Friday, April 29, 2016

Weekly: Bonds, gold, pizza, and Mercury

Mercury went retrograde on Thursday, and the stock market turns. Gold and bonds have been the big winning asset classes during calendar 2016. I initiate some small long positions in gold, gold miners and bonds (selling puts GLD, GDX, TLT). Pizza was the big sour note of the week. Dominos Pizza DPZ earnings disappointed and I took a big loss.

Chipotle CMG continued to be a lucky stock for me, as do Tesla TSLA and Valeant VRX. 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)

Mon Sell CMG AprW5 380 p 195 Chipotle has drifted lower into earnings. Sentiment on the Yahoo boards is also mostly negative. Even with a negative report, I am at the 8% probability line.

Sell VRX strangles: AprW5 for 44 gross Valeant slightly higher with news of a new CEO
Sell VRX AprW5 24.5 p 28
Sell VRX AprW5 50 c 16

Sell MCD May 120 p 29 rebalance

Tue Sell CMG May 335 p 50 Add to longs ahead of earnings news.

Wed Sell CMG Apr 475 c 60
Cover CMG AprW5 380 p 11 90% profit, taking my money and running
Cover ISRG May 550 p 55 35% profit, don't like tape action

Sell PNRA May 200 p 65 earnings

TSLA ratio spread 203 gross / bullish earnings play
Buy TSLA May 275 c 522
Sell 2x TSLA May 300 c 160x2

Sell TLT Jun 120 p 29

Sell GLD Jun 109 p 23

Sell TSLA AprW5 262.5 c 28

Buy SPY put vertical 140 gross
Buy SPY Jul 200 p 281
Sell SPY Jul 190 p 141

Sell PNRA May 230 c 25 rebalance

Thu Sell FB May 107 p 26 rebalance
Sell DPZ May 130 c 65 rebalance, earnings poor

Sell CMG May 370 p 94 rebalance
Sell GDX Jun 19 p 20

Sell MON May 89 p 44 rebalance
Sell JNJ May 116 c 16

Sell XLE Jun 76 c 16
Cover DPZ May 120 p 295 about a 550% loss

Fri Market sell off continues as Mercury has gone retrograde. I sell some more calls to rebalance my positions.

Sell YUM May 86 c 28 rebalance
Sell JNJ May 115 c 20

Sell SPY May 213 c 25
Sell XOP Jun 43 c 20

Sell UA May 48 c 15
Sell UNH May 138 c 24

Sell SPY June put backratio 18 gross:
Buy SPY Jun 190 p 130
Sell 2x SPY Jun 183 p 74 per

Sell CTXS May 87.5 c 20 rebalance
Sell UNP May 94 c 21

Cover TSLA AprW5 237.5 p 05 85% profit
This last one was a nail-biter as the low for the day was 238 or so. I closed it for a nickel rather than risk a last minute move.
 

Saturday, April 23, 2016

Weekly: small fish and oil

The news from last weekend was that oil producing countries could not agree on any production cuts. On Monday, the initial reaction was a sharp down gap in oil and oil stocks. Then buyers came in large. To me, the up day on bad news may mean the bottom is in for oil and oil stocks. I took some small long positions in XLE and XOP and then added to them. 
 
It was a busy week for earnings news. I mostly went after a lot of small fish. I sold many low premium out of the money puts on stocks with positive earnings news. Elsewhere, TSLA continued to make me money as it continued in its tight range and six layers of sold options came in safe. Mostly small fish, but enough sardines can make a nice mea1.

Here are the trades (c = calls, p = puts, weeklies denoted by W suffix, W1 is week1, sell means sell-to-open, cover means buy-to-close, number is price per contract).

