Saturday, July 23, 2016


I played CMG, IBM, NFLX before their news, ISRG, MSFT, QCOM, TUP, VMW after the announcements. I went far out on the wings for the pre-earnings plays. I picked up a few "nickels" in front of a potential earnings steamroller. Overall, a positive week.

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):

7/18/16 Mon Sell NFLX strangles JulW4
Sell NFLX JulW4 80 p 21
Sell NFLX JulW4 120 c 22

Sell TSLA JulW4 38
Sell VRX Aug 15 p 34

Sell IBM strangles JulW4 145/172.5 c
Sell IBM JulW4 145 p 27
Sell IBM JulW4 172.5 c 31
Sell IBM JulW4 148 p 45 third leg

Tue Roll CMG:
Cover CMG JulW4 300 p 05 for 95% profit
Sell CMG JulW4 350 p 45 ahead of Thu earnings
Cover CMG JulW4 500 c 14 for 80% profit
Sell CMG JulW4 470 c 72

Sell VWM Aug 60 p 35

Wed Sell MSFT Aug 52 p 17 earnings

Sell ISRG strangles: Sell ISRG Aug 650 p 136
Sell ISRG Aug 760 c 129

Sell BRKB JulW5 148 c 36 rebalance
Sell TSLA JulW5 202.5 43 rebalance

Sell TUP Aug 55 p 20 c
Sell SPY AugW1 209.5 p 32

Thu Sell BRKB Aug 148 c 102 rebalance
Sell QCOM Aug 56 p 18 earnings
Sell TSLA JulW5 240 c 37 rebalance

Fri Sell CMG strangles:
Sell CMG Aug 350 p 81
Sell CMG Aug 480 c 51

Sell CMG Aug 335 p 50 rebalance as CMG rallies
Sell CMG JulW5 400 p 45 rebalance again
Cover TSLA JulW4 190 p 01 97% gain

Saturday, July 16, 2016

Monthly: 66-19 Brexit whiplash, Grade C-

The Brexit dip then rally causes whiplash in my portfolio. Most of the bigger losses were on the call side as the market rallied sharply. I am now lagging all asset classes and indices. The minor bit of good news is that I am doing better than cash/money markets and still positive for the year. Still, it is a lackluster performance. The last week was particularly vexing as the market kept hitting new highs and I had to cover short positions most of the week.

Here is the etf round up, best to worst, dividends not included

SLV +45.7% silver
GLD +25.0% gold
TLT +14.8% U.S. 20 year treasury bonds

EEM +10.9% emerging markets
IWM +6.3% Russell 2000, U.S. small cap
SPY +5.9% S&P 500, U.S. large cap stocks

my trading account +3.4

Not good, but not terrible, mediocre is an accurate adjective. Onward, and upwards.

Weekly: Massive Short Covering

Fark! I had a miserable week in the stock market. Some say selling naked options is like picking up nickels in front of a steam roller. This week, I got crushed as the rally rolled on. I took multiple losses on sold calls. It is most galling to lose money when the stock market is going up. Casual market observers assume that because the market went up that anyone involved is making money. 
My rule #1 is: Live to trade another day. This means taking losses when they are manageable. Third week expiration gives me a chance to regroup with a lot of dry powder. Hopefully clear my head, to do better. It has been a mediocre 2016 for me so far, with my trading account now lagging the buy-and-hold investors in SPY and IWM.

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 Rally rolls on and I cover some sold calls for big losses
Sell SPY JulW5 204 p 34 rebalance
Cover FDX Jul 157.5 c 155 big losses on two traunches of calls

Cover AVGO Jul 157.5 c 205 about a 300% loss

Cover TSLA Jul 222.5 c 610 about a 150% loss
Cover TSLA Jul 225 c 590 about a 450% loss

Cover VGK Jul 46 c 75 about a 230% loss
Cover WFC Jul 50 c 07 about a 20% gain

Half an hour into trading, it is a bad morning for my account balance. I could have gotten out at better levels on almost all the above. However, with so many underlyings going into the money against me, I followed my mechanical rule rather than waiting. This time the out come is not so good.

Sell SPY AugW1 202 p 41
Sell COST Aug 150 p

Sell PEP Aug 100 p 21
Sell MCD Jul 120 p 12

Cover SPY Jul 201 p 03 95% profit
Cover MCD Jul 122 c 60 100% loss
A sour end to a sour day.

Tue More short covering as the rally keeps rolling
Cover SPY Jul 214 c about a 400% loss

Roll Chipotle:
Cover CMG Jul 305 p 03 95% profit
Sell CMG JulW4 300 p 75 in front of earnings

Sell BRKB Aug 135 p 54 rebalance

Cover IWM Jul 119 c 111?? 600% loss?
Cover ULTA Jul 255 c 140 about a 170% loss

Sell GLD Aug 140 c 29 rebalance

Another down day for me, though the damage was modest. S*cks to have the stock market go up and lose money.

