13 - 2 for March

The March option cycle was profitable. I give myself a grade of B for the month of trading. The ongoing theme is that hedging strategies tend to underperform buy-and-hold, and more aggressive long strategies. I stuck to my knitting which tends to be low risk, low reward hedging strategies, that look for high probability profits, not home runs. I took a big swing on buying puts on GDX and whiffed, but that was maybe a 20% probability trade going in. Another big swing was buying a vertical put spread on SPY back in January betting on a stock market decline and I also whiffed on that. On SPY, I pivoted to an overall long position and profited on other sold puts, but that swing and miss had a big impact.

The losers for March include those two big swing whiffs. I realized a gain on one leg of a GLD call calendar, but overall I am down on the overall gold position, including the damage control trade. Some of the damage control and adjustment trades worked out well, such as selling APC Mar 90 calls, which reduced overall risk and increased overall profit. One that is not so good at the moment, was selling IWM Apr 85 calls (IWM is the Russell 2000 ETF). Winners include short puts on APC, BRKB, IWM, MCD, SPY, some with layers, and short calls on APC.

For closed trades, I count 13 individual option winners, 2 losers. Netting out to a nice gain, but again, not as much as more aggressive bullish traders or buy-and-hold investors that were 100% in equities. A big positive is that I avoided the temptation to try call a top in the stock market and continually add to short positions. When a trader sometimes goes long, sometimes short, matching the 100% long performance can be difficult in a straight up market. The dangerous temptation is to become more aggressively bullish now, because it would have been a good thing to do a month ago, or two months ago. Calling market tops tends to be another low probability game.

Going forward I am short puts on APC AXP IWM SLV SPY XRT, short a put spread on IBM. I also have a diagonal call spread going on IWM so that nets out to short IWM. I have a GLD call diagonal that now nets out to slightly positive delta because of the movement and time decay. I mentioned that April to Novemeber tends to be a bullish time in the bond market, so I am looking to sell puts on TLT (Treasury bond ETF).

Long APC AXP IBM IWM
Long SLV SPY XRT
net long GLD
net short IWM

APC Anadarko Petroleum
AXP American Express
GLD Gold ETF
IBM International Business Machines
IWM Russell 2000 ETF
SLV Silver ETF
SPY S&P 500 ETF
XRT Retail sector ETF