Our February 2015 options expire on Friday. The raptor recommended writing: RDS-B 65, CVX 105, BP 36, and HSBC 48.
Our three oil plays have all outperformed as the price of oil has recovered. Shell is at 68.64 and will be called away. Chevron is at 112.38 and will be called away. British Petroleum is at 41.42 and will also be called away. Our capital will be returned to us, we will pick up a few cents in capital gains, and the options premiums are ours to keep. A triple whammy!
Our diagonal call is also performing as expected. We bought the long date 30 call to open our position when the spot price was at 45.24 and the asking price is now 46.15. That is 91 cents in capital appreciation on only 15.29 in capital at risk or almost 6 percent in just a month. Our total gains including the options premium are 1.06 on 15.29 at risk (for 32 days!) That comes out to 79% annualized and counting. We will look to roll the position out to the March expiry on Monday on the 49 or 50 strike depending on market action (called “rolling up and out.”) Any option premium will be our to keep win lose or draw and any additional capital appreciation will be leverage about 3 to 1 in our favor.
Devour your prey, raptors!