Friday, April 11, 2014

Weekly: bear week

The wild ride continues, the market gets even more volatile during this bearish week. I take some more losses. Expiration is Thursday next week because of the Good Friday market holiday. I closed all my in-the-money April short options, now hoping the rest come in on my side, with many getting close to their strikes.

Thu Buy to cover GILD May 60 puts @66.1. Gilead Sciences plummets lower. I take another big loss, about 300% basis the option premium collected. News is that Merck has competing Hepatitus C drug passing Phase II trials. I am still short Apr 62.5 puts and some calls. The entire GILD experience has been a house of horrors. Trade long enough and you will experience these kind of things. Hopefully, have enough winners to compensate.

Wed Buy to cover UAL Apr 43 puts @42.7. A painful loss on one of these worms. United Continental breaks the shelf of support at 43 on heavy volume, so I cover for a 600% percentage loss. As always the dollar amount is small. Some of my Monday hedging moves are also deep in the red. Again, if I could call every top and bottom, I would have no need to be timid, no need to hedge. However, as this 600% percentage loss (basis the option premium collected) in a week shows, an option trader can get in a lot of trouble real quick if wrong. Update a few hours later: Grrr, looks like another whipsaw, another taking out of stop-loss orders as UAL rebounds to even and then booms higher on Fed speak. C'est la vie (such is life), though it is extremely frustrating.

Sell ASH May 85 puts @97.7. Rebalance my position in Ashland, as it moves higher. Selling calls on Monday has the makings of a big mistake. We'll see if the uptrend continues.

Mon The bumpy stock market ride continues, with an early spike lower, a brief fake out rally, then new lows and more selling and signficant losses for me. I sell multiple layers of calls to hedge some of my short put positions. I am on a mechanical plan, to close any short options on a break of the strike price. Some are getting very close, some still have room.

Sell KORS Apr 95 calls @87.1. / Sell KORS May 100 calls @86.7. Michael Kors down again, no news that I can see. I hedge my short puts by selling two layers of calls. The decline has been painful. I will close some short puts on a close below 85 the rest below 80.

Sell IWM Apr 118 calls @113.0. / Sell IWM May 121 calls @112.9. Rebalance a bit by selling two layers of calls on the Russell 2000. April 109s are the nearest puts. April and May 121s are the nearest calls.

Sell ASH Apr 100 calls @93.9 / Sell ASH May 110 calls @93.9. Sell two layers of calls on Ashland to hedge short puts.
Sell DIS May 90 calls @80.1. Same idea, hedging short puts by selling calls.
Sell APC May 110 calls @97.5. Ditto, hedging short puts by selling calls,
Sell VRX Apr 140 calls @119.5. Ditto, hedging short puts by selling calls.
Sell AMGN Apr 125 calls @117.8. Ditto, hedging short puts by selling calls.

Position summary:

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