Book Big Gain in CBI Put Option

By Linda McDonough • March 1, 2017

Chicago Bridge and Iron is wilting despite strength in the industrials group. Take advantage of this weakness and book a solid gain.

Sell to close the March 24, 2017 put on Chicago Bridge & Iron (CBI) with a strike price of $33.50 at $1.90 or higher for a 100% gain. Symbol (CBI170324P33.5).

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Michael S.

03/01/17 ‐ 11:26am ET March 1, 2017 at 11:26am ET

Hi Linda,

CBI put purchase was at $1.40 or lower. It was filled for me at $1.35.
I placed an order to sell at $1.90 as you instructed.

Ronald Towler

03/01/17 ‐ 11:59am ET March 1, 2017 at 11:59am ET

Linda: What am I missing here? As you instructed, I paid $1.35 for that put. how is selling it for $1.90 a 100% gain?

Linda McDonough

03/01/17 ‐ 12:48pm ET March 1, 2017 at 12:48pm ET

Ronald,
My trades are booked on our system with the closing price of the day the trade was place, which was 95c. The options were trading at $1.90 when I issued the sell this morning so you would have still had a 40% gain. I believe they are trading a bit lower currently but the spreads are very wide so I would enter my sell order and wait it out.
Best,
Linda

Guest User

03/01/17 ‐ 12:19pm ET March 1, 2017 at 12:19pm ET

/Users/manicarter/Desktop/Screen Shot 2017-03-01 at 11.13.06 AM.png

This is my very first Option trading. If you can see the attached screen shot, can someone tell me if I am putting the option order correctly?

Guest User

03/01/17 ‐ 12:23pm ET March 1, 2017 at 12:23pm ET

apparently the screenshot copy failed to show. I am using optionhouse to trade options and the ticker was not the same as Linda provided. it shows up as, CBI02417C033500 Sell 1Mar-24-2017 33.50 put @1.35 limit to open.

Linda McDonough

03/01/17 ‐ 12:50pm ET March 1, 2017 at 12:50pm ET

Hello,
It is hard for me to know if the order is placed correctly but the bid/ask for these puts is currently $1.35/$1.60 with them actively trading at $1.55. The spreads on options are quite wide so I would place an order close to the last trade and wait it out.
Best,
Linda

Guest User

03/01/17 ‐ 2:39pm ET March 1, 2017 at 2:39pm ET

Thank you Linda. Sold CBI Mar-24-2017 33.5 put @1.32.

RT

03/01/17 ‐ 3:39pm ET March 1, 2017 at 3:39pm ET

You seem to have the correct symbol, but you want to sell to CLOSE, not open…big difference.

Guest User

03/01/17 ‐ 3:55pm ET March 1, 2017 at 3:55pm ET

it is already filled. what is the implication? where do you chose the close option?

RT

03/01/17 ‐ 4:25pm ET March 1, 2017 at 4:25pm ET

I don’t know the details of how your brokerage trade platform works, so I can’t help you there…it sounds like you now have bought and sold ‘to open’ contracts of the same position…not a generally recommended strategy.

I’d advise you to call your broker and ask them to close all your positions, then do some studying on options. The theory is simple, but the details and practice can be very confusing.

Guest User

03/01/17 ‐ 5:07pm ET March 1, 2017 at 5:07pm ET

You are corrrect, I now have bought and sold ‘to open’. I guess that is why I still do not have the option for sell to close? I will find out tomorrow if I can close on it with not much loss. Thanks.

RT

03/01/17 ‐ 5:42pm ET March 1, 2017 at 5:42pm ET

You will need to close each position in the same account where it was opened. Buy to close the one you sold to open, sell to close the one you bought to open.

Guest User

03/01/17 ‐ 4:19pm ET March 1, 2017 at 4:19pm ET

I understand that I didn’t have the position to close, different account :(. Any advise me on the exit strategy?

Michael S.

03/01/17 ‐ 12:29pm ET March 1, 2017 at 12:29pm ET

I closed my position on CBI.
Sold CBI MAR 24 2017 33.5 Put @ $1.45

John

03/01/17 ‐ 1:02pm ET March 1, 2017 at 1:02pm ET

Linda,

I’m trying to place trade for CBI 3/24 $33.50 strike and I am using 1.30 as that’s what they’re selling for . Is this GTC order or TODAY ONLY ? I keep getting an error code saying I don’t have enough long shares .i choose GTC . Thanks

John

Linda McDonough

03/01/17 ‐ 1:08pm ET March 1, 2017 at 1:08pm ET

John,
You might decide to place the sell order with a higher price and give it a day or two. The company reported weak earnings last night and would be much lower if not for the huge up day in the market today. I don’t think you have to sell these puts today if the price is much below the $1.90 where they were this morning.
Best,
Linda

John

03/01/17 ‐ 1:15pm ET March 1, 2017 at 1:15pm ET

That’s not the issue . I’m getting error saying ‘ account does not have enough long option contracts ?

Linda McDonough

03/01/17 ‐ 1:18pm ET March 1, 2017 at 1:18pm ET

Sorry I cannot help you out with that one. I’d call customer service ASAP and have them enter your trade manually.
Best of luck,
Linda

John

03/01/17 ‐ 1:23pm ET March 1, 2017 at 1:23pm ET

Ok . Thanks

Melody Pfingsten

03/01/17 ‐ 8:15pm ET March 1, 2017 at 8:15pm ET

Linda, with the market going up so much so quickly are you anticipating it to go a lot higher? I am curious if you closed out the position on CBI because you were up a lot or because you think the market is headed much higher?
Thanks,
Melody

Linda McDonough

03/02/17 ‐ 6:49am ET March 2, 2017 at 6:49am ET

Melody,
I closed the CBI position because they reported a disastrous number the night before. They reported 85c, 40% less than the $1.45 expected. Guidance was not great either. The stock was down to $32 early in the day, so the option was in the money and trading at $1.90. Alas, it eventually got swept up with the rest of the market. It is so hard to predict the market’s move but it is feeling a bit stretched. I expect as reality sets in, that despite the president’s big plans, it takes a significant amount of time for any administration to move along the funding. These stocks are behaving as if the money is in the bank already.
Best,
Linda

Daniele Valerio

03/02/17 ‐ 10:22am ET March 2, 2017 at 10:22am ET

Hello

I still have not managed to sell CBI with limit at 1,90 usd. Do I have to wait with the risk of making a loss or entering an unlimited order? Thank you for explaining

Linda McDonough

03/02/17 ‐ 10:34am ET March 2, 2017 at 10:34am ET

Daniele,
The puts are trading around $1.45 so lower than yesterday morning. You still have a few weeks before they expire and they are currently in the money. You could think about putting a stop loss at $1.40 if you want to protect your position while leaving in place a $1.90 limit order for the position. This means if the option drops to $1.40 it will be sold or if it rises to $1.90 it will be sold. If you still hold it one week before expiration I would sell them either way. Feel free to ask again if you have more questions.
Best,
Linda

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