Moments ago, I decided to take profits on Costco (symbol COST) because my March $550 puts have a 75% profit and they are announcing earnings on Thursday after the close. Just before I clicked the Sell button, however, I glanced over at my spreadsheet and noticed that 94% of the value of my puts was intrinsic. In other words, I’m paying virtually nothing for the uncertainty between now and March 17, which is over 100 days from now! I’m going to therefore stay put. It COST goes rocketing, oh, well, too bad, but my rational for dumping based on the earnings has been dispatched. I remain in position.
