Saturday, October 21, 2017

Monthly: Smelling like a rose, 63-8, Grade B+

I count 63 winners, 8 losers for the October option cycle. Grade B+. There are costly whipsaws in NVDA and TSLA. I am up about 14% for the year, which is good, but nothing amazing.

Here are some etfs I track and their ytd performance, best to worst:

EEM +32.1% emerging markets equity
SPY +15.0% S&P 500, US large cap

IWM +11.2% Russell 2000 US small cap
GLD +10.9% gold

SLV +6.4% silver
TLT +4.1% US 20-year treasury bonds

Precious metals and bonds are slipping, after a strong first half of the year. Equities continue to power ahead. The surprise continues to be EEM considering the chatter about trade wars early in the year. My trading account is at +14% s, right in line with SPY and IWM.

Again, for newer readers, I tend to describe myself as a cautious, slow moving options trader. During strong bull moves I often lag. Considering that I expected a 5% to 8% correction in September/October, and made several trades in early September based on that, I have come out smelling like a rose.

I try not to let my expectations paint me into a corner. Listen to the markets. It remains a bull market. Those expecting a sharp pullback to let them in have been waiting for years now. I signaled a red flag warning on this blog in April 2014 at SPY 187 mostly based on valuations. SPY is 257 today, almost 40% higher in 3 1/2 years. If I had stayed stuck on valuation warnings, I would have missed out on those gains, Some traders have taken losses while the most hated bull market of all time, continues to march to new highs.


I initiate positions in ADBE CMG PYPL ULTA. Otherwise, not too much going on. I nip and tuck at other existing positions. Markets continue their slow yeast rise. Will the souffle crumble? Way too many novices seem worried about the market for any significant downside.

Here are the trades (p = puts, c = calls, sell means sell-to-cover, cover means buy-to-close, percentage gain/loss are based on the premium collected, number near the end is price per contract).

Mon Sell CMG Strangle: Sell CMG Dec 435 c 41
Sell CMG Dec 240 p 90

Sell LMT Dec 285 p 85
Cover BA Oct 215 p 02 for 95% profit

Roll BRKB for 195 debit: Cover BRKB Oct 180 c 800 for 470% loss
Sell BRKB Dec 185 c 605

Sell IBB Dec 290 p 70
Sell AAPL NovW1 147 p 53

Tue Sell BABA OctW4 190 c 22

Thu Sell BRKB Dec 200 c 45Sell ULTA Nov 175 p 65

Cover SPG Oct 140 p 01 for 98% gain
Sell ADBE Nov 155 p 39

Sell UNH Nov 190 p 49
Sell AAPL OctW4 162.5 c 20

Fri Sell UNH Dec 185 p 65
Sell ADBE Dec 150 p 71

Sell PYPL Nov 65 p 19
Sell QQQ Dec 133 p 41

Cover TSLA Oct 400 c 01 for 99% gain

Friday, October 13, 2017

Weekly: Not enough bull, bottom fish GE, M

I am up for the week, but take a few more losses. I get whipsawed in Shopify and cover some calls in Nvidia and McDonalds for losses. Overall, I wasn’t bullish enough.

Here are the trades (p = puts, c = calls, percentage gain/loss is vs. premium collected, number near the end is price per contract, sell means sell-to-open, cover means buy-to-close):

Mon I rebalance in BABA, FB, NVDA
Cover NVDA OctW2 157.5 p 02
Cover SHOP Oct 125 c 05

Sell NVDA OctW2 175 p 14
Sell FB OctW2 167.5 p 12

Cover FB OctW2 162.5 p 05
Sell FB Oct 165 p 40

Sell BABA Oct 170 p 43
Cover BABA Oct 155 p 05

Tue Crunch time in Shopify as I close one leg for a huge loss. I close some trades for gains to free up buying power. I add more layers to Nvidia as it rallies.

