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:
long
APC ASH BRKB DIS FDX
long
HON JWN MMM MRK MSFT NKE
net
long AMGN BRKB GLD IWM SLB
net
short SPY TLT VRX
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