Saturday, December 03, 2016

Weekly: Small potato trader

With little time for trading, I do a few small potato trades just to keep some skin in the game. This week oil rallies on news of production cuts. I did about half as many trades in in November 2016 as I did in October.

Trades follow, sell means sell-to-open, p means puts.

Wed Sell SPY Dec 211 p 36
Sell IWM Dec 122 p 19

Sell APC Dec 60 p 31
Sell XLE Dec 69 p 22

Sell XOP Dec 36 p
Sell SPY Jan 190 p 28

Thu Sell NVDA Dec 72 p 19
Sell XLE Dec 71 p 24
Sell XOP Dec 38 p 15

Fri Sell GS Dec 205 p 49

Friday, November 25, 2016

Weekly: nap time

A very quiet week of trading. I do a few trades after Thanksgiving. All are way out of the money put sales.
Sell means sell-to-open, p means puts.

Fri Sell UNH Dec 140 p 40
Sell BA Dec 138 p 34
Sell LMT Dec 245 p 45
Sell SPG Dec 165 p 40

Sunday, November 20, 2016

Monthly: 37-7, Grade C, election trade results

I count 37 winners, 7 loser for the November option cycle. Grade is C. In the old days, there a term "gentleman's C." I am up a smidge for the trading month. Considering how surprised I was by the market reaction to the election, I did well to come out ahead. 

Of my four election trades placed in late August only one came in a winner. The bets had max payoffs with gold up 10%, bonds up 7%, stocks up 5% or down 10%. Up 5% in stocks was the only winner. Gold and bonds dropped. Bonds and interest rate stocks dropped hard on the election news.

I got stopped out on a lot of trades. Almost all of them would have been better had I held on. That said, sticking to rules is more valuable than a few positive outcomes. The worst case of selling naked options can be really, really bad. So I prefer to exit and take the loss rather than risk even bigger losses, by defending or doubling down.

Here is the YTD summary:
SLV +19.3% silver
IWM +16.3% U.S. small cap stocks
GLD +13.5% gold
EEM +7.5% emerging market stocks
SPY +7.2% U.S. large cap stocks

My trading account is +8.6% so right about even with SPY when factoring in the dividends. Not great, but not bad either. If you had offered +8% for the year on January 1st, I would have taken it. For the year, U.S. Treasury bonds have given up all of their substantial. Gold and silver have slipped back to the pack, allowing U.S. small cap stocks to get near the top.

My schedule is busier than ever, so trading and blogging will tend to be light. Have a Happy Thanksgiving. Anyone reading this with time and money to invest, has a whole lot to be grateful for. Of course, there are those with more, those with less, but we can all be grateful.

Friday, November 18, 2016

Weekly: Duck and Cover

A lot of my mental stops were threatened or taken out. I gave some positions some rope, others I just closed. Overall, it was a difficult Monday. I take a lot of big percentage losses, but the dollar amounts are small. Mostly, I would have been better off hanging in there, but my rule is to take the loss if the strike price is violated. 

For newer readers, I tend to sell way out of the money options, usually at the 10% probability line, but sometimes a bit closer, sometimes a bit further out. I use the strike price as a mental stop level.

Here are the trades (c = calls, p = puts, all are third week expiration unless noted, sell means sell-to-open, cover means buy-to-close, number is price per contract):

Tue Cover UNH Nov 150 c 305 for a 2000% loss
(tiny premium, big percentage loss, small dollar amount)

Sell CMG Nov 380 p 45
Sell JWN Dec 50 p 29

Wed Cover PYPL Nov 39 p 43 about a 150% loss
Cover FB Nov 116 p 103 about a 500% loss
more tiny premiums, turning into big losses.

Thu Close IWM backratio (election trade from late August)
Sell-to-close IWM Nov 125 c 522
Buy-to-close 2x IWM Nov 130 c 75 each
About 60% profit on the long leg, 20% on the short leg

Fri Roll BRKB for 830 debit:
Buy-to-close Nov 145 c 1260 for a 700% loss
Sell BRKB Dec 155 c 430

Buy-to-close CMG 415 c 225 for a 270% loss
A galling loss, had I held a few more hours, I would have won this one. Of course had the rally continued, the lossses can become astronomical.

