Thursday, June 01, 2017  2:46:13 AM

Buy the Dip

by Jim Brown

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Review prior updates here: 2014  2015  2016  2017 
Traders are waiting patiently to buy the dip, but there are no material dips.

The one-day crash on May 17th was the only material dip we have had since March 21st and that was the only dip since early November. Volatility has disappeared. While bond funds are still seeing the most inflows of cash according to Bank of America, cash is still flowing into equities as well.

With ten-year yields at 2.19% and on the verge of a six-month low, "there is no alternative" to stocks. This has spawned the acronym TINA. If you want more than 2% return you have to have equity risk.

Apparently there is very little risk in equities either. The lack of material declines and every intraday dip is bought, has put traders on edge. They want to see a dip and then again they don't. If one was to appear, is it the beginning of a larger decline?

This lack of conviction is keeping us in a narrow trading range, despite the minor uptick last week that saw the S&P make a new high last Thursday. There is just enough conviction to buy the dips but not enough to really start a new leg higher.

On Wednesday, the big cap tech stocks actually declined. That was the first dip since the 17th and it was minimal with the NDX only losing 5 points. People are afraid they are going to miss the next big move so they are buying any weakness rather than actually wait for a material decline.

They say the trend is your friend until it ends. Paul Singer, CEO of Elliott Management, said when it ends, it will end badly. However, he has been bearish on the market for a long time and it just keeps going higher.

Now that earnings are over, we have about 30 days to capitalize on the lack of headlines and the ability to reach out a little bit in duration. I am trying to be more conservative in my recommendations because we are eventually going to get one of those dips that can clear the board of all existing positions. We lost two energy positions last week when the OPEC announcement turned into a sell the news event.

The 2,400 level should now be support on the S&P with 2,420 as short-term resistance. The long-term resistance is 2,445-2,450.


The Dow fell back to 20,940 at the open on Wednesday but rebounded to lose only 20 points and close back above 21,000. That is our line in the sand that we need to watch for market direction.


The Nasdaq Composite set a new intraday high at the open then fell -57 points intraday only to rebound and close with a loss of 5 points. The dip was bought.


We could see some volatility over the next couple days if the payroll reports miss estimates. This will impact the Fed's decision-making process when they meet on the 14th to hike rates. Unless something changes, I do not expect a big increase in volatility. There is too much money on the sidelines for a major decline to occur.

Enter passively, exit aggressively!

Jim Brown

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Current Portfolio


The fourth column in the portfolio graphic is the earnings date. We will always exit a position before that date unless specifically mentioned otherwise in the play description.

Lines in blue were previously closed.

Current positions

Unopened Positions

Covered Calls



Current Position Changes


TSLA - Tesla (Short call closed)

Last week it appeared that Tesla was about to rebound and I recommended we close the short call at the open on Thursday. That was the right call with TSLA shares rising $35 over the last week.

The long call is now profitable but with Tesla making new highs every day, I am leaving it open with a stop loss. Who knows, this could be a home run if the trend continues.

Closed Jun $350 short call, entry $2.44, exit $1.02, +$1.42 gain.
Retain Jun $370 long call, entry $1.00, currently $1.90. Stop loss $332.25.



EPZM - Epizyme (Covered Call)

Our luck ran out on EPZM. The stock finally picked a direction and it was straight down. We were stopped out of the second position on Tuesday for a minor loss. We still gained $2.05 on the combination of the two positions.

Position 5/22/17:
EZPM shares, entry $17.85, stopped $14.85, -3.00 loss.
June $17.50 call, entry $3.30, stopped $.90, +2.35 gain.
Net loss 75 cents.

Previously closed:
Called EPZM shares, entry $15.00, exit $17.50, +$2.50 gain.
Called May $17.50 call, entry .30, called, +.30 gain.
Net gain $2.80



EOG - EOG Resources (Put Spread)

The sell the news event on the OPEC announcement caused oil prices to drop 5% on Thursday and stopped out the short side on the EOG position for a breakeven. The long side is still open and once oil prices begin to rebound we will sell a new put. I am going to make the recommendation now to reload the short with an EOG trade at $92.50.

Closed July $85 put, entry $1.18, exit $1.18, no gain.
Retain July $70 long put, entry .23, currently .08. No stop loss.

With an EOG trade at $92.50

Sell short July $85 put, stop loss $87.85.



