It’s time to clean out three option plays to make room for new strategies as the market dynamic changes. I am recommending closing out the HCA June 2017 $80 and the Molina June 2017 $55 straddles along with the Biotelemetry May 2017 $21 protective put. Aside from the individual company-related issues, the problem with these straddles is that one leg has gone too far without the other moving far enough in the opposite direction to offset the price impact. As a result, the straddles could deliver big losses as the time premium starts to erode, even if the underlying stock prices reverse course.

Sell Biotelemetry Inc. Protective Put.

Shares of Biotelemetry Inc. (NSDQ: BEAT), a leading provider of cellphone-mediated, telemetry monitoring equipment for cardiovascular patients, has been strengthening lately. As of the March 10  close the stock is up nearly 20% since our Jan. 19  recommendation. The stock looks poised to make further gains, so the put is useless at this point. 

Sell to close May 19, 2017, 21 Biotelemetry Inc. Put Option (BEAT170519P00021000), bought Jan. 19 at $1.95. March 10 closing price: $0.325.

Buy Biotelemetry Inc. (NSDQ: BEAT) up to $25. Bought Jan. 19 at $21.70. March 4 closing price: $26.25. 

Sell Molina Healthcare June 2017 Straddle. Molina Healthcare (NYSE: MOH) is the leading provider of Medicaid HMO health insurance policies, but I believe the Medicaid HMO and even Molina itself are an endangered species given that the newly minted and still unfinished Trumpcare emphasizes Medicaid-funding cutbacks.   

One of the risks of trading options is that you could be absolutely right about the event you’re betting on but the options market refuses to recognize your genius. That’s what has happened to our Molina straddle, a trade we put on in late 2016 on the premise that Trumpcare was going to upend the health insurance market and Molina would not measure up.  So, we were right. Molina’s most recent earnings were a huge debacle, and the stock tanked accordingly. The guidance was terrible, and nothing in the news suggests this company can even stay in business if Trumpcare takes a big bite out of Medicaid, which is Molina’s main source of revenue.

In fact, the stock tanked further on March 10, and insiders are selling. Yet the put option has gained less than it should have due to a lack of interest from traders. By selling it now, we can still come out of the trade with some money whereas holding on to it risks eating into our principle.   

Sell Molina Healthcare June 2017 Straddle.

Sell to close Molina Healthcare June 16 $55 Call Option (MOH_06162017C55) up to $8. Bought Dec. 7, 2016, at $8. March 11 closing price: $0.85

Sell to close Molina Healthcare June 16 $55 Call Option (MOH_06162017P55) up to $8. Bought Dec. 7, 2016, at $7.80.  March 4 closing price: $10.30

Initial straddle value: $15.80.  March 10 closing value: $11.15.  

Sell HCA June 2017 80 Straddle.

We picked HCA Inc. (NYSE: HCA) as part of our Trumpcare straddle strategy because HCA is the world’s largest hospital corporation.. But the put side of this trade has fallen significantly in price, while the rally in the call side has not been big enough to offset the decline in the put. Now, as the uncertainty rises in Congress over what will replace Obamacare, the call is vulnerable to a price decline. Yet, there is little activity in the put, which means that unless HCA collapses as a company, which is extremely unlikely, the call will start to fade while the put lingers. Because the loss is fairly small, to manage the overall risk of the trade I recommend closing out of the entire position.

HCA June 2017 Straddle

Sell to close HCA June 16 2017 $80 Call (HCA170616C00080000) below $6. Bought on Dec. 12, 2016, at $3.50.  March 10 closing price: $8.05

Sell to close HCA June 16 2017 $80 Put (HCA170616P00080000) below $12. Bought on Dec. 12, 2016, at $9.80. March 10 closing price: $2.02.

Initial straddle value: $13.30.  Straddle value on March 4: $10.07

—Joe Duarte

A Growing Global Population Is Good News for Trimble

The value of investing in agricultural technology is obvious. The world’s farmers already have to feed nearly 7.5 billion people, and the global population keeps growing. In fact, the United Nations estimates that global food production must double by 2050 to avoid mass famine. That’s a pretty tall order, especially because if a crop takes 90 to 120 days to grow and mature, there’s not much you can do to speed that up.

Genetically engineering seeds can shave a few days off of a plant’s growth cycle but that’s not enough. In any case, there’s growing resistance from consumers to genetically modified foods. So the best use of agricultural technology is to allow farmers to leverage their time and stretch their resources.

That’s why Trimble (NSDQ: TRMB) is such a great play for investors interested in the ag tech sector. Although ag tech only accounts for about 15% of revenue, Trimble is considered a leader in farm automation technologies. By using the company’s precision mapping technologies, Trimble has found that farmers can maximize yields even when they use 10% less seed by planting in the most efficient pattern possible. When farmers also follow Trimble’s recommendations, like self-driving tractors and combines, their input savings jump to 20%. Meanwhile, the company’s water management system, which monitors fields and directs irrigation to the driest areas, helps farmers reduce their water consumption as much as 30%.

For farmers, that’s the perfect solution. Automation frees them to devote more time to the fields and crops that need it, while an input management system allows farmers to do more with less seed, fertilizer and water. With agricultural commodity prices still low, particularly for wheat and corn, farming more efficiently boosts yield and profits—leaving farmers with more money to invest in more automation.

Profit margins were a bit squeezed for Trimble’s field systems division last year because of the mix of products sold, but revenue was up 5% from strong global demand. In fact, while North American sales were sluggish (again, crop prices are low), the company had double-digit growth in nearly all other regions. Ag tech and automation aren’t just a North American phenomenon; farmers from sub-Saharan Africa to South America and across Europe and Asia see the value of these systems. That value, along with the reality that the world will always need more food, will continue propelling Trimble higher.

Buy Trimble up to $36.

—Benjamin Shepherd