32.

Volatility does create opportunity as we saw last week with closing out two winners.

Unfortunately, this week we end on the wrong side with two positions that will expire worthlessly, so let’s talk shop.

Portfolio Update

On Monday: 

  • Buy-to-open the Virgin Galactic Holdings, Inc. (NYSE: SPCE) May 29, 2020, $25 call (SPCE200529C00025000) up to $0.75 per contract or better, for the day.

On Friday:

  • Buy-to-open the Snap Inc (NYSE: SNAP) May 29, 2020, $18.50 call (SNAP200515C00018500) up to $0.28 per contract or better, for the day.

Right now, our open positions are:

  • Snap Inc (NYSE: SNAP) May 29, 2020, $18.50 call (SNAP200515C00018500) 
  • Virgin Galactic Holdings, Inc. (NYSE: SPCE) May 29, 2020, $25 call (SPCE200529C00025000)
  • GOODYEAR Tire & Rubber Co. (NASDAQ: GT) July 17, 2020, $5 put (GT200717P00005000)
After-Action Report
 
Hyatt Hotels Corp. (NYSE: H) May 15, 2020, $35 put
 
Date: April 13, 2020
 
Reason: Our system spiked on sure bet activity that would cause shares to continue to drop lower.
 
Outcome: Expired worthless.
 
Notes: This is a frustrating loss. Not only did we have big money, but fundamentally I believed more weakness in prices would continue. But, the market is being propped up by the fed’s printing machine, and by the time this starting to move lower, too much time passed. The bad guys got us on this one, but we’ll get em’ on the next one.
 
Huazhu Group Limited (NASDAQ: HTHT) May 15, 2020, $25 put
 
Date: April 7, 2020
 
Reason: Our system spiked on sure bet activity that would cause shares to continue to drop lower.
 
Outcome: Expired worthless.
 
Notes: This is another frustrating loss. This company deals in the hospitality business in mainland China. Every time this opened lower, it reversed off the lows. We never had a continued sustained move that allowed us to profit. The bad guys got us on this one, but we’ll get em’ on the next one.

As always, keep sending your questions and feedback to [email protected]

Have a great weekend and I’ll have a new trade for you on Monday morning.

Joshua M. Belanger
Joshua Belanger is founder of CounterVest and the editor of Hot Money Trader. He has been providing ordinary investors blockbuster returns since 2008. In 2018, the average return of Hot Money Trader beat the markets by over 15%