PXD - Pioneer Natural Resources (Put Spread)

Pioneer declined with the energy market on the big drop after the OPEC announcement. We were stopped out at $168.55. Since we still have a long July put I am recommending we reload this position with a PXD trade at $170.75.

Closed Jun $160 short put, entry $1.80, exit $1.26, +.54 gain.
Retain Jun $145 put, entry .50, currently .25, no stop.

With a PXD trade at $170.75
Sell short Jun $160 put, currently $1.20, stop loss $165.35.



MU - Micron (Covered Call)

We had a May covered call on Micron that expired. Over the last week, the stock has rallied and I am recommending a new call to replace it. If you want to reach out to July, the premium is more than double.

Sell short Jun $31.00 call, currently 87 cents, stop loss $28.85



AMD - Advanced Micro (Covered Call)

We had written multiple calls on AMD before it declined. Shares are starting to recover again but we need them to move back into the $12.50 range before we can sell a new call.



SLCA - US Silica (Covered Call)

Silica is fighting the drop in crude prices just like the rest of the energy stocks. We need for SLCA to move back over $48 before we can sell a new call. I have faith that will happen because their business is booming and we are moving into the high demand driving season and oil inventories will continue falling. We just need to be patient. Shares were up 4% today.



VIX - Volatility Index (Call Spread)

We have an unopened call spread on the VIX and I have given up on volatility returning to the market. We have not seen the VIX much over 16 since November. Normally there is a bounce to 18 or higher every couple of months. I am cancelling the recommendation. That is a guarantee there will be a volatility event next week.

Cancel the July VIX Call Spread recommendation.



New Recommendations


COST - Costco (July Put Spread)

Costco shares spiked on an earnings beat, rested one day and are heading higher. Analysts are giddy about Costco's prospects.

Earnings Aug 25th.

Sell short July $175 put, currently $1.55, stop loss $177.35
Buy long July $165 put, currently .45, no stop loss.
Net credit $1.10.



AAOI - Applied Optoelectronics (July Short Put)

AAOI continues to defy skeptics and the stock seems to gain strength on every negative headline. With earnings expectations at $5 and a PE of 20 that would put the stock at $100 but nobody is projecting the price that high. They are not doing the match or they simply do not believe the numbers.

Earnings Aug 3rd.

Sell short July $50 put, currently $1.40, stop loss $59.50.



ILMN - Illumina (July Short Put)

The company posted decent earnings but only met estimates. That is good for a decline every time. Shares have pulled back from $189 to $173 and a textbook support test and now they are rebounding.

Earnings July 25th.

Sell short July $165 put, currently $2.15, stop loss $171.85



New Covered Call Recommendations


No New Calls

Check the big list below for potential covered calls.


Other Potential Plays (Spreads, Covered Calls, Naked Puts)


These are not official plays but a good place to start if you are looking for something else to trade.

June expiration is the 16th. July expiration is the 21st.



Existing Positions (Alpha by Symbol)

THESE ARE NOT CURRENT RECOMMENDATIONS. These are prior recommendations that are still active in the portfolio. Do NOT act on the plays described in this section. This is the archive of prior recommendations in the current portfolio.


AMD - Advanced Micro Devices

AMD was left for dead multiple times over the last several years. They have reinvented themselves and are becoming an actual competitor for Intel and Nvidia. They beat on earnings and have several new products in the delivery stream.

Earnings May 2nd.

Buy-write Mar $14 call, currently $13.56 and $.80, stop loss $11.85
Gain if called $1.24

Update 3/22/17: AMD closed on Friday at $13.49 and we had sold a $14 call. That call expired worthless and we need to resell an April call. Shares ar moving slowly higher and you have the option of selling the April $14 call for 97 cents with AMD at $14.10 or selling the $15 call for 58 cents and hoping to get an additional 90 cents of stock appreciation over the next three weeks. I am recommending the $14 call because the higher premium provides a little more insurance against a dip. Support is $13.

Expired Mar $14 call, entry .90, expired, +.90 gain.

Sell short Apr $14 call, currently .97, stop loss $12.85.

Update 4/12/17: AMD took a beating from Goldman with a sell rating and $11 price target. Shares have declined to $12.75 and our short call is worthless. I am recommending we close the April call and sell a May call.

Close Apr $14 short call, entry .95, currently .08, +.87 gain.