Mon Sell BRKB Jun 130 p 55
Sell XLE Jun 55 p 33 news
Sell HAS May 77.5 p 15 earnings

Sell TSLA strangle 108 gross:
Sell TSLA AprW5 222.5 p 59
Sell TSLA AprW5 285 c 49

Tue Sell UNH May 120 p 42 earnings
Sell MON May 82.5 p 45 rebalance
Sell XOP Jun 27 p 22

Sell TSLA AprW5 272.5 c 60 rebalance
Sell TSLA AprW4 260 c 38

Wed Sell UNH May 125 p 51 add
Sell ISRG May 550 p 90 earnings

Sell SPY May 199 p 49 rebalance
Sell TSLA AprW4 240 p 46 rebalance

Sell JNJ May 108 p 23 add
Sell XLE May 60 p 18 add
Sell XOP May 30 p 18 add

Thu Sell YUM May 75 p 20 earnings
Sell UA May 40 p 15 earnings
Sell CTXS May 77.5 p 25 earnings

Fri Sell SKX May 27.5 p 15 earnings
Sell MCD May 132 c 29 earnings

Saturday, April 16, 2016

Monthly: 52-3 grade A-, I'll take it

I count 52 winners, 3 losers for the April option cycle. After opening 2016 with month after month of mediocre trading (grades D, C-, C), I finally have a good month. The good news is that I have crossed the Mendoza line and now have a modest profit for calendar 2016. The bad news is that I am lagging behind SPY (S & P 500 etf). Still, after opening the year with an 8% drawdown, getting back to break even is a step forward.

Overall I was too cautious during a powerful stock market rally. I have also missed the boat in my trading account, on gold and bonds so far. Premiums aren't big enough to tempt me on GLD, TLT or similar instruments.

Here are a few etfs, current price and their 2016 ytd (dividends excluded):
SLV 17.2% 15.46 silver
GLD 16.2% 117.92 gold
TLT 9.4% 131.88 20-year Treasury bonds
EEM 7.4% 34.57 Emerging markets
SPY 1.9% 207.78 S&P 500
IWM -0.2% 112.45 Russell 2000

I am right near the bottom at +1.3% for 2016, behind SPY, ahead of IWM, missing the fast boats of bonds, and precious metals.

The big picture is okay. I had three bad months, now one good month, and I am back to a profit for the year, and right there with the major stock indexes. I have a lot of dry powder, as I am starting to trade better. The big losers in BA, FB, UA early in the year, are what dug me a deep hole. Lately, what some see as speculative stocks: CMG, TSLA and VRX have helped me climb out of the hole. I still see myself as a cautious trader. 
 
For the astro people reading along, Mercury goes retrograde on April 28th. We will see if it marks a reversal, an acceleration, or nothing this time around. 
 
Big earnings week coming up. The CBOE blog (link) has a list of some of the optionable stocks reporting each week. So far the more interesting candidates to me are:

Tue before open: JNJ UNH
Wed after close: SKX
Thu after close: MSFT V

Weekly: frustrating losses

Another up week for me. I take frustrating losses in CMG and FB this week. Chipotle dipped then recovered. Facebook fell on news, and then the news was retracted. New long is JPM on earnings news.

Tue Cover CMG Apr 430 p 450 about a 100% loss
A painful trade. My first order to close was at 385 but CMG kept slipping, so I moved it to 450 and it filled. A minute later the low of the morning was made and CMG rebounded. CMG actually closed up. The big picture is that Chipotle has been a lucky stock for me. This time, I didn't wait until the mental stop level of 430 because to preserve an overall profit for the ticker for this cycle. If my worst trades are small profits or break even, it is going to be a good month.

Wed Sell JPM May 55 p 21 New long position in JP Morgan, moving higher after earnings

Sell SPY May 190 p 48 rebalance
Sell IWM AprW5 p 103 16

Cover FB 107 p 155 Facebook lower on news, about a 600% loss. Facebook has been a bad luck stock for me most of this year, so the bad streak continues. FB closes about unchanged after the sharp drop. Cheese.

Sell MON May 80 p 57 rebalance
Sell VRX May 15 p Valeant opens lower then rebounds. I am impressed by the tape action.

Sell FB May 130 c 30

Thu Sell FB May 90 p 47 complete FUBAR on Facebook as the news that caused the drop was retracted. Nothing to be done except move on.

Sell TSLA AprW4 230 p 80

Fri Sell DPZ May 120 p 55

Saturday, April 09, 2016

Weekly: Lessons from golf


I've been watching some of the Masters golf tournament. I saw Phil Mickelson miss a birdie put from about 5 feet, push it past, and miss again. Three putts from five feet by a hall of famer. Then there was Ernie Els carding a nine on the first hole. Six putts from another hall of famer. What does that teach me? That mistakes happen, that even the best of the best sometimes make unforced errors.

