We are coming to you a little earlier than usual this week given a few factors. As we’ve shared in the past there are times when we as investors and traders need to be flexible rather than be locked into a fixed schedule, and today is one of those times.

We’ve seen some pronounced moves in some of our Utilities Select Sector SPDR ETF (XLU) calls over the last few days as winter weather has finally come. You’ve probably seen the temperature drop, and may have heard about snow storms starting to hit parts of the Northeast and other parts of the country. As those freezing temps started to hit in late November, utilities cranked up production as Americans turned up the heat to stay warm. We expect to see a rebound in Utility production in tomorrow’s November Industrial Production Report, but with even more cold weather thus far in December, the odds are pretty good utility production has continued to expand in December.

On the one hand, we have rather large gains in our XLU calls – up 98%-100% from our initial purchase points just a few weeks ago – and the likelihood for more upside as the impact of current cold temperatures are realized. In addition to tomorrow’s November Industrial Production Report we will also hear from the Federal Reserve as it concludes its Dec. 13-14 FOMC meeting, and the expectation is it will indeed boost interest rates by 25 basis points. As we discussed in this week’s Monday Morning Kickoff, while the probability is slim, it is possible to see the Fed boost interest rates by more than 25 basis points. Should that happen, odds are higher dividend paying stocks, including utilities are likely to get knocked around.

As such, being the prudent investors that we are, we are making the following changes:

• Selling half of the Utilities Select Sector SPDR ETF (XLU) January $50 call (XLU170120C00050000) position that closed last night at 0.28
• Selling half of the Utilities Select Sector SPDR ETF (XLU) January $48 call  (XLU170120C00048000) position that closed last night at 1.05

We will hold the balance of these two positions to capture further gains. As we do this we will set  protective stop loss as follows:

• For the Utilities Select Sector SPDR ETF (XLU) January $50 call (XLU170120C00050000), we will set a protective stop loss at 0.85, which should ensure a gain of 60%.
• For the Utilities Select Sector SPDR ETF (XLU) January $48 call  (XLU170120C00048000) we will set a protective stop loss at 0.22, which should ensure a gain of 57%.

As we make these trades, we also want to close out our McCormick (MKC) December $95 call (MKC161216C00095000) position, which closed at night at 0.27 compared to our 0.55 buy in. The thesis on this trade was the underlying MKC shares would step up following the company’s annual dividend increase. Even though McCormick announced a 10% dividend increase, MKC shares traded off as part of the Trump Bump currently gripping the stock market. While MKC shares have since recovered, climbing from just under $89 to close last night at $93.37, with just  a few days to go until the calls expire odds are we are not going to see them close the gap from our purchase price. Better to get as much capital returned as we can before expiration. Therefore

• We are closing out our McCormick (MKC) December $95 calls (MKC161216C00095000) position.

We will place the returned capital along from the MKC call trade along with the gains from our two XLU trades into our cash war chest for now, and look to deploy it once we’ve digested the Fed’s next move. Odds are we will have some quick commentary later this week following the Fed’s news; depending on what we learn, we may have another option trade to share at that time.

With regard to our Facebook (FB) February $120 calls (FB170217C00120000) that closed last night at 4.67 are still a Buy at current levels. As we indicated when we first added them to our holdings, we would Buy the Facebook (FB) February $120 calls (FB170217C00120000) up to 5.00 and our protective stop remains at 3.80.

Turning to our Alphabet (GOOGL) January $800 calls (GOOGL170120C00800000), they finished up trading yesterday at 22.90 vs. our buy up to level at 22.00. This moves the GOOGL shares from the Buy camp to the Hold camp, and as such we are setting a protective stop-loss at $17. As the calls move higher, we’ll look to move that protective stop loss up to switch from minimizing losses to locking in gains.

In summary, 

• Selling half of the Utilities Select Sector SPDR ETF (XLU) January $50 call (XLU170120C00050000) position that closed last night at 0.28, up 100 percent from our 0.14 buy-in price.
• Selling half of the Utilities Select Sector SPDR ETF (XLU) January $48 call  (XLU170120C00048000) position that closed last night at 1.05,  up nearly 100 percent from our 0.53 buy-in price.
• We are only selling half of these two XLU call positions given the recent and near-term weather outlook that calls for bitter cold and snow in a growing portion of the US. 
• We are closing out our McCormick (MKC) December $95 calls (MKC161216C00095000) that are set to expire later this week and closed last night at 0.27 vs. our 0.55 entry point. 
• With the Alphabet (GOOGL) January $800 calls (GOOGL170120C00800000) moving past our buy up to price of 22.00, we are setting a protective stop loss at 17.00