Saturday, June 14, 2014

Weekly: Wild fire in APC

The takeover rumor rally in APC Anadarko Petroleum causes me some pain. I was short strangles and the stock is near the short June 110 calls. I sold some July puts to hedge my position. Other highlights including covering short puts in BEAV BE Aerospace, hedging in DAL Delta Airlines. I rebalance in IWM the Russell 2000 etf and the move lower gets me to net neutral. 

The sentiment at AAII is getting to be a concern. Others cite a record high bullish reading among advisers at Investors Intelligence. Transports are moving lower. Interest rates have ticked up. So there are reason for concern. It isn't time to prepare for the big one, but a minor squall has been in the forecast for over a year now. Here is this week's recap:

Thu Sell DAL Jul 45 calls @38.4. Delta Airlines knifing lower. I hedge my short Jul 35 puts by selling some calls.

Wed Sell APC Jul 100 puts @108.0. Anadarko Petroleum up on takeover rumors. My short position in APC Jun 110 calls is deep in the red. I sell yet another layers of puts to reduce my negative delta, but my net position is short. It is a difficult situation. I weigh other choices such as buying back the calls and taking the loss, buying shares of stock to hedge the short call, or selling other puts at different strikes and expiration, before deciding.

Tue Sell GLD Jul 115 puts .25 @121.4. Gold showing signs of life with a small up day. I rebalance my short strangles back to net long. I am betting on a continuation of a narrow trading range between 115 and 128. In the big picture this is a narrow window, but in the short term gold is not moving.
Buy to cover BEAV Jun 90 puts .35 @93.9. BE Aerospace says it is splitting into two companies. I took my position on news that they were seeking strategic alternatives. The outcome was not a buy-out, so the stock drops. I get out with a small profit.

Sell SLB Jul 97.5 puts .30 @106.5. I open a July position in Schlumberger.

Sell IWM Jun 112 puts .22 @116.5. I rebalance my complicated position on the Russell 2000 etf. I am still net short. It doesn't want to go down.

Sell WFC Jul 49 puts .17 @52.5. I open a July position in Wells Fargo.

Position Summary:
net long APC DAL
net neutral AAPL GLD IWM SPY

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