Investor Questions – Buy To Close and Sell To Open On Starbucks Stock (SBUX) Options – July 28 2017

With the collapse of Starbucks today, not everyone was long the put options. Some were short the put options and are now holding in the money positions that are at risk of stock assignment.

An investor emailed who is holding the Aug 18 $45 puts long but is short the July 28th $55 puts which will expire today and result in stock assignment unless the stock can recover above $55. That seems unlikely. He is seeking some tips. Here’s his question:

 Investor Questions

I currently hold the following diagonal spread in SBUX:

Long 8 Aug 18th $45 puts

Short 9 July 28th $55 puts

I originally received $0.29 net premium.

I have two questions,

1) do you see further downside today?  I am wondering when I should Buy to Close the short puts.

2) should I wait until next week to sell puts using my Aug 18th long puts or should I do it today.

Thanks for you attention!

Tom

Some Answers

There are numerous strategies that can be applied to this kind of problem. The key is staying flexible and do not panic in a downturn. Starbucks is a company that shows great promise as it continues to expand in China. With the knowledge that this stock is not going to disappear, an investor can enter any number of rescue and repair strategies. Here are a few trade ideas and tips that focus on protecting the capital in use while still continuing to provide an income through selling options.

  This Starbucks Stock (SBUX) Trade Alert and Strategy Article is for FullyInformed Members.

Starbucks Stock (SBUX) Repair and Rescue Tips For July 28 2017

Disclaimer: There are risks involved in all investment strategies and investors can and do lose capital. Trade at your own risk. Stocks, options and investing are risky and can result in considerable losses. None of the strategies, stocks or information discussed and presented are financial or trading advice or recommendations. Everything presented and discussed are the author’s own trade ideas and opinions which the author may or may not enter into. The author assumes no liability for topics, ideas, errors, omissions, content and external links and trades done or not done. The author may or may not enter the trades mentioned. Some positions in mentioned stocks may already be held or are being adjusted.