Saturday, January 14, 2017

Weekly: Managing a trade vs. Mangling

Most have heard of the term "managing a trade." There are any number of ways to do this, rolling, getting stopped out, doubling down. I tend to favor rebalancing back closer to delta neutral by selling more layers of options and committing more capital. Mangling is what happens when managing goes haywire. My misadventures in BRKB this week were close to the line. 
 
Here are the trades: p = puts, c = calls, number at the end of the line is price per contract. Cover means buy-to-close.

Mon Sell UNH 172.5 23
Mildly bearish play on Facebook earnings. The debit backratio max profit occurs if FB declines to 110 (currently 124.4) at Feb expiration. If it is up or steady, it loses. A decline below 100 also loses. I sell a layer of closer in puts to make it delta neutral for now. Earnings are out after the JanW4 puts expire.

Sell FB backratio 131 debit: Buy FB Feb 120 p 299
Sell 2x FB Feb 110 p 84

Sell FB JanW4 115 p 30
Sell FB Jan 118 p 19

Tue Sell BRKB Feb 150 p 48
Sell BRKB Feb 165 c 155

Wed Sell BRKB Feb 155 p 92

Thu Sell SPY Feb 236 c 17
Sell DIA Feb 206 c 21

Sell BRKB Mar 165 c 225
Sell BRKB Jan 157.5 p 31

Sell IWM Feb 144 c 14

Sell SPY backratio: 
Mar 199/205 Buy SPY Mar 205 p 92
Sell 2x SPY Mar 199 p 58

Fri I took the "head fake" and sold on the steep decline on Thursday. I rebalance to limit the damage.

Sell BRKB Jan 160 p 39
Sell FB Jan 120 p 25

Cover (buy-to-close) SPY Jan 211.5 p 03 for a 90% profit
Sell IWM Feb 122 p 30

Saturday, January 07, 2017

Weekly: Trump rally rolls on

The rally rolls on, with a few fits and starts. Overall, I find the strength to be remarkable. I expect more profit taking with some folks booking their gains for 2017. I did a few more trades, but remain cautiously bullish. I sold some out of the money calls this week, so don't believe in a runaway bull scenario. Cautious bull yes, rocket ship bull no.

Sell means sell-to-open, number at end of line is price per contract.

Tue Sell XLE Feb 67 p 22
Sell GM Feb 30 p 23

Sell NVDA Jan 125 c 34
Sell NVDA Jan 120 c 37

Wed Sell Feb SPG 150 p 44
Sell RTN Feb 125 p 33

Thu Sell SPY Feb 238 c 17
Sell TSLA Jan 192.5 p 31
Sell XLE Feb 83 c 15

Fri Sell GM Feb 42 c 13
Sell BA Feb 180 c 20

Sell COST strangle: 
Sell COST Feb 145 p 39
Sell COST Feb 175 c 30

Sell AMGN Jan 145 p 23
Sell SPY FebW1 216 p 33

Sell IWM Feb 120 p 32
Sell NVDA JanW4 87.5 p 36

Saturday, December 31, 2016

2016 Year end, 662-115, grade B-

I count 662 winners, 115 losers for calendar 2016. Win percentage is about 85%, which sounds good, but those are about the odds that I look for. The payouts tend to match the odds. So a few big whopper losers offset a lot of small and tiny profits. The vernacular description is eat like a bird, poop like an elephant. 

I was up about 9.8% for the year. I see this is as a cup half-full result. I started the year with a dip and was down -6% early on, so any positive result from there seems good. So not a champagne year, but a glass of wine or mug of beer seems right for the toast for this New Year's Eve.

Here are a few etfs I track, best to worst for 2016:

IWM +19.7% Russell 2000 U.S. small cap
SLV +14.6 Silver

SPY +9.6 S&P 500 U.S. large cap
EEM +8.8 Emerging market stocks

GLD +8.0 Gold
TLT -1.2% U.S. 20 year treasuries

So my +9.8% was right with SPY, but slightly lagged after factoring in the 2% SPY yield. TLT had the wild ride up over 15% at one point, only to give it all back after the election. 
 
I wish I knew what was going to happen next. I'd make a lot better than 10% if I knew. I still see quite a bit of online chatter about a stock market crash, so that seems like the least likely outcome. However, a -5% or -10% correction can come at virtually any time. 

The AAII sentiment reading (link) is at +45% bulls. To me, this seems more like a smart money indicator at this point. People in the American Association of Individual Investors tend to be older, wiser than the young hotshots that dominate some sections of the Internet. So I remain cautiously bullish.