Sell short May $13 call, currently $1.06, no stop loss.

Previously closed: Mar $14 call, entry .90, expired +.90 gain.

Update 5/3/17: AMD shares imploded after earnings and declined -$3.50. There was a minor rebound today but not enough to reflate call premiums. We have sold 3 calls on AMD over the last two months. I am recommending today that we close the current $13 call and buy a May $10 put to protect us from further declines. I believe AMD will turn around because of their new Ryzen 7 server processor. We just need to wait until the stock rebounds slightly to sell another call. We have received $2.70 in call premiums to date compared to the $3.39 decline in the stock price so we are still in good shape.

Close May $13 short call, entry .97, currently .04, +.93 gain.
Buy May $10 put, currently 35 cents, no stop loss.


CLVS - Clovis Oncology (July Short Put or Put Spread)

Clovis has a decent chart with a rebound forming out of the early May dip. They posted a gain of nearly $1 despite the market crash.

I am reaching out to July strikes so I can get some decent premium well out of the money.

I like this as a naked cash secured put. The premium of $2.55 is excellent and it is $15 out of the money. If you want to turn it into a spread then add the $22.50 put as a long.

Earnings August 2nd.

Sell short July $35 put, $2.55. stop loss $41.45

Optional:

Buy long July $22.50 put, currently .85, no stop loss.
Net credit $1.70


CLVS - Clovis Oncology (July Short Put)

Option premiums are extremely high for Clovis because of the ASCO meeting next week. The bar is high and Clovis will be making four presentations on their main cancer drug Rucaparib. They are expected to show strong progress in the clinical trials. Shares are rising and closed at a 4-week high on Wednesday.

Earnings August 2nd.

Sell short July $40 put, currently $3.20, stop loss $47.35.


EOG - EOG Resources (July Put Spread)

EOG reported earnings this week and said it was going to increase production 18% and increase cash flow even at $47 oil. EOG is known as the "Apple of the oil patch" because of the apps they created for their workers phones. It is like having a control room in your pocket according to the CEO. Shares spiked to $95 on the news.

Earnings August 7th.

Sell short July $85 put, currently $1.02, stop loss $89.50
Buy long July $70 put, currently .30, no stop loss.
Net credit 72 cents.


EPZM - Epizyme (May/June Covered Call)

This is a crazy play but the premiums are there. The stock is $16.65 and the May $17.50 call is $1.65 with one day until expiration. If that premium still exists at the open on Thursday, I would sell the May call. If the call expires as expected, immediately sell the June $15 or $17.50 call depending on there the stock opens on Monday. If it is over $15.50 then sell the $17.50 call. If it is under $15.50 sell the $15 call.

Earnings August 7th.

Buy-write EPZM May $17.50 call, currently $1.65, stop loss $14.85.

If not called on Monday:

Sell short June $17.50 call, currently $3.00 if EPZM is over $15.50.

OR

Sell short June $15.00 call, currently $4.30 if EPZM is under $15.50.

Stop loss $13.85.

Update 5/23/17: This was a double play. The May premiums were still high last Wednesday and I recommended selling a May call at the open on Thursday and then reloading the call on Monday depending on where the stock was priced between the $15 and $17.50 strikes. The play did not go exactly as planned but it worked out in our favor.

The premiums collapsed from $1.65 to 30 cents at Thursday's open, which was not surprising because the stock dropped $2 at the open. The plan was entered at $15-0.30 using the $17.50 May strike. Unbelievably, the stock spiked to $18.50 on Friday and closed at $17.90 to call us out on the position for a $2.80 gain.

The plan was to reload the position on Monday. The stock opened at $17.85 and the $17.50 call at $3.30. As long as EPZM remains above $16 we have a great position in progress.

Called EPZM shares, entry $15.00, exit $17.50, +$2.50 gain.
Called May $17.50 call, entry .30, called, +.30 gain. Net gain $2.80

Position 5/22/17:
EZPM shares, entry $17.85, stop loss $14.85.
June $17.50 call, entry $3.30, stop loss $14.85


EXEL - Exelixis Inc (June Covered Call)

EXEL reported earnings of 5 cents that beat estimates for 1 cent. Revenue of $80.9 million beat estimates for $65.6 million. Shares spiked to $24 on then news then pulled back for a week. Now they are rising again. Decent support at $21.50.

