Friday, February 07, 2014

Weekly: wide swings


I did okay during this extremely volatile week. For those not following the action closely, Monday the stock market tumbled, only to see it recover all those losses and end higher for the week. Thursday and Friday completely routed the bears. As always with options, could have been better, could have been worse. A few trades look stupid, so there is a lot of room for improvement. Here's a recap:

Fri Sell BRKB Mar 105 puts rebalance @111.4
Berkshire Hathaway continues to bounce back, and I add more deltas to my complex position via selling another round of puts.
Sell KORS Mar 80 puts rebalance @93.5
Michael Kors rallies a bit and add delta to my complicated position.

Thu Sell DIS Mar 67.5 puts @75.8
I open a new long position in Disney. DIS up on earnings.
Sell to close SPY Feb 169 puts @176.5
These puts are down to about a 15% chance of coming into the money. They are part of a put backratio (still short 2x Feb 166 puts), so I add to my risk and eat up some margin too.
Sell BRKB Mar 100 puts rebalance @110.0
I add some long delta to a complicated Berkshire Hathaway position, rebalancing as the stock rallies.

Wed Sell BRKB Mar 115 calls to rebalance @108.5
I reduce the delta on my long position on Berkshire Hathaway
Sell KORS Feb 100 calls to offset @89.6
Sell some way out of the money calls on KORS for a tiny premium. The frustrating thing is that if I had just sat through the turbulent morning yesterday, I would be in an okay position. Instead, I locked in a loss, and am at the risk of more losses by being long stock. Ah well, if I knew every wiggle on the chart ahead of time, I would be rich beyond Midas.
Cover short AMBA Feb 24 puts @.55 @26.6
Ambarella falling fast. I cover the short put leg of the strangle so the entire trade doesn't turn into yet another loser. This leg is at a tiny loss, but it is offset by the premium from selling Feb 42 calls.
Sell KORS Feb 80 puts rebalance @.20 @91.4
KORS rebounds off the lows, I rebalance for the second time today

Tue Buy KORS stock to compensate for being short Feb 90 calls @92.5
I am short calls going into earnings and Michael Kors shoots the moon and gaps up to over 92. Yikes. The options trade at a wide spread, so I decide to cover by buying the stock, capping the loss at $2.50 per contract. However, there is the risk is that it fades the gap and goes below 90. I didn't want to dilly-dally in case it gaps higher and keeps going. It is an uncomfortable position to be in. It is already fading as I type to below 91.0. These kind of situations remind me why I don't do well in fast markets, don't do well day trading. My streak of red continues as KORS closes under 90 for the day.

Mon Cover BRKB Feb 110 puts @113.3
cover TM Feb 110 puts @1.88 @112.2
I take two more big losses on Toyota and Berkshire as the stock market careens lower. I didn't want to risk being short puts on Toyota going into earnings. Earnings came out pretty good, so this was a bad one.

net short AMBA BA BRKB TLT XRT XOP
net long ASH GLD GS IWM KORS OXY SPY
net neutral AMGN
long DAL DIS LGF MRK PG TM WFC

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