Cover SHOP Oct 90 p 380 for a 550% loss
Cover BRKB Oct 175 p 05 for 95% gain

Sell NVDA OctW2 177.5 p 20
Sell MCD Dec 140 p 38

Sell NVDA OctW2 180 p 33
Cover TSLA OctW2 390 c 03 for 85% gain

Sell MCD Nov 145 p 29
Cover MCD Oct 145 p 01 for 97% gain

Cover SPG Oct 145 p 03 for 97% gain
Cover SPY Oct 225 p 04 for 98% gain

Sell NVDA OctW4 175 p 118

Wed I am stopped out on one leg for Nvidia.Cover NVDA OctW2 190 c 248 for 180% loss

I chicken out on Netflix before earnings, taking small profits.
Cover NFLX Oct 240 c 36 for 25% profit
Cover NFLX Oct 162.5 p 29 for 20% profit

Sell MCD Oct 157.5 p 17
Sell BABA OctW4 172.5 p 60

Thu I go bottom fishing in Macys and General Electric
Sell M Nov 18 p 29

Sell GE Nov 21 p 16
Sell MCD Nov 155 p 88

Roll BRKB for 270 debit: Cover Oct 180 c 620 for 90% loss
Sell BRKB Nov 185 c 250

Fri Rallies in McDonalds and Nvidia trigger more stops, more big losses.

Cover MCD Oct 165 c 136 for 750% loss
Cover TSLA Oct 300 p 05 for 97% gain

Sell MCD Nov 150 p 33
Sell SPY Dec 240 p 108

Sell NVDA OctW4 210 c 63
Cover NVDA Oct 192.5 c 340 for 190% loss

Cover FB Oct 155 p 03 for 85% gain

Friday, October 06, 2017

Weekly: broken record

The stock market breaks records. Multiple consecutive record highs for SPY for the best run in 20 years. Most the indexes march to record high after record high. My comments may sound like a broken record with descriptions such as zombie bull, the most hated bull market of all time. Newbies and Chicken Littles continue to call for the sky has to fall. Old timers might remember the cliche, don’t fight the tape. The tape is strong. Transports have confirmed record highs. The Russell 2000 is picking up speed.

I make money, but not as much as more aggressive bulls. This tends to be the fate during a strong bull move, for the cautious, hedging, often delta neutral trader.

One possible danger is a blow off top. However, to get there, we need an acceleration to the upside, such as a 10% market gain in a month or 20% in three months. Without that, there are still way too investors positioned defensively. Many are waiting for a minor 5% dip to get in. I thought we would get that dip in September, but it didn’t happen.

Here are the trades (p = puts, c = calls, sell means sell-to-open, cover means buy-to-close, number near hte end of the line is price per contract):

Mon Berkshire rally rolls on, I scramble to stay near delta neutral, then throw in with the bulls.

Cover BRKB Oct 165 p 03Sell BRKB Nov 175 p 83

Sell BRKB Dec 185 p 420
Sell QQQ Nov 135 p 51

Sell IWM OctW4 137 p 21
Sell TSLA OctW1 297.5 p 20

Sell SPY Nov 235 p 51

Tue Roll some, rebalance some
Cover LMT Oct 265 p 05 for 92% gain
Sell LMT Nov 280 p 60

Sell TSLA OctW2 390 c 21
Sell TSLA OctW2 300 p 31

Cover TSLA OctW1 297.5 p 03 for 83% gain
Cover TSLA OctW1 390 c 02 for a 95% gain

Sell BRKB Nov 185 p 250
Cover BRKB Oct 185 c 256 for a 200% loss

Sell AAPL Oct 147 p 43
Cover AAPL Oct 135 p 03 for a 90% gain

Wed More adjustments, add more legs on Shopify as it drops on comments
Sell RCL Oct 112 p 25
Cover RCL Oct 100 p 02 for 95% gain