Wed Roll CMG: 
Cover CMG Jul 465 c 04
Sell CMG JulW4 500 c 84

Sell VRX strangles Aug 15/35
Sell VRX Aug 15 p 47
Sell VRX Aug 35 c 24

Thu Cover SPY Jul 216 c 78 about a 200% loss
Buy BRKB shares 146.64 to cover sold Jul 146 calls
Sell YUM Aug 80 p 33

Sell MON strangles Aug 90/125:
Sell MON Aug 90 p 81
Sell MON Aug 125 c 50

Sell BRKB JulW4 148 c 30

Fri Sell TSLA JulW4 240 c rebalance

Saturday, July 09, 2016

Weekly: Two weeks worth of Brexit

It was a wild market while I was away. The Brexit dip then rally caused a lot of stress, but after the whirlwind, I am ahead. The short version of the story is that I got hurt on the dip, then got whipsawed on a few positions on the rally.

The overall market recovered all of its Brexit swoon. Maybe I can sort it out more after July 15th option expiration. Two new longs are PEP and COST.

Here are the trades for the past two weeks (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):

1st week here:
6/27/16 Mon Sell BRKB Jul 146 c 24
Sell IWM Jul 117 c 18
Sell SPY Jul 209 c 37

Cover FDX Jul 170 c 02 90% profit
Sell FDX Jul 157.5 c 41

Cover MCD Jul 125 c 05 about a 80% profit
Sell MCD Jul 122 c 28

Sell BRKB AUg 150 c 48
Sell AVGO Jul 157.5 52

Sell VRX Jul 26 c 18
Sell SPY JulW2 208 c 23

Sell TLT strangle 85: 
Sell TLT Aug 130 p 51
Sell TLT Aug 155 c 34

Sell TSLA JulW1 175 p 31
Sell VGK Jul 46 c 25

Wed 7/29 Sell SCTY Jun 20 p 41
Sell TSLA JulW2 187.5 p 144

Sell SPY JulW1 198 p 41
Sell AVGO Jul 140 p 70

Sell MCD Jul 114 p 28
Sell VGK Jul 43 p 35

Sell FDX Jul 138 p 35
Sell SPY Jul 198 p 74

Sell TSLA Jul 170 p 60
Sell SPY JulW2 200 p 17

Sell TSLA JulW1 200 p 58
Sell TSLA JulW2 197.5 220

Sell SPY Jul 201 p 94
Cover TSLA JulW2 210 c 325 big loss
Cover TSLA Jul 210 c 735 bigger loss

Sell TSLA JulW1 220 c 33
Sell TSLA Jul 22.5 c 242

Thu 7/30 Cover SPY JulW1 200 p 02 nice profit
Cover SPY Jul 209 c 222 big loss
Cover SPY JulW2 208 c 224 big loss

2nd week here:
Tue 7/5 Sell GDX Aug 25 p 37
Sell IWM Aug 97 p 34

Sell TSLA Jul 197.5 171
Sell TLT Aug 132 p 24

Sell MCD Aug 105 p 31
Sell GLD Aug 119 p 35

Wed 7/6 Sell GLD Jul 126 p 27

Thu 7/7 Roll out and up on TSLA puts:
Cover TSLA Jul 180 p / 
Sell TSLA JulW3 190 p 116 94 gross / 11

Cover TSLA Jul 170 p / 
Sell TSLA JulW3 195 p 188 175 gross / 22

I cover some sold puts to free up buying power:
Cover GLD Jul 117 p 01 97% profit
Cover SPY Jul 192 p 03 93% profit

Sell PEP Aug 100 p 36 earnings

Fri 7/8 Sell TSLA Jul 202.5 p 102
Sell SPY JulW3 206 p 48

Buying power covering:
Cover SPY Jul 198 p 04 95% profit
Cover GLD Jul 115 p 01 95% profit

Roll ULTA Cover Jul 220 p 05 95% profit
Sell ULTA Aug 230 p 155
Roll IWM: Cover IWM Jul 107 p 03 bp
Sell IWM Aug 107 p 54

Cover IWM Jul 117 c 97 stopped out for about a 500% loss

Sell COST Aug 150 p 51 new long Costco jumped on sales report two days ago

Saturday, June 25, 2016

Weekly: Brexit goes boom

Stock markets tumble on Friday as the UK votes to leave the EU, the Brexit. I got caught in the bull rally trap. It was a good week to be a cautious trader. My losses for the week ended about the same as SPY -1.4% or so. The other piece of crap was Telsa bidding to take over Solar City. I will live to trade another day. I did a lot of tap dancing, but it could have been many multiples worse.

