Friday, May 23, 2014

Weekly: dog days

Trade slows, spreads widen as many leave early for the holiday. I was on the right side of the stock market (bullish), but I often wish I was more aggressive with the market moving higher and volatility moving lower like the tide on the beach. 

A few posts ago, I wrote about a possible market top (link). The transports IYT made a new high today. The local Investors Business Daily CANSLIM meetup only had about a dozen people. If this was a bubble market, there might have been 100 people at the live meeting to talk stocks. So no top yet. Many will want technical confirmation, with a break of the 200 day moving average.

In observance of Memorial Day, here is a Youtube link to Trace Adkins performing Arlington (link2). Highlights for this week include new positions in Nordstroms JWN and Dillards DDS. 

Here is the recap:

Thu Sell IWM Jul 94 puts @110.8. I rebalance my short strangles on the Russell 2000 etf. I call these mechanical trades, because I am targeting a certain delta.
Sell DIS Jul 72.5 puts @82.5. I open a July position in Disney. DIS is one of my better trading stocks for 2014, so I want to stay with it.
Sell VRX Jul 95 puts @131.4. Similar deal for Valeant Pharma. I open a July position in one of my winner stocks for the year.

Wed Sell KORS Jun 75 puts @93.0. Michael Kors has earnings out next week on the 28th. I open a position way out of the money. Two other high end retailers, Nordstroms and Tiffany, reported strong earnings.

Tue Sell JWN Jun 62.5 puts @67.1. Nordstroms had a good earnings report last Friday and is pulling back a bit. Chart support around the 62.5 strike.

Sell GLD July strangles @124.8:
Sell GLD Jul 113 puts / Sell GLD Jul 137 calls
Again, selling strangles is a bet on a trading range. I am already short June strangles. Option premiums are tiny vs. the capital needed for these trades, but I have a lot of buying power and not that many good ideas at the moment.

Mon A lot of capital is freed up with option expiration, and I put some to work.

Sell IWM July strangles @110.0
Sell IWM Jul 91 puts / Sell IWM Jul 120 calls. These are way out of the money, so premiums are tiny, probabilities of profit in the 93% range. I already am short layers of June strangles on the Russell 2000 etf.

Sell EPI Jul 19 puts @22.1. Rally keeps going in India's stock market, EPI is an India stock etf. I add to longs with a July position. Again, it is extended, the base for the breakout is 19.

Sell AZN Jun 60 puts @71.8. Astra-Zeneca rejects Pfizers take over bid, stock moves sharply lower. Call premiums remain elevated, so some believe another company may make a bid or something else might go on. The 60 level is two support levels lower. Stock is holding up well intra-day.

Sell DDS Jun 95 puts @109.1. Dillard broke out on earnings on Friday. Chart base is 97.5.

Position Summary:

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