Sell SHOP Oct 125 c 25
Sell SHOP Oct 90 p 60

Sell BABA OctW2 167.5 p 24
Cover IBB Oct 290 p 05 for 95% gain

Sell TSLA Oct 310 p 62
Cover HON Oct 115 p 03 for 85% gain

Thu Sell IWM Dec 135 p 62Sell NVDA OctW4 162.5 p 68

Sell FB Oct 160 p 31
Cover QQQ Oct 133 p 03 for 83% gain

Cover BRKB Oct 170 p 02 for 95% gain
Sell SHOP OctW1 93 p 35

Sell SHOP Oct 85 p 55
Cover NVDA OctW1 145 p 01 for 97% gain

Cover NVDA OctW1 210 c 01 for 98% gain
Cover NVDA OctW1 195 c 01 for 97% gain

Sell SHOP Oct 107 c 95

Fri Sell TSLA OctW2 325 p 19
Sell QQQ Oct 142 p 13

Cover IBB Oct 375 c 05 for 85% gain
Cover BA Oct 200 p 04 for 93% gain

Sell AAPL OctW4 148 p 51
Cover TSLA OctW2 300 p 03 for 90% gain

Cover AAPL Oct 140 p 05 for a 80% gain
Sell NFLX strangle 92: Sell NFLX Oct 162.5 p 40

Sell NFLX Oct 240 c 52

Saturday, September 30, 2017

Weekly: TSLA whipsaw

This week’s whipsaw is Tesla. It dipped hard, and I covered one leg of sold puts for a huge loss, then the stock bounced. Last week was NVDA. So it goes for a trader that uses mental stops. Even with the whipsaw loss, I manage a small profit for the week. It is a bit disappointing with the market near record highs.

Going forward, there are theories about what happens next. Many portfolio managers are lagging SPY in performance for the year. The hedge fund managers don’t get paid unless they beat the index. So one theory is that they will take on that much more risk for the last quarter to try and leap frog ahead. Now what they might buy or short is another interesting question. Will they buy the leaders? The high beta stocks? The laggards? Hard to say what they will do as a group, because there are many individual managers or firms in that situation.

Here are the trades for my week (p = puts, c = calls, sell means sell-to-open, cover means buy-to-close, number near the end of line is price per contract, percentage gain/loss are basis the premium collected):

Mon Sell off in some leading stocks. I rebalance closer to delta neutral by hedging or selling more layers of calls.

Sell NVDA Oct 192.5 c 119
Sell FB OctW2 175 c 43

Sell NVDA OctW2 190 c 89
Sell TSLA OctW1 390 c 50

Sell BABA Oct 190 c 35
Sell TSLA Oct 400 c 106

Sell MCD Nov 170 c 30

Tue Sell NVDA OctW2 157.5 p 48
Sell IBB Nov 285 p 65

Sell AAPL Nov 135 p 81
Sell SPY OctW1 242 p 18

Wed Sell SPG Nov 135 p 60Sell AAPL Oct 140 p 19

Sell FB OctW1 157.5 p 17
Cover SPY SepW5 239 p 01 for 97% profit

Thu Cover TSLA SepW5 340 p 595 for a 1200% lossSell IWM Nov 130 p 26
Sell TLSA Oct 390 c 84

Fri Cover TSLA Oct 450 c 02 for 97% profit
Cover BA SepW5 237.5 p 01 for 97% profit
Cover FB OctW1 157.5 p 05 for a 65% profit

Sell FB OctW2 162.5 p 38
Sell FB Oct 155 p 20

Sunday, September 24, 2017

Weekly: Persnickety

The word for the week is persnickety. It means to be fussy about small details, to nit-pick, to find minor faults. It felt like that kind of week for me. I end up with a tiny plus sign, but it felt like I was losing money every day. First was a whipsaw on NVDA where I covered some calls for huge losses only to see the stock dip two days later. AAPL also caused some consternation as it dipped.