Earnings July 31st.

Buy-write June $22 call, currently $22.12-$1.20, stop loss $20.85.
Gain if called $1.08.


FB - Facebook (July Put Spread)

Facebook shares imploded with the market but this is temporary. The company is growing earnigns at 35% and revenue at an even faster rate. With price targets at $175 the stock is not going to fall below support. There are too many investors waiting to add it to their portfolio on any dip.

Earnings Aug 2nd.

Sell short July $135 put, currently $1.68, stop loss $138.85
Buy long July $125 put, currently .55, no stop loss.
Net credit $1.13.


ILMN - Illumina (Put Spread)

Illumina reported earnings and revenue that roughly matched analyst estimates but the guidance was strong and the story was better. They recently spun off a company called GRAIL and profited from the sale of partial ownership. They launched a new product called VeriSeq for non-invasive prenatal testing in Europe. More than 135 NovaSeq systems were ordered in Q1 and they cost up to $1 million each. They guided for 10% to 12% revenue growth in 2017 and GAAP earnings of $5.26-$5.36. Shares have been moving up steadily since the April 25th earnings.

Earnings July 25th.

Sell short June $175 put, currently $2.20, stop loss $180.85
Buy long June $160 put, currently .80, no stop loss.
Net credit $1.40.

Update 5/10/17: Shares hit a new intraday high on Friday and then fell $10 in four days on no news. Sometimes traders just need to take profits. This stopped us out of the short side for a steep loss. If the shares start to rise again I will replace it with a new short.

Closed June $175 short put, entry $2.21, exit $4.20, -1.99 loss.
Retain June $160 long put, entry .81, currently .55, no stop loss.


MU - Micron Technology (Covered Call)

Micron reported better than expected earnings and raised guidance. Shares spiked then rolled over in the semiconductor meltdown last week. They are starting to rise again. The company said memory prices were up an average of 20% last quarter and they expected prices to continue to rise due to a shortage in the market.

Earnings June 22nd.

Buy-write May $27 call, currently $27.25-$1.25, stop loss $25.25
Gain if called $1.00.


NFLX - Netflix (June Put Spread)

Netflix reported earnings last week and shares crashed back to $138 intraday on what some called weak guidance. They immediately rebound as analysts began to pound the table on the stock. Several days after earnings the CEO tweeted they had exceeded 100 million subscribers. They guided to add 3.2 million in Q2 and analysts now believe that was a lowball number. Multiple analysts have raised price targets to the $175 level.

Earnings July 17th.

Sell short June $140 put, currently $1.73, stop loss $143.00
Buy long June $130 put, currently .57, no stop loss.
Net credit $1.16.


NFLX - Netflix (July Put Spread)

Netflix set a new high over $160 two days before the market crash. Shares dropped sharply to $153 and rebounded just as quickly. The stock as stalled about $158 as it consolidates the gains from the last four weeks. Rumors of interest by Disney, Apple and Amazon continue to provide support.

Earnings July 17th. Before expiration on the 21st.

Sell short July $140 put, currently $2.29, stop loss $148.85.
Buy long July $120 put, currently .53, no stop loss.
Net credit $1.76.


PXD - Pioneer Natural Resources (June Put Spread)

Pioneer reported earnings that beat on both earnings and revenue and predicted a strong increase in production the rest of the year. Shares rebounded back above prior support after crashing through on the sharp drop in oil prices the past Thursday. Pioneer is the cheapest producer in the Permian.

Earnings August 2nd.

Sell short June $160 put, currently $1.85, stop loss $165.85.
Buy long June $145 put, currently .50, no stop loss.
Net credit $1.35.


SLCA - U.S. Silica Holdings (May Covered Call)

SLCA has found a bottom along with oil prices. Now that refineries are restarting and producing summer fuel blends, oil inventories will decline and prices should rise. This will continue to lift the energy sector. SLCA produces sand for fracking oil wells. Sand prices have doubled over the last 12 months and are expected to go up another 25% by fall. Some analysts are predicting a sand shortage late this year and early 2018. That will lift prices even higher.

Earnings May 24th.

SLCA has solid support at $43 when oil was crashing throughout March. If we are not called we will sell a new call.

Buy write SLCA May $50 call, currently $47.84-$2.25, no stop loss.
Net gain if called $4.41.