I'm sure some aggressive traders were hit hard by the big moves this week, though a few may have had a huge up week. I plan to skip a week of blogging because of travel. Hopefully it will be a quiter week. I'll have two weeks of updates on July 9th. I am looking for more downside, because many novices want to buy this decline. I sold a lot of calls thinking that any upside will be limited.

Here are the crap trades for a crap week (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 Big rally on Brexit poll movements to stay. After option expiration, I have a lot of dry powder and put some to work.
Sell SPY JunW4 201 p 26
Sell SPY JulW2 195 p 44

Sell CMG Jul 305 p 50
Sell ULTA Jul 220 p 80

Sell AVGO Jul 135 p 40

Sell TSLA strangle: Jul 180 p / 265 c 82
Sell TSLA Jul 180 p 51
Sell TSLA Jul 265 c 31

Sell BRKB Aug 125 p 54

Tue Sell SPY JunW4 199 p 25

Wed Telsa down hard on news that it wants to acquire Solar City. I tap dance all day long. For the most part, the hole keeps getting bigger.

Sell TSLA Jul 240 c 61
Sell TSLA Jul 160 p 48

Sell MCD Jul 110 p 20 McDonalds lower on downgrade. I go long, but with a tiny position.

Sell TSLA JunW4 215 c 27
Sell TSLA JulW2 222.5 c 53

Cover TSLA JunW4 200 p 490 about a 500% loss
My gut tells me to stay with this one. In hindsight, I thankfully didn't listen to my gut and followed my rules as TSLA touched 189 before the week was over.

Sell TSLA JunW4 210 c 27
Sell TSLA Jul 225 c 111

Sell TSLA JunW4 207.5 c 36
Sell TSLA JunW4 185 p 36

Sell SCTY Jul 26 c 26

Sell FDX strangle 135/170 for 54: 
Sell FDX Jul 135 p 24
Sell FDX Jul 170 c 28

Sell ULTA Jul 255 c 54

Thu Sell TSLA JulW1 222.5 c 40
Sell TSLA JulW1 170 p 44
Sell TSLA JulW2 165 p 46

Sell SPY JunW4 203 p 34

Fri Brexit yes is to leave. Markets tumble. At the open, I am lucky enough to have modest losses.

Sell SPY JulW2 213.5 c 24
Sell SPY Jul 214 c 30
Sell GLD Aug 115/150 strangle 71: GLD Aug 115 p 41
Sell GLD Aug 150 c 30
Sell GLD Jul 117 p 18
Sell VGK Jul 48 c 29

Mid-day worried about a sell off into the close
Cover TSLA JunW4 185 p 04 for 90% gain
Cover SPY JunW4 203 p 27 for 12% gain

Online newbies lean towards buying this dip. I sell calls thinking any up side is limited and more downside may be coming.

Sell IWM Jul 119 c 17
Sell MCD Jul 125 c 22
Sell AVGO Jul 165 c 43

Sell GDX Aug 21/36 strangle 36: 
Sell GDX Aug 21 p 20
Sell GDX Aug 36 c 16

Sell TSLA Jul 210 c 148
Sell VRX Jul 27.5 c 17

Sell WFC Jul 50 c 13
Sell CMG Jul 465 c 52

Sell TSLA JulW1 170 p 38
We didn't get the hard sell off into the close that I feared. Market may tick up on Monday as some novice mutual fund buyers want to buy the dip. I lean towards more

Saturday, June 18, 2016

Monthly: Up, Down, Sideways, 51-10 Grade C+

I count 51 winners, 10 losers for the June option cycle. I eek out a gain, but it felt like a crap month. About two weeks ago, I was feeling pretty good, then my fortunes reversed and most of the gains for the trading month slipped away. My two big winners for 2016, my so-called lucky stocks, CMG and TSLA turned against me. Despite the recent setbacks, these two still top my winning ticker symbols list for 2016. 

I managed the Monsanto takeover mess, and booked some more losses, but they were manageable. Considering I was short three legs of calls before the takeover news, the losses were as bad as imagined. Part was due to luck, but I didn't freeze on the news.