Here are the trades (p = puts, c = calls, sell means sell-to-open, cover means buy-to-close, number near the end is price per contract, percentages are based on premium collected):

Mon NVDA run up continues, stops get taken out. I take some losses.
Cover NVDA SepW4 182.5 c 590 for a 1000% loss
Cover NVDA SepW5 185 c 555 for a 3500% loss, perhaps the worst percentage of 2017. Thankfully dollar amounts are small.

I sell some way otm calls but the debit is huge
Sell NVDA Oct 240 c 20
Sell NVDA SepW5 220 c 18

Sell QQQ Oct 133 p 20
Sell BRKB Oct 175 p 84

Sell TSLA SepW5 340 p 47
Sell BA SepW5 237.5 31

Tue Sell BRKB Nov 170 p 75Sell MCD Oct 165 c 18

Sell BRKB Oct 170 p 32
Sell BRKB Oct 177.5 p 95

Wed Sell MCD Oct 150 c 33
Sell FB Oct 155 p 28

Sell NVDA OctW1 210 c 38
Sell BRKB Nov 180 p 235

Thu Sell TSLA SepW5 400 c 23
Cover NVDA Oct 240 c 05

Sell NVDA SepW5 192.5 c 34
Cover NVDA SepW5 220 c 02

Sell AAPL Oct 170 c 25
Sell AAPL SepW5 162.5 c 14

Cover AAPL SepW5 c 02
Sell NVDA OctW1 c 94

Sell NVDA Oct 202.5 c 104

Fri Sell AAPL Nov 165 c 147
Sell AAPL Oct 135 p 23

Sell BA Nov 210 p 81
Sell TSLA SepW5 380 c 46

Cover TSLA SepW5 400 c 02

Saturday, September 16, 2017

Monthly: Better and better, 65 - 5 grade A-

I count 65 winners, 5 loser for the September option cycle for my most profitable month of 2017. I am up about 2.9% for the month, up about 11.6% for 2017. Sure 11% isn’t all that when compared to the the trading unicorns and the YOLO crowd. However, for a relatively slow moving trader that is almost always hedged trader, I see it is as good news.

Here are a few etfs I track, best to worst:
EEM +30.2% emerging markets equity
GLD +14.5% gold

SPY +11.5% S&P 500, U.S. large cap
SLV +10.0% silver

TLT +6.5% 20-year Treasury bonds
IWM +5.6% Russell 2000, U.S. small cap

My trading account is right there with SPY with a gain of 11.6%.

SPY also gets an additional 1.5% in dividends (13% total return), so I am behind. That said, I feel like I am positioned at lower risk than buy-and-hold. A simliar return with what seems like less risk is a good thing. I managed profits, even though I felt like the market was due for a 5% drop in September. I did take some precautions, but didn’t let my bias get totally in the way of more profits. Like I said, this option cycle was my most profitable of the year.

I like to use the phrase, “listen to the markets.” Observe how the market responds to various event. Observe the stock market chatter online and in person. With so a lot of chatter about a sharp correction or crash, these events become less likely. Crashes tend to be rare events. Way too many newbies think crashes happen every year or two. Severe crashes are more like once every 20 to 30 years, so the time frame might be out to 2028 or later.

I plan to continue to listen going forward.While the major indexes have had a good year, there certainly have been sectors such as oil, retail, and most recently airlines that have way underperformed. Some stubborn investors have gone heavy into these laggards, and many have underperformed. There can be merit to investing in beaten down sectors. However, there is also the value trap. Investing in what seem like good values, without factoring in the secular decline in those businesses.

Weekly: more bull

Not even another missile launch could rattle the zombie bull market as it lurches forward. On Friday Nvidia broke out to the upside. I scramble to rebalance back near delta neutral. On Reddit, so many still seem to be looking for a sharp down move. Heck, I am one of them. However, I am not letting my bias get in the way of profits. The path of least resistance remains to the upside.

