Friday, September 26, 2014

Weekly: Not a fan of Rollercoasters

I was never a big fan of riding rollercoasters, and now tend to opt out riding the real life ones. As such, I didn't enjoy this week's market action. Expiration on 9/19 frees up a lot of capital and I put a lot of it right back to work. Highlights include a new net long position in gold GLD and YHOO, new net short positions in bonds TLT, new long positions in IBB and MMM, great earnings from NKE where I add to longs. Here are the trades:

Fri Sell NKE Nov 80 puts @88.0. I add to longs in Nike after a great earnings report. Chart support at 80.

Thu Sell IWM Oct 116 calls @110.3. I rebalance my net long position by selling some calls on the Russell 2000 etf. Looks like I stepped into a pile of crap with some of the trades earlier this week, with lots of big losers. Some like IBB can't even be hedged because the bids have mostly vanished because of the fast market. I just checked the S&P 100 quote list and 99 are down, SO is the only winner at +0.02. Yikes! I never liked fast markets so it is an uncomfortable day for me.

Wed Sell YHOO Oct 35.5 puts @35.5. I rebalance my short strangles on Yahoo! as it finds support.

Sell MMM Nov 130 puts @144.7. New long position in 3M, mostly based on the chart.

Sell VRX Oct 100 puts 124.1. Rebalance short strangles on Valeant Pharma by selling a second layer of puts. I was short Oct 95 puts, Oct 155 calls. Many biotechs are up big today.

Sell IBB Oct 250 puts @278.7. New long position in the Biotech etf. I do this after looking at some more individual biotechs and their wide option spreads. Why the 250 strike? It is near the 10% probability line and also at chart support.

Tue Another active trading day as I continue to put capital back to work after expiration.

New net short position in TLT (20 year treasuries):
Sell TLT Oct 112 puts / Buy TLT Dec 110 puts @115.3 debit
It can be called a diagonal, but I see it is a put calendar with the out month at a lower strike than the front month. Why? Because there is so little premium at Oct 110 puts they aren't worth selling. As I wrote in my monthly update, bonds are still seasonally strong until November 1.

Sell IWM strangles: Sell IWM Nov 95 puts
Sell IWM Nov 122 calls @111.5.
I sell some November strangles on the Russell 2000 etf. This new layer skews net long, adding to a net long position. Again, a short strangle is a bet on a trading range.

Sell WFC Oct 50 puts @52.5. New long position in Wells Fargo.

Sell DIS Oct 92.5 calls @88.3. I hedge my short puts in Disney by selling calls.

Mon Lots of trades for me on the Monday after expiration, and the stock market dips.

Buy GLD call calendar: buy GLD Dec 123 calls
Sell GLD Oct 123 calls @117.1 for debit
New net long position in gold in the form of a calendar spread. Selling the fron month call lowers the cost and decay, risk is a sharp rally before October expiration.

Sell YHOO strangles: sell YHOO Oct 34.5 puts
sell YHOO Oct 44 calls @38.7
Yahoo pulling back on analyst downgrades. 44 is near the high, 35 is support.

Sell IWM strangles: sell IWM Oct 103 puts
Sell IWM Oct 118 calls @112.5
Minor chart support and resistance at 103 and 118 for the Russell 2000 etf.

Sell SLB Oct 110 calls @101.7
Rebalance short strangles in Schlumberger by selling another layer of calls. I was short the Oct 95 puts and Oct 115 calls.

Sell SPY backratio: Sell 2x SPY Nov 180 puts
Buy 1x SPY Nov 183 puts @199.0 credit
I sell a put backratio on the S&P 500 etf. This is a net long position with an explosive upside if there is a decline to the lower strike of 180. If the decline goes past 177, it starts losing big time money.

Sell BRKB strangle: Sell BRKB Oct 135 puts
Sell BRKB Oct 135 calls @139.5
I sell Berkshire Hathaway strangles, which is a bet on a trading range. I was already short the Oct 130 puts.

Position Summary:
net short SPY TLT VRX

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