If you read my last post “Results week ending 7/29/16” you are aware I was in Boston for Expiration Day and I had wifi problems at my hotel. My 50 contract YELP Call was In-the-Money and I had to make an adjustment trade. I was in the middle of a Roll Out and the wifi went down and the market closed. I was executed on my “Buy to Close” part of my Roll Out but I wasn’t able to finish the Roll Out with the second half which is the “Sell to Open” to complete the adjustment trade. This morning I am back in my office and I just completed the Roll Out. Here are the trades closing one position and opening the second position to complete the Roll Out:
Sell to Open 50 YELP 7/29/16 $30.50 C @ $.35 (+$ 1750)
Buy to Close 50 YELP 7/29/16 $30.50 C @ $1.55 (-$7750)
To complete the Roll Out
Sell to Open 50 YELP 8/12/16 $34.50 C @ $1.50 (+$7500)
I was able to get a good premium while raising the Strike Price to $34.50. The problem is I had to go out 2 week and toward the Expiration Day, YELP will be reporting earnings on 8/9/16. This is a problem and it goes against my rules, but I had no choice. I will watch this closely and do research to try to predict how the earnings report will come out. If I think the earnings will be good I’ll cover my Call. Because of the earnings report, I give this Roll Out a Risk Factor of 5. Remember, trading is never a smooth road. You will run into potholes and many other hazards. When it happens you must stay calm and make adjustments trades. Having said that, I will be glad when this position is closed!
If you have any questions on this Roll Out please send me an email.
Steve
The Options Coach