Here are the trades (p = puts, c = calls, sell means sell-to-open, cover means buy-to-close, number near the end is price per contract, percentages are vs. premium collected):

Mon Sell QQQ SepW4 138 p
Cover QQQ Sep 140 p 05 for 80% profit
Cover BABA SepW4 150 p 05 for 80% profit
Cover SPY Sep 235 p 04 for 90% profit

Sell SPY SepW5 239 p 36
Sell SPY Sep27 240 p 32
Sell QQQ SepW4 139 p 16

Tue Cover SPY Sep 249 c 115 for a 300% loss
Sell MCD Nov 140 p 64 add to longs on the dip

Sell SHOP Oct 80 p 20 new long

Sell TSLA strangle 215 credit: Sell TSLA Oct 300 p 154
Sell TSLA Oct 450 c 61

Wed Cover NVDA Sep 180 c 05 for 95% profit
Cover IWM Sep 142 c 54 for 325% loss

Thu Sell NVDA OctW1 145 p 22

Sell AAPL strangle for 37 credit: Sell AAPL SepW5 148 p 22
Sell AAPL SepW5 172.5 c 15

Roll BABA for 36 credit: Cover BABA Oct 140 p 15 for 70% profit
Sell BABA Oct 155 p 51

Cover GILD Sep 80 p 09 for a 25% profit

Fri Nvidia breaks out. I rebalance back to neutral.
Cover NVDA Sep 148 p 01 for 95% profit
Cover SPG Sep 165 c 05 for 90% profit
Cover BRKB Sep 165 c 01 for 98% profit

Sell BA Oct 215 p 40

Sell NVDA SepW4 165 p 23
Sell NVDA Oct 160 p 116
Sell NVDA SepW5 160 p 59

Sell TSLA SepW4 340 p 27
Sell SPG Oct 145 p 42
Sell BRKB Oct 175 p 94

Saturday, September 09, 2017

Weekly: storm clouds

Hurricane Irma follows Harvey, and a possible hydrogen bomb test in North Korea over the weekend send stocks lower. I make a few modest moves, then the market recovers on Wednesday. BRK.B and some other insurance related stocks move lower, then rally. I close out one leg near the lows. I eek out a tiny gain for the week. New positions include selling a strangle on IBB, a bull credit spread on AMZN, new long in TRV.

Here are the trades (p = puts, c = calls, number near end is price per contract, percentage gain/loss is based on premium collected, actual gains/losses tend to be much smaller because of margin requirements)

Tue Another hurricane, and a bomb test in North Korea rattle the markets.
Sell BRKB Oct 185 c 86
Sell NVDA SepW4 182.5 c 51

Sell GILD Oct 95 c 19
Sell RCL Oct 135 c 27

Sell BA Oct 270 c 18

Wed Sell NVDA Sep 148 p 29
Sell MCD Oct 145 p 35

Sell BABA SepW4 150 p 26
Sell HON Oct 115 p 21

Thu Berkshire knifes lower, probably on hurricane insurance losses.
Cover BRKB Sep 175 p 211 for a 325% loss

Sell IBB strangle: Sell IBB Oct 290 p 90
Sell IBB Oct 375 c 36

Sell GILD Sep 80 p 14

Fri Roll SPG: Cover SPG Sep 140 p 02Sell SPG Oct 145 p 99

Roll BRKB: Cover BRKB Sep 175 c
Sell BRKB Oct 180 c

AMZN vertical for 46 credit: Sell AMZN Sep 935 p
Buy AMZN Sep 915 p
Amazon continues lower so I go into the red by the end of the day.

Sell NVDA SepW4 185 c
Sell TRV Sep 110 p

Cover MCD Sep 140 p 02 for 85% gain

Cover AAPL SepW2 157.5 p 02 for 95% gain
I feel nervous about Apple and close the position with 45 minutes left.