I've written before about Bubba Watson. How he used to get extremely upset after shanking a drive or missing a putt. So upset that he would go on to make some more unforced errors due to his emotional state. Bubba barely made the cut and starts ten shots back on Saturday.

In trading, emotional trading can show up as "revenge trading." There is also stubborness. There is "this time I will not follow my rules." All of these are often emotional reactions to mistakes.

For novices, one of the most common emotional mistakes is the unwillingness to take a loss. They keep adding capital, adding risk so their clunker trade turns green. Sometimes it works. A small percentage of the time, it completely blows up and the novice loses their account. Rule #1: live to trade another day. A novice will never get to become experienced if he/she bets the farm all the time. Eventually, luck runs out, or a bad streak comes.

Okay enough chit-chat. This week I continue to focus mostly on TSLA and VRX. I take a new long position in EW Edward Life Sciences. I try to get STZ Constellation Brands, but my order at the mid never fills. MON Monsanto earnings were in line so I mange that position back closer to delta neutral.

Here are the trades (c = calls, p = puts, weeklies denoted by W suffix, W1 is week1, sell means sell-to-open, cover means buy-to-close, number is price per contract).
Mon Sell EW Apr 95 p 42 New long position in Edward Life Sciences. EW gaps higher on drug news.

Sell TSLA AprW2 220 p 58 Rebalance
Sell TSLA Apr 210 p 72
Sell TSLA Apr 220 p 105

Sell MCD May 115 p 48
Sell FB May 90 p 48
TSLA gaps lower after hours on news of production shortfalls and the exit of the CIO.

Tue Sell TSLA AprW2 230 p 74
Telsa briefly goes green despite the news.

Sell TSLA AprW4 200 p 58
Sell TSLA Apr 227.5 p 177

Sell TSLA AprW1 240 p 130
Cover TSLA Apr 260 c 570 about a 600% loss

Another day of wide swings in Tesla with a morning low at 240 and now 255. I cover, because the stock is up up on a big down market day, in the face of what many see as bad news, and a lot more short sellers possibly doubling down on recent losses. Well, minutes after I cover, TSLA fades back below 254, so maybe it was stop loss orders being taken out. I certainly feel stupid when these things happen.

Wed The Telsa rally rolls on, and I rebalance again.
Sell TSLA AprW4 227.5 p 141
Sell MON May 75 p 42 Monsanto earnings in-line.
Sell MON May 97.5 c 36
Sell TSLA Apr 235 p 104
Sell VRX Apr 25 p 26

Cover TSLA AprW1 207.5 p 03
Cover TSLA AprW1 220 p 04

Thu Sell CMG Apr 485 p 55
Cover CMG Apr 550 c 05 95% gain, free up buying power
I make several more Telsa trades, rebalancing back closer to delta neutral as it finally seems to dropping.

Sell TSLA Apr 290 c 55
Cover TSLA AprW2 240 p 20 about a 80% profit
Cover TSLA Apr 227.5 p 85 about a 50% profit
Sell TSLA AprW4 305 c 45

Fri Sell MON May 80 p 80
Sell FB May 130 c 51

Sell TSLA AprW4 280 c 106
Sell TSLA Apr 270 c 63

/edit to add: Wow a Brit, Danny Willett wins the Masters golf tournament. Jordan Spieth was on top of the world, with a five shot lead after the ninth hole, cruising to what looked to be a coronation. Then bogey, bogey, quadruple bogey, and in thirty minutes the lead was gone. Trading can be like that too, going from feeling nearly invincible, then boom, a stumble, a gap, and then its all gone, deep into the red, in a very short time period.

Saturday, April 02, 2016

Weekly: TSLA baby

.
My April Fool's joke is that this week, I made enough money to buy a new Tesla. Which one? The Model S, or Model II? No, the toy version made for little kids. Anyway, a positive week. All my April 1 TSLA options did come in safe, but it wasn't a lot of money. Still, another positive week is a good thing.

Here are the trades (c = calls, p = puts, weeklies denoted by W suffix, W1 is week1, sell means sell-to-open, cover means buy-to-close, number is price per contract).

Mon Sell VRX Apr 40 c 22
Sell TSLA Apr 180 p 67

Tue Sell SPY strangles gross 100:
Sell SPY May 185 p 69
Sell SPY May 215 c 31

Sell FB strangles gross 37
Sell FB Apr 107 p 29
Sell FB Apr 124 c 18

Wed Sell IWM Apr 105 p 23
Sell SPY Apr 197 p 22
I make some minor adjustments as the market rally rolls on.

