Spread in WMT was threatened, DAL was assigned early.
music selection: “Hocus Pocus” — Focus
Most of my in the money net debit spreads will be carried to expiry and auto-exercise for the maximum profit. Sometimes, when the shares are deep in the money or there is a dividend due, shares will assign early. And sometimes, the price action moves against me and it makes sense to close early to limit my risk.
With Walmart (WMT), I entered the trade with the one month trend chart confirming that shares were headed down and a bear put spread was indicated. That trend reversed and shares were within one percent of moving out of the money. I decided to close early rather than be caught hanging as the chart was now against me. I originally bought the 120/125 strikes bear put spread on 21JAN2020 for 4.29 a share. I sold today for 4.72 a share. I booked 245 dollars in profit on 5 spreads over 29 days. That was good for 11% gain or 144% annualized. Not bad for a position that moved against me.
I had 10 bull call spreads open on Delta Air Lines (DAL) since 16DEC2019. I had the 50/52.5 strikes and entered at about 2.18 per spread. I had 4 contracts assign early. I was unable to catch a bid to get extra profit out of the remaining time value on the hedge so just exercised my calls for the full profit originally available. I earned 245 on 874 capital at risk over 65 days. That was good for a gain of 28% or 157% annualized. The six remaining spreads expire in March.
Devour your prey raptors!