Update 4/17/17: SLCA shares imploded over the last week along with the price of oil. On Wednesday alone, crude prices fell -$1.83 to knock -$2.34 off the price of SLCA. I am not the least bit worried about SLCA long term. Sand prices have doubled over the last six months and they could double again over the next year. The decline in SLCA shares was directly related to the fall in oil prices and that trend is about over. Refiners are back at work and crude inventories are going to start declining rapidly as they gear up for summer blend fuels. I would not have any problem selling a call or put at this level at this point on the calendar.

We do not have a stop loss on the SLCA covered call because of the calendar bias for oil prices to rise starting in late April through July.

No change in the position.


SLCA - U.S. Silica Holdings (Short June Put)

We already have this as a covered call that is significantly underwater. However, they reported strong earnings this week and guided for 20% earnings and revenue growth for the foreseeable future. The stock is going to move higher as soon as oil finds a bottom, which is always does in late April, early May because of the demand cycle.

Strong guidance on earnings call. Earnings gudiance

I am recommending a slightly in the money put at $45 but the premium is $3.80. It is $1.94 in the money so the market maker cannot just put you the stock or he loses $1.86. If you were put, just repeat the process and you make $1.86 every time. Trust me, they will not put it to you. You have to be prepared in case they do but 99 times out of 100, they will not do it.

Earnings July 24th.

Sell short June $45 put, currently $3.80, no stop loss.

Update 5/3/17: Covered Call Update: Silica shares have collapsed. The stock has declined $11 in the last two weeks despite strong earnings and stronger guidance. Making the situation worse was a big earnings miss by Emerge Energy Services (EMES) reporting a loss of 38 cents compared to estimates for 34 cents. EMES misses estimates 58% of the time so a miss is not uncommon. However, it does impact the other two stocks in the sector, SLCA and HCLP. Emerge said total sand volumes rose 185% to 1,251,000 tons. We know from other reports that sand prices have doubled over the last six months and are expected to double again over the next six months.

Also, Dan Loeb's hedge fund Third Point is shorting the frac sand distributors. Third Point said there could be a shift from northern white sand to abundant in-basin brown sand. They warned there were new sand reserves being developed and there were significant reserves on the sidelines that had been deactivated during the slump. SLCA debunked all those excuses in their earnings report. They said frac sand revenue rose 161% YoY and 41% from Q4.

Comments from the conference call: Our comments last quarter and other industry capacity expansion announcements have created questions for some investors over the potential future supply and demand balance of sand proppants and the implications for pricing and other industry dynamics. Let me take a few minutes this morning to share some thoughts on how we see this unfolding and why we believe that the sand proppant market fundamentals should say strong for the foreseeable future.

We believe our industry will remain tight in the near future due to 3 main factors: First, our industry must add capacity to meet customers' needs. Our internal estimates and current sell side reports estimate industry sand proppant demand to be about 75 million tons here in 2017, growing to over 100 million tons in 2018, with some estimates as high as 147 million tons.

Our industry will be short capacity and we cannot let sand become the bottleneck for the completions industry. Second, oil sand is not fungible within that 100-million-plus tons of projected 2018 demand. Unlike many industrial products, there is a lot of friction in the sand market for a variety of reasons, including logistics, quality differences and mesh sizes. Therefore, we're on average to see 20% to 25% more total supply than demand before our markets come into balance. So for example, if 2018 demand is 110 million tons, that implies that supply and demand balance around 135 million tons of effective capacity. Today, even after estimated reactivations of idle capacity, our industry will only have approximately 90 million tons of effective capacity, thus leaving a 45-million-ton shortfall versus projected 2018 needs. And third, even all the likely capacity additions that are being talked about are not enough. We think there could be an additional 10 million to 15 million tons of brownfield capacity added in the next 12 to 18 months, including our own expansions and perhaps as much as 20 million to 25 million tons of greenfield capacity being added locally in the Permian. All of which will be needed, if current demand estimates prove accurate. Even if our estimated 35 million tons of potential brownfield and greenfield additions come online, the market will still be short.

Full transcript HERE

I cannot fix the current covered call. I am recommending we close it but call premiums are depressed and I am not going to recommend selling a new $40 call today because that would lock in our loss on the first rebound. We need to wait for the rebound to inflate premiums then sell a new call in the $45 range.

