Scanner of the Day: Near-Term Expiration Investable Options

I thought I would start presenting some scanners I have found helpful. Here is my first one. It identifies potential near-term options that I can sell for quick turnarounds. Note that I always go through my list and only take trades where I would be fine owning the stock in case the trade goes south.

Filter Min Max Notes
Option Bid 0.1 If the bid isn’t 0.1, the contract costs will eat up too much of the price.
Days to Exp 15 Looking for short-term options. If you find some, this will compound well.
Stock Last 8 This makes sure the option is a decent % of the stock (because I have to reserve that much cash), and this is the level I play at.
Stock EPS -0.1 This makes sure the stock isn’t just oozing money. If I get stuck the stock they have a decent chance of recovery.
Option % out of the money 1% This is just to make sure I’m not hitting a stock just because it has an in-the-money option (which gives false triggers for the “option bid” filter)

Investment Report – 2018/07/17

Here’s the reality – if you find a system you like, and step outside of it, you could get easily screwed. The most important thing is to learn from it. I sold a PUT option on AQXP because it seemed like instant money, but I’m pretty sure the buyer had inside information on it. Lost a decent bit.

However, my other trades seem to be doing well. Here’s what I have going on:

This was a nice trade. Not sure who was selling this, but it was nice to be profitable with both a call and a put.

Trade Enter Value Notes
SORL 5 4.79 SORL has been bouncing. Expecting good things. Depressed due to Trump’s trade war with China, but, actually, SORL shouldn’t be affected long-term. Should bounce soon enough.
SALM 3.35, 3.98 Sold @ 5.45 Also got a small dividend payment.
SALM 4.72 4.85 Taking advantage of the volatility on this guy. Sadly, no good options for selling.
BCRH 10.40 11.2 Also got a nice dividend. Will hold to 16. This is an insurance company that got hit hard, but seems to be recovering fine.
IRL 12.10 Sold at 11.95 Bought it b/c it was a discount to asset value, but apparently not enough to be worthwhile.
DM 13.33 13.70 Looks like a decent energy company. Has decent option values, too.
Sell-to-Open DM CALL@15 0.63 Doesn’t expire until November. Wish I could have done a more recent one, but oh well. Still new to this. Planning on it being in-the-money, and using the call as a sell vehicle.
MNDO 2.25 2.09 Bought this because there is essentially no debt and the company is doing well and giving a 10% dividend. Stock isn’t doing well because they aren’t growing. I think they are doing well, and will probably branch out to new business when the time is right.
ESIO 16.49 17.85 (TOPPED at 17.50) Company was in a downturn but came out of it, but market was still pessimistic. Unfortunately, this will probably be called away at 17.50 due to my option. Still a nice gain.
Sold ESIO Call @ 17.50 1.05 This limits my upside for ESIO, but, on the other hand, I’m still doing better than otherwise unless ESIO tops 18.50 by mid-August.
Sold ESIO Put @ 15 0.4
Sold MNK Put @ 18 0.5 Probably my most profitable trade just based on the short-term nature of it. Might have been better owning the stock, but that was riskier. Option expired out of the money.
Sold CLSN Put @ 2.5 0.1 Super-small trade but a big winner percentage-wise. It’s possible CLSN could drop, but I don’t think so. I think the current price calculates all of the news in.

Overall, I think I’m doing well. The AQXP trade hurt me considerably, but I’m almost back to where I was. If I can avoid the stupid, I should be able to do well.

However, AQXP and CLSN has me thinking – I wonder if, *after* an event occurs that was pushing option prices up, if perhaps they might remain up temporarily. For example, if there is an announcement on Tuesday, will Wednesday’s option prices still be up significantly (if not as much). I’m thinking that maybe a lot of people are closing out positions early, but leaving good money on the table.

Additionally, I’m looking into some ways to use options to leverage investments more. The problem is that the theta decay (decrease of option value over time) is a killer. So, what I’m looking for is a stock whose appreciation essentially outruns its theta decay by a wide margin. So far, I haven’t found much.