Friday afternoon I decided to pull the plug on the bulk of my short positions by covering (MS) at $52.96, (HZO) at $15.17, and selling my (SPY) Jan 146 calls at a premium of $1.94. By about 3.20pm it became clear that today’s weakness was not going to accelerate significantly in the last hour of the trading day, and therefore, I decided to take some tax losses in my MS short. A bit of patience allowed me to get out of the MS position in better shape, but it was clear that my entry point was going to make this position very difficult to make profitable.
With regard to the SPY Jan calls, I had already expressed my desire to roll the position over to February or March because I dislike holding the front month option due to the steep decline in time value. The last two days worth of drop gave me a better opportunity to close out my January position, and the moderate loss I have taken can also be used for tax writeoff purposes. I will be looking to put on the position again if I can find a better entry point.
Finally, with regard to the HZO, I had increased my put position in the stock a few days ago, and with my increased put position put on at what I consider a pretty solid price, I was looking to exit the actual short position I owned. I see no reason to have a short position in the common and a put position, so I used today’s dip to cover the common at an advantageous price.