We have three short puts expiring next Friday, two of which (Huntsman and Prologis) are comfortably out-of-the-money and should expire worthless (which is what we want to happen).

However, our short put on Macy’s is currently deep in-the-money and will most likely be exercised against us barring a 20% jump in its share price within the next week. Macy’s share price took a hit a month ago when the company announced its holiday sales results and reduced its Q4 guidance as a result.

If Macy’s ends up being put to you (or has been already), I advise hanging on to it and writing a covered call. When we issued that Trade Alert in November, we sold a put at the $30 strike price for a limit price of $1.75. That works out to a net cost basis of $28.25. As of yesterday’s close, we could sell a call at the $27 strike price expiring on May 17 for a premium of $1.60. If that option were exercised against us then the next proceeds would be $28.60, producing a small profit on this position.

Macy’s is scheduled to release its Q4 and year-end results the last week of this month. Since it has already guided lower for revenue and earnings, it is unlikely the company will fall short of the revised figures. However, any unexpected good news could push its share price higher. For that reason, you may want to consider waiting until after those results have been made public to write a covered call against it.

Of course, we still have one more week to go before our current put expires so I will wait until then to revise the portfolio for the results of all three of these positions.