We cannot buy a put to protect against further declines. The put premiums are too expensive. You could close the position, take the loss now and then buy back in when the stock rebounds.

Close May $50 short call, entry $2.40, currently .04, +$2.36 gain.
Retain SLCA shares.

Update 5/3/17: Short Put Update: If you read the prior commentary, you know the facts on SLCA. We have a June $45 short put that is under water. We sold it for $4.50 last week. I am recommending we turn this into a spread to protect against a further decline. This will reduce our eventual gain but it will ease the pain now.

Buy June $37 put, currently $2.55, no stop loss.
Retain June $45 short put, entry $4.50, currently $8.00.


TSLA - Tesla Inc (June Call Spread)

Tesla shares may have finally found a top. The earnings loss was significantly more than expected and shares declined to close at the low for the day. The $1.33 per share loss made people rethink what they were thinking with a $330 stock price.

Earnings Aug 3rd.

Sell short June $350 call, currently $3.75, stop loss $327.50
Buy long June $370 call, currently $2.00, no stop loss
Net credit $1.75.


VIX - Volatility Index (Call Spread)

The VIX has been slightly elevated over the last several days to close near 12 today. If we were to get a major downdraft, I would like to capture that by selling a call spread. We are going to enter the spread with a VIX trade at $18. There will be no stop loss because it rarely stays high for more than a couple days.

With a VIX trade at $18,

Sell short Mar $20 call, estimated premium $2.00, no stop loss.
Buy long Mar $30 call, estimated premium 40 cents, no stop loss.
Estimated net credit $1.80


Update 2/8/17: The market refuses to decline and the VIX refuses to rise. Both of those facts will eventually reverse. I profiled a March call spread in the VIX in the prior newsletter. With time expiring quickly, I am revising that to use April strikes.

With a VIX trade at $18

Sell short Apr $20 call, estimated premium $3.00, no stop loss.
Buy long Apr $30 call, estimated premium 50 cents, no stop loss.


Update 3/8/17: We have a speculative call spread on the VIX to be executed on a spike to $18. Since I added that potential position several weeks have passed and the April strikes were sneaking up on us. I modified the recommendation to use the May strikes if/when the VIX spikes to $18.

With a VIX trade at $18
Sell short May $20 call, estimated $3.00, no stop loss.
Buy long May $30 call, estimated 50 cents, no stop loss.


Update 4/12/17: We have a pending call spread on the VIX with a spike to 18. The VIX closed right at 16 on Wednesday and could hit 18 over the next couple of sessions. We have had this recommendation in place for several weeks and the May strikes are now too close on the calendar. I am changing the recommendation to use June strikes.

With a VIX trade at $18
Sell short June $20 call, estimated $3.00, no stop loss.
Buy long June $30 call, estimated 50 cents, no stop loss.


Update 5/17/17: We have been rocking along for the last six months without a major spike in volatility and the June options are running out of premium. I am revising the position to use the July options. Personally I hope we are not triggered on this position because it would mean we are going to be stopped out on others. However, this is a hedge against that volatility.

With a VIX trade at $18
Sell short July $20 call, estimated $3.00, no stop loss.
Buy long July $30 call, estimated 50 cents, no stop loss.


Margin Requirements:

There are several different formulas for determining margin requirements for naked put writing. These are normally broker specific and some can require larger margin requirements than others.

Here is the most common margin calculation for naked puts.

100% of the option premium + ((20% of the Underlying Market Value) - (OTM Value))

For simplicity of calculation simply use 20% of the underlying stock price and you will always be safe. ($25 stock * 20% = $5 margin)


Prices Quoted in Newsletter

At Option Investor we have a long-standing policy prohibiting the editors and staff from actually trading the individual recommendations in order to conform to SEC rules concerning trades.

The prices quoted in the newsletter are the end of day prices in most cases.

When discussing fills or stops the prices quoted are the bid/ask at the time the entry trigger or exit stop is hit. This is NOT a price that someone on staff actually got using a live order.

For entry/exit points at the market open the prices quoted will be the opening print. The majority of the time the readers are able to get a better fill than the opening print because of market maker bias at the open.

For trades with an opening qualification the prices quoted will be the bid/ask at the time the qualification was met.

All of these rules normally produce worse prices than an active trader would normally get. Because they are standardized there may be some cases where a price quoted was better than an actual fill. If you received a price that was dramatically different than what was quoted please let us know.