February was a good news, bad news kind of month. The good news is that for this option cycle there were six winners and no losers. The bad news is a big paper loss on long GDX puts, and with a strong trending market, many other trading and investing styles made more money. I was on the right side of being long stocks, short bonds. For stocks, aggressive long strategies were better than being timid like I was.
I avoided the wreckage that aggressive short sellers experienced when they shorted AAPL or the stock indexes. There was a funny tweet about that on one of the other sites. T-shirt design: I shorted 1000 shares of Apple and all I have left is this lousy T-shirt. It pays off big to be aggressive and right. Aggressive and wrong and it is ends up like my GDX position, down 90% in a few weeks, down 60% after a few days on news. Thankfully it is a small position.
This month's winners include short puts on BRKB EEM SPY TBT short put spreads on AAPL AMZN. I am deep in the red on long GDX March puts and am still in, with the current probability of profit in the 3% range. Even though I sold three layers of SPY February puts, I netted out to about neutral on SPY overall because I was long March 114 puts which I am still holding and are now at a huge percentage loss.
As for commentary, yes, the stock market is overbought. Yes, a correction is due. However, with the strong up trend, any topping action is likely to form a complex top, with head fakes and churning. Again, I am operating on a "no crash" in 2012 hypothesis. When price is uncertain, time may be a useful tool. For example, if the up move last 12 weeks, a correction may last for half of that or six weeks.
Long APC BRKB IWM MCD SPY XRT
* short GDX
* delta is near zero on this position