Saturday, September 24, 2016

Weekly: Fed Monster Truck Rally

Wednesday was Fed day. Stocks, bonds, and gold all rallied. There was a bit of a fade later in the week, but overall the shorts were wrong. I did okay with my cautiously bullish stance. I was relatively happy with my results. Yes, some big swingers made big money by being aggressive. Long time readers know that I describe myself as a cautious trader.

Highlights include new longs in ADBE, FDX, SCTY, SRPT. 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 Sell WYNN Oct 125 c 41

PCLN vertical: 
Sell PCLN Oct 1300 p 357
Buy PCLN Oct 1250 p 212

Sell SCTY Oct 11 p 25
Sell BRKB Oct 148 p 103

Sell TSLA SepW5 185 p 51
Sell FB SepW5 122 p 22

Sell SRPT Oct 35 p 35

Thu Sell FDX Oct 160 p 44
Sell ADBE Oct 100 p 29

Sell IWM Oct 116 p 34
Sell GLD Oct 122 p 24

Sell TWLO strangles: 
Sell TWLO Oct 50 p 82
Sell TWLO Oct 90 c 50

Sell NTES Oct 300 c 50

Saturday, September 17, 2016

Monthly: Weathering the storm, 51-5 grade B+

Volatility ticks up. My cautious approach works fairly well. Stocks, bonds and gold all moved lower for this cycle. I made modest gains. I count 51 winners, 5 losers for the September option cycle.

The year-to-date etf tracking follows, best to worst, dividends not included:

SLV +35.4% silver
GLD +23.3% gold

EEM +13.4% emerging market stocks
TLT +11.8% U.S. treasury bonds

IWM +8.2% U.S. small cap stocks
SPY +4.7% U.S. large cap stocks

my trading account +6.8%.

Good news: I finally leap frog out of last place, moving ahead of SPY for calendar 2016. Considering how the year started, with about a 9% drawdown, being positive, moving ahead of the S&P 500 is all good news. Cynics can say that "good traders" made much more. Just look at the big gains in other asset classes, such as silver, gold, treasury bonds.

Going forward I continue to be cautious. That said, a surge to the upside in stocks, might be the most frustrating thing the market can do. Last month I wrote about some election trades. All were mediocre to dead wrong. I thought gold and bonds would go up, and both went down. I thought stocks would be more volatile, and that was true, but my positions did not move much.

Friday, September 16, 2016

Weekly: Apple blow out

I got blown out for a loss on some sold AAPL calls. Thankfully, that was the worst of the damage to my chicken coop, as the markets moved up, down, up, and down again. Being short way otm options was a decent place to be this week, so I came out ahead. GLD and GDX positions also became uncomfortable.

Market rollercoaster may continue with Fed next week, then the first presidential debate on the 26th. It may be concidence that the Fed meeting is Wednesday, and Mercury goes direct on Thursday, but hey, whatever works. The monthly update will be posted soon.

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 Sell FB Sep 124 p 16
Sell BRKB SepW4 143 p 31
Sell AAPL SepW4 100 p 33

Tue Sell TLT Oct 143 c 21
Sell GLD Oct 135 c 35
Sell IWM Oct 128 c 29

Sell BRKB SepW4 149 c 60
Sell GDX SepW4 29 c 25

Wed Cover AAPL SepW4 110 c 252 for a 1800% loss. Ouch. Thankfully a small dollar amount.

Sell TWLO Oct 40 p 70
Sell VRX Oct 20 p 34

Sell WYNN Oct 85 p 47
Sell BABA Oct 85 p 22

Thu Sell GLD SepW4 130 c 17

Sell AMZN vert: 
Buy AMZN Oct 650 p 124
Sell AMZN Oct 675 p 193

Sell NTES Oct 195 p 102
Sell AAPL SepW4 123 c 15

Fri Sell TLSA SepW4 185 p 36

Friday, September 09, 2016

Weekly: Live long and prosper

This week Star Trek fans celebrated the 50th anniversary of the show. The Vulcan farewell is "live, long and prosper." Friday, the stock market hit its first bit of real turbulence since the Brexit scare. I am down for the week. I was cautious, but still got hit. For those tracking planet Mercury, it comes out of retrograde on 9/22/16.

I don't think this is the "big one," but as always we can only tell in hindsight. One trading buddy moved to 100% cash on Thursday. Good move. I don't do all-in, all-out, all-short kind of moves, so would never do that. My market timing tends to be no better than flipping coins, so mostly I manage risk, and mostly sell premium.

I thought a stock market decline would be good for bonds and gold, but on Friday all three went down. Highlights include a whipsaw loss in GDX, a new long position in AMZN that quickly went to red, a bearish ratio spread in FB. 