Thu Sell MCD strangles:
Sell MCD May 115 p 55
Sell MCD May 130 c 37

Fri Sell TSLA Apr 195 p 75
Sell TSLA AprW2 207.5 p 61

Saturday, March 26, 2016

Weekly: TSLA VRX

Most of my trades this week are in Tesla and Valeant. With Sequoia fund dumping 1.5 million shares of VRX, a short term bottom may be in. Tesla has a big news event on Friday April 1st, the launch of the new car. 

As I often do, I am selling naked strangles. I start way out of the money, then add layers. I'm thinking that both these stocks are going to stabilize. My mental stops are the strike price of each layer of sold options.

Happy Easter everyone.

Here are the trades (c = calls, p = puts, weeklies denoted by W suffix, W1 is week1, sell means sell-to-open, cover means buy-to-close, number is price per contract).

Mon Sell TSLA AprW1 200 p 89
Sell BRKB May 125 p 47

Sell VRX strangles 73 gross
Sell Apr 15 p 54 / Apr 50 c 19

Tue Sell SPY strangles 54 gross
Sell Apr 191 p 33 / Apr 211 c 21
Sell VRX AprW1 19 p 20

Wed Sell VRX Apr 20 p 38
Sell TSLA AprW1 265 c 46

Thu Sell TSLA Apr 280 c 65
Sell VRX Apr 45 c 22
Sell TSLA AprW1 192.5 p 57
Sell IWM May 90 p 36

Good Friday market holiday.

Saturday, March 19, 2016

Monthly: slump continues, 56-10, grade C

I count 56 winners, 10 losers for the March option cycle. I made money this month, but lagged the big stock market rally. SPY is back to flat for calendar 2016. I am down about -2.5% in my trading account. I am not happy with my results. I lagged the rally because I sold calls. I had some big losers in SPY and TSLA. CMG had another bad week to close the cycle.

Here are the year-to-date numbers for a few etfs, from best to worst:

GLD +18.1% gold
SLV +13.9% silver
TLT +7.0% U.S. 20-year Treasuries
EEM +5.7% Emerging market stocks
SPY +0.3% S&P 500 stocks
IWM -2.7% Russell 2000 stocks

I am right near the bottom of the barrel, right with the Russell 2000 (-2.7% vs. my -2.5%). If I were stubborn or panicky, some of the big losers would have been much worse. For the most part, I got out when my mental stop levels were breached.

Some might say bad luck, some might say bad trades. Whatever the case, the losses have been contained and I live to trade another day.

Weekly: CMG SPY TSLA

Oldtimers might remember the cartoon Wacky Races, featuring Dick Dastardly and his dog Muttley. Each cartoon episode, Dick would try to cheat his way to victory, and each time his plot would fail. His tag line was, drats, foiled again. That was my trading week. The continuing rally in SPY and TSLA had me covered sold calls for losses. A drop in CMG caused some April positions to go deep into the red. So I was down a bit for the week, overall about -2.5% for the year while SPY is about flat.

Here are the trades (c = calls, p = puts, weeklies denoted by W suffix, W1 is week1, sell means sell-to-open, cover means buy-to-close).
 
Mon Cover TSLA Mar 210 c 620 about a 500% loss. Crunch. Telsa gaps higher. I am still short 215 calls and 230 calls, so I am taking my lumps.

Sell HON Apr 97.5 p 32
Sell UNH Apr 110 p 39

Sell FB Apr 92.5 p 27
Sell MCD Apr 110 p 23

Cover TSLA Mar 215 c 415 about a 600% loss. Telsa holds its gains. It moved past my 215 stop level than came back a bit.

Tue Sell TSLA AprW1 255 c 101

Wed Sell MON Apr 80 p 53 rebalance

Sell CMG Apr 550 c 158 rebalance Chipotle tumbles again on news

Thu Rally rolls on and I scramble some more.
Cover SPY Mar 204 c 72 about a 10% loss.
Sell TSLA AprW1 185 p 85

Fri Sell CMG Apr 520 c 200 Chipotle continues lower.
Cover TSLA Mar 230 c 133 about a 300% loss.