For long term positions, it seems too early to rebalance into bonds. An inverted yield curve is the flashing red light indicator. We are long way from that. An inverted yield curve is also a flashing red light indicator to avoid the long side of the stock market. I'll flash the "Bat signal" for those that don't know what I am talking about. The yield curve tends to be a long term indicator, so there will be time to make moves as the curve flattens then inverts.

Weekly: ending with a whimper

The year ends with a whimper. I do a few trades. At the Christmas party, I told folks that my predictions are about as good as coin flips. Directional trading is not my cup-of-tea. Selling premium, managing risk, taking losses (vs. defending positions) are what I tend to do.
Sell means sell-to-open, number is price per contract.

Tue Sell TSLA Jan 190 p 92
Sell NVDA Jan 95 p 46

Sell UNH Feb 140 p 64
Sell DIA Feb 182 p 59

Thu Sell TSLA 255 c 40
Sell JPM Feb 70 p 17

Sell C Feb 50 p 25
Sell GS Feb 180 p 30

Fri Sell SPY Jan 211.5 p 34
Sell IWM Jan 123 p 18
Sell NVDA Jan 87 p 34

Happy New Year to all.

Saturday, December 24, 2016

Weekly: Cautious trade continues

I make a few trades, but caution remains the word of the day. Sell means sell-to-open, number is price per contract.

Mon Sell COST Jan 149 p 25
Sell XOM Jan 83.5 p 22

Tue Sell LMT Jan 230 p

Wed Sell TLSA DecW5 190 p 27

Sell FDX strangle 53: Sell FDX Jan 167.5 p 29
Sell FDX Jan 212.5 c 24

Sell SPY Feb 205 p 57
Sell IWM Feb 114 p 27

Sell SPG Feb 145 p 61
Sell BA Feb 125 p 34

Thu Sell NVDA DecW5 99 p 16

Sell COST Jan 150 p 31
Sell SPG Feb 200 c

Fri Sell BA Jan 170 c 21

To all those that celebrate the holiday, Merry Christmas. God bless us every one.
 

Sunday, December 18, 2016

Monthly: Blessing or a curse? 23-1 Grade B


I count 23 winners 1 loser for the December option cycle. Grade is B because I lagged behind the market during the sharp rally. More than a few premium sellers got burned by the rally. Some got burned badly. So perhaps I was fortunate to be too busy to do much trading. Some might see the other side, however, my history is that I lag behind during sharp rallies. So probably I was fortunate to be too busy to do much trading.

The six-pack of etfs that I track from best to worst YTD:
IWM +20.7% U.S. small cap stocks
SLV +15.8% silver

SPY +10.4% U.S. large cap stocks
EEM +9.2% Emerging market equity

GLD +6.9% gold
TLT -2.9% U.S. 20-year Treasuries

My trading account is at +9.8, so I am now behind SPY buy and hold. This is what tends to happen during sharp rallies. Factor in another 2% for the SPY annual yield and the underperformance becomes more annoying. Still, I'll repeat that if someone told me at the beginning of the year, I could sign up for +9%, I would have taken it. If they had told me that when I was down more than -5% during February, I might have been talked down to +5%. 

There are no guarantees for the trading that I do. The odds are in my favor, but even so, some will lose, some will lose big.

I'll take some time during the holidays to clear my head, and have more time for trading. We will see if that means more trades, and hopefully more profits.

Saturday, December 17, 2016

Weekly: not a creature was stirring

Not even a mouse. I do a few trades, but remain relatively inactive. Sell means sell-to-open, p means puts, number is price per contract. Cover means buy-to-close

Tue Sell TSLA DecW5 175 p 55
Sell XLE Jan 70 p 22
Sell XOP Jan 37 p 19

Wed Sell UNH Jan 135 p 42
Sell BA Jan 130 p 27

Sell NVDA Jan 120 c 22
Sell TSLA DecW5 227.5 c 41
Sell GS Jan 195 p 51

Thu Sell NVDA Jan 80 p 35
Sell C Jan 52.5 p 23

Sell JPM Jan 75 p 23
Sell APC Jan 60 p 32

Roll BRKB 359 debit per
BRKB Buy-to-close BRKB Dec 155 p 1099 for a 150% loss
Sell BRKB Jan 160 c 742

Fri Cover (buy-to-close) JWN Dec 50 p 03 for 90% profit

Saturday, December 10, 2016

Weekly: hibernation continues

Another quiet week for me, as the rally rolls on. I remain time-challenged until Christmas, so my trading will continue to be light.

Sell means sell-to-open, p means puts, number is price per contract.

Mon Sell BRKB Jan 140 p 36

Thu Sell IWM Jan 120 p 25
Sell SPY Jan 205 p 38
Sell RTN Jan 130 p 48

Fri Sell SPG Jan 150 p 45
Sell NVDA Jan 70 p 23