New longs on two bank stocks.
Sell JPM Dec 70 p 19
Sell C Dec 50 p 18

Sunday, November 13, 2016

Weekly: Election rally

Wow what a week. Sorry for the late update, but my schedule is getting busier, so late updates or no updates might be expected for the next five weeks or so.

I was surprised by the market reaction to the election news. Especially because U.S. stock futures were down about 5% in Asia when the results were coming in. I came in light on positions and remain so. I added longs to defense related stocks such as BA, LMT, NOC. NVDA was another new long after a huge earnings gap up.

About two months ago, I did four election timed back ratios. Only one of the four is paying off. The other three are at break even or small loses. Overall, I think I am up a bit.

Here are the trades (c = calls, p = puts, all are third week expiration unless noted, sell means sell-to-open, cover means buy-to-close, number is price per contract):

Mon Massive rally on pre-election day news. I add a bit of long delta, but remain cautious. The new trades are way out of the money.

Sell EA Nov 74 p 18
Sell WYNN Nov 77 p 18

Sell CMG Nov 320 p 30
Sell BRKB Nov 138 p 23

Sell FB Nov 112 p

Tue Sell EXPE Nov 135 c 30

Wed Sell BRKB Dec 145 p 114
Sell FB Nov 116 p 19

Sell IWM Nov 112 p 14
Sell-to-close SPY Nov 205 p 27 for 90% loss, but I have offsetting trades

Sell RTN Dec 130 p 39
Sell BA Dec 125 p 29

Sell NOC Dec 220 p 70

Thu rebalance a few positions

Sell BA 141 p 24
Sell UNH Nov 138 p 30

Sell TSLA Nov 202.5 c 49
Sell SPY Nov 207 p 24
Fri Nvidia gaps higher on earnings.
Sell NVDA 65 p 28
Add to longs as the rally gets gathering steam.
Sell NVDA 75 p 12

Sell IWM 112 p 38

Friday, November 04, 2016

Weekly: Crunch time in ULTA

I continue to tread lightly. I get whacked in ULTA as it drops below my mental stop level. I am down for the week, but with my cautious stance, the damage is limited.

Here are the trades (c = calls, p = puts, all are third week expiration unless noted, sell means sell-to-open, cover means buy-to-close, number is price per contract):

Tue 11/1/16 Sell TSLA Nov 220 c 54 rebalance into the decline

Sell AAPL Nov 100 p 20 down five days in a row already, probably won't continue in a straight line down.

Wed Sell BABA Nov 110 c 24

Electronic Arts fades after a higher opening so I short it.
Sell EA Nov 85 c 18

Sell EA Nov 71 p 21
Then EA catches a bid and I hedge the short.

Thu Sell WYNN Nov 100 c 21
Sell FB 129 c 23

Sell WDC Nov 61.5 c 18

Fri Cover ULTA Nov 230 p 600 for a 800% loss. Crunch.

Saturday, October 29, 2016

Weekly: Trading flurry

More internet connection woes for me so no trading early in the week. I do a flurry of put selling early Thursday morning. Many of those stocks falter, so I sell calls to hedge in the afternoon. By the end of the day I am in the red on both sides on some. No bueno. New longs in BA, PYPL, WFC.

Here are the trades (c = calls, p = puts, all are third week expiration unless noted, sell means sell-to-open, cover means buy-to-close, number is price per contract):
Thu Sell NOC 210 p 40 earnings
Sell BA Nov 132 p 34 earnings

Sell PYPL Nov 39 p 20 earnings
Sell TSLA Nov 177.5 p 56 earnings

Sell FB OctW4 128 p 16
Sell WDC Nov 54 p 27 earnings

Sell TSLA Nov 235 c 55 Tesla acting poorly, so I hedge the puts I sold in the morning

Sell FB OctW4 133 c 14 hedge
Sell BA Nov 152.5 c 21 hedge

Sell UNH Nov 150 c 16 hedge
Sell ULTA Nov 265 c 25 hedge

Fri Sell CMG Nov 415 c 62
Sell RCL Nov 65 p 20

Sell EXPE Nov 118 p 35
Sell NFLX Nov 150 c

Sell AMZN vertical: 
Sell AMZN Nov 835 c 182
Buy AMZN Nov 855 c 96

New shorts in CMG and AMZN, hedge NFLX, new longs on RCL EXPE.