short backratio is for a net credit, net bullish, theta positive. If
the market is up or flat, I pocket a small credit. If the market
declines to 154, I get a huge profit. A decline below 151 and big
losses occur. Long
BRKB GE GDX IWM PG
winners, two losers for the July option cycle. One loser was Boeing,
the other was part of a SPY backratio. The Boeing loss was the worst
of the year, and why the grade is so low.
Some may ask what I learned from the BA loss. It happens, sometimes you enter a trade and a few hours later there is a fire on a plane. A person could never time that if they wanted to. I closed the riskiest part of the position, and even though, BA rallied from there, it was a sound move. A person either uses stops or doesn't.
have concentrated open positions for August, with APC BA LGF having
multiple layers of short puts. Many of the other puts are now so far out of the money, the delta is near zero, meaning I get little benefit from any up moves.
minor foray into gold is working out so far. My short puts in GDX got
off to a rough start, but are now moving in my favor. I still think
lower lows are possible.
I am still shying away from bonds. It gets
too hard when the Fed can pull its puppet strings or relax them at
any time. Some may say that about the other markets, but with bonds,
the Fed has openly discussed both sides of the trade, intervention,
tapering, and perhaps eventual unwinding.
seems to be moving higher based on a Jim Cramer recommendation. I am
short August calls and three layers of August puts. Earnings are on
July 24, which is after July option expiration. The rally in Boeing makes my position neutral.
my recent put sale on GDX isn't working out so far. So far the Yahoo
column call is a decent one. As always, no indicator is 100%.
However, I like to be on the positive side of the odds. In the option
market, it means lower payouts, a higher percentage of winners, and
in my case substantial risk if there is a big move against me.
/edit to add: I closed the BA Aug 104 puts for a monster loss. Another Boeing 787 had fire problems. Ouch. This is a big loser, worst of the year. Obviously, there was no way of knowing ahead when and if another incident might happen. Sometimes it is just bad luck.
add a third layer of August puts on Lions Gate. As the stock moves
up, the short strangle becomes a net short position. There is an
earnings report second week of August. Similar deal with Anadarko
Petroleum. I sell puts to rebalance a short strangle, and there are
earnings in August.
other short calls are taking on water as the stock market moves back
to record highs on SPY. I lucked into today's move on GLD, selling
puts late yesterday, which are down 60% in early trade. Some snarks
might bank it, and report a 60% one-day gain on that. However, the
margin requirement is large, so it is closer to 1% based on the
capital required to make the trade. Commissions take another
significant chunk out.
to add: I sell GDX Sep 20 puts @24.9
today? There was an article on Yahoo finance saying to sell GDX on
this up day. I don't know how long the link will remain, on the article
"Dump the Gold Miners."
>> the article ends with this bit:
If you've been lugging around the GDX today is your chance to hit the sell
button and look for better investments. At last count there are roughly
15,000 publicly traded companies in the world. At least 14,900 of them
have better prospects than the GDX.
To that I can say, wow, 14900 out of 15000 will out perform GDX? When someone writes something like that, they are likely to be eating some crow.
add to my gold longs with some July puts. I was already short Aug 91
puts. The recent low was 114.6. It is choppy action today around the
Fed news. The plan is to roll down and out if gold declines. If
steady or up, I get to pocket the tiny premium. One issue is the
large margin requirement for selling puts on GLD.
is a positive article on Lions Gate Entertainment on Marketwatch
today. For most of 2013, I have been cautiously bullish on LGF. With
the run it has had, call buying has done better than other
BA Boeing is now positive after a minor dip in the morning due to news
of the 777 plane crash this weekend.
add to longs in Anadarko Petroleum and Proctor and Gamble. More worms
for the tiger (worms, meaning low risk, tiny reward option selling).
gold and bonds resume the down trend. I have a tiny position in gold,
and for now I am steering clear of bonds. The trend in bonds is
lower. However, seasonality is positive, and sentiment is mixed.
Sentiment in metals is mixed as few bulls are throwing in the towel,
despite terrible tape action.