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 Sell SPG Sep 200 p 19
Sell GDX SepW4 25 p 19

Sell GLD SepW4 123 p 31
Cover GDX Sep 28.5 c 83 for a 500% loss

Sell SPG Oct 190 p 59 add

AMZN 730/750 credit put vertical: 
Buy AMZN Sep 730 p 47
Sell AMZN Sep 750 p 97 gross 50

Big sell off on Friday. I came in light, but still took it on the chin. I sell calls, I short FB, I turn my put vertical AMZN into an iron condor. With gold, bonds and stocks all down, my thesis so far has been wrong. I thought a decline in stocks would mean a rally in bonds and gold. It ain't working out so far.

Fri Sell BRKB Oct 155 c 50

FB ratio spread: 
Buy FB Oct 110 p 118
Sell 2x FB Oct 110 p 27 each

Sell TLT Oct 126 p 25
Sell TLT Oct 145 c 18

Sell AMZN vertical: 
Sell AMZN Sep 792.5 c 98
Buy AMZN Sep 802.5 c 44

Sell TSLA Oct 235 c 83
Sell TSLA Sep 210 c 38

Sell GDX Oct 32.5 c 18
Sell GLD Oct 137 c 31

Sell SPG Oct 230 c 43

Sell BRKB SepW4 150 c 72
Sell BRKB Oct 155 c (2nd) 36

Saturday, September 03, 2016


New positions in Simon Property Group SPG and United Airlines UAL. I reenter CMG and TSLA. I adjust my GLD and GDX positions.

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 Sell BRKB Sep 142 p 27
Sell SPG Oct 190 p 81 new long Simon Property Group

Sell TSLA strangles: 
Sell TSLA Sep 190 p 56
Sell TSLA Sep 240 c 38

Sell CMG strangles: 
Sell Sep 375 p 72
Sell Sep 470 c 62

Tue Sell SPG Oct 230 c 53 hedge
Sell GDX 28.5 c 17 hedge

Sell AAPL Sep 98 p 18 add
Sell BRKB Sep 144 p 28 rebalance

Sell GLD Sep 131 c 16 hedge

Wed Sell UAL Sep 45 p 17

Thu Sell TSLA Sep 230 c 35

Fri Sell GDX Sep 25 p 17
Sell TLSA Sep 215 c 63

Sell GLD Sep 123 p 17
Sell BRKB Oct 140 p 54

Friday, August 26, 2016

Weekly: Four election trades

I'm looking for volatility to pick up so plan to trade cautiously, with big reserve. This week I initiated, four election ratio spread trades. These back ratios target a 5% up move in IWM, or 10% down move in SPY, and a 10% up move in GLD, 7% up in TLT. These are pilot positions, so I am add, subtract, perhaps even reverse as time goes on. For easy tracking: IWM ~ 123, SPY ~ 217, GLD ~126, TLT ~138.
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):

Wed Sell VRX Sep 26 p 18 rebalance as Valeant rallies
Sell WYNN Sep 75 p 21

Election trades. I am targeting a 5% up move in IWM, or 10% downside in SPY. Also a 10% up move in GLD. Initial outlay is small for IWM, GLD. I get a small credit for SPY.

IWM ratio: Buy IWM Nov 125 c 289
Sell 2x IWM Nov 130 c 98 each

SPY ratio: Buy SPY Nov 205 p 249
Sell 2x SPY Nov 195 p 135.5 each

GLD ratio: Buy GLD Dec 135 c 209
Sell 2x GLD Dec 145 c 82 each

Sell BRKB Sep 152.5 c 36
Sell GDX Oct 22 p 24

Thu TLT ratio: Buy TLT Nov 145 c 122
Sell 2x TLT Nov 150 c 50 each

Fri Roll BRKB: Cover BRKB AugW4 147 c 43 (40% profit)
Sell BRKB Sep 148 c 143
Sell ADSK Oct 57.5 p 29

Saturday, August 20, 2016

August: Pretty Good B+ 67-7

A pretty good, though I feel like I left some money on the table. I count 67 winners, 7 losers for the August option cycle, grade is B+. I didn't have any major blow ups, though I did take a few large percentage losses. 

Going forward I am looking for volatility to pick up. An acceleration to the upside might be the scenario that frustrates the most market participants.

Long time readers know I sometimes mention Mercury retrograde. This is coming August 30 and lasts about three weeks. Often times, markets go turbulent during that time. Combine that with September often being a month with wide swings, a lot of uncertainty over the U.S. presidential election, and a September or October surprise is something to look for.

Results from best to worst:
SLV 39.1% silver
GLD 26.1% gold
EEM 16.8% emerging markets equity
TLT 15.0% U.S. 20 year treasuries
IWM 9.2% U.S. small cap
SPY 7.2% U.S. large cap

My trading account still lags at +6.2 for the year. Real world results are a bit worse, because the table above doesn't include the dividends, while my account total does. Add another 1% or so to SPY and TLT for dividends. There is good news and bad news. Good news is that I am up. Bad news, is that I could have done a lot better. My retirement accounts are more conservatively invested and up less than the 6%. I tend to be a market chicken, though I take an occasion big swing for small amounts.