A lot of people are looking at the Brexit vote, whether the UK leaves or remains in the European Union. Longer term, it will have ripple effects. Shorter term, it is often the higher percentage play to go against the crowd. As for the bigger picture, here are some etfs I track, best to worst for calendar 2016:

YTD for 2016, dividends are not included
SLV +25.9% silver
GLD +22.2% gold
TLT +12.5% U.S. 20-year treasury
EEM +3.4% Emerging market stock
SPY +1.3% U.S. large cap stock
IWM +1.3% U.S. small cap stock

my account +2.2%

So, some good news and bad news. The bad news is that we didn't go all in on gold, silver and treasuries on Dec 31, 2015. The good news is that I am up for the year, about even with the U.S. stock indices, after factoring in a 1% SPY dividend yield. The other good news is that +2% isn't terrible for six months, and ahead of most short term CDs and savings accounts.

When people hear "options trader," many think gun slinger, YOLO (you only live once) kind of traders that take huge risks. Not very many think about cautious, near delta neutral traders like me. I don't care what others think. I hope you are the same. My rule #1 is to live to trade another day. Risk and reward are often correlated. I rarely take on a lot of risk, so my returns are going to be on the small side.

Friday, June 17, 2016

Weekly: Stop losses lead to frustration

It was a frustrating week. Several stop loss levels got triggered and I took some big losses. A mild recovery later in the week was a small consolation prize for my losing week. Two of my "lucky" stocks for 2016 went bad, as I took big losses in Chipotle and Tesla. Most galling was CMG, had I held to expiration, it would have come out fine. Instead I took big hits on two legs.
Stop losses are a philosophical question for traders. Either a person uses stops or doesn't. If a person uses stops, there are going to be times like this week, when the stops get run and then the stock reverses. It is mostly a matter of when not if. If a trader uses technical support levels, everyone else can see those same chart levels.

The other side is that if a person doesn't use stops a trending move can cause massive damage. The losses can go exponential for those that sell naked options on leverage. In fast markets, margin calls and forced liquidations can and do happen. This too is also a question of when not if. Yes, the odds or a huge trending move are smaller, but when it does happen, it can wipe out a leveraged account.

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 Cover TSLA Jun 217.5 p 365 -500%
Cover CMG Jun 397.5 p 913 -700%
Cover CMG Jun 395 p 800 -600%
A royal "flush" as I cover three legs for huge losses. The declines in Chipotle run through my stop levels. TSLA doesn't break it, but sold another leg of 217.5 puts so cover a bit early. Time to regroup, try and clear my head after these destabilizing hits. My consolation prize is at least I wasn't short LNKD calls (LinkedIn went up about 50% today and anyone short calls was obliterated).

Tue Cover TSLA JunW5 217.5 p 675 about a 400% loss

Sell CMG Jun 365 p 55 Chipotle closes higher after being down 10 points

Wed Sell IWM Jul 121 c 23
Sell SPY Jul 216 c 28

Thu Cover VRX Jun 22.5 p 56 about a 45% loss
Sell GLD strangle 115 p /145 c for 42
Sell Jul GLD 115 p 23
Sell Jul GLD 145 c 19

Sell TLT strangle 127 p /150 c for 36
Sell TLT Jul 127 p 16
Sell TLT Jul 150 c 20

Sell SPY Jul 192 p 82 add delta as market rallies
Sell IWM Jul 101 p 30

The monthly update will come tomorrow (Sat).

Saturday, June 11, 2016


It was a see-saw week and I got the short end of the stick at the end. My account was down, mostly from CMG and TSLA. Just when I thought we might be settling in for calm summer trading, there is a sharp drop on Friday. We will see if there are more storms and I get stopped out on my positions, or if blue skies return and I escape. 
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 to close TSLA Jun 200 p 72 for a 92% loss
I bought these puts for over $800 per contract, so getting out at $72 seems terrible. The big picture is that I used this leg to sell many layers of weeklies puts so overall I am on the sum of all TSLA positions.

Sell TSLA Jun 202.5 p 82
Sell TSLA Jun 250 c 16
A bit later, I sell a layer of strangles with a bullish skew.

Tue Sell VRX Jun 28.5 c 16 Valeant lower after earnings
Sell XLE JunW4 64 p 16 rebalance

Sell TSLA JunW4 200 p 88
Sell TSLA JunW4 260 c 36
Tesla rally rolls on, I sell another brace of strangles

Sell VRX strangles 56: Sell VRX Jul 15 p 26
Sell VRX Jul 35 c 30

Sell TSLA Jun 210 p 60 rebalance
Sell VRX Jul 15 p 15 rebalance

Sell SCTY Jun 20 p 20 rebalance

Wed Sell TSLA Jun 217.5 p 81 rebalance
Cover TSLA JunW1 200 p 02 buying power
Sell TSLA JunW4 217.5 p 140 rebalance

Thu Sell TSLA Jun 257.5 c 22

Fri Cover GLD Jun 109 p 01 95% profit
Sell TLSA JunW4 240 c 112 rebalance