Sunday, December 20, 2015

35-5 for December, Grade A-

I count 35 winners, 5 losers for the December option cycle. I blundered into my biggest dollar winner, CMG assignment then selling on the first day of the option cycle. Some of the other winners include AMZN, DIS, FB (Amazon, Disney, Facebook). Some losers include LUV JBLU TSO (Southwest Airlines, JetBlue, Tesoro Petroleum). 
I was extra cautious this month. Given the volatile end to the option cycle, caution was a good thing. As the year winds down, I am up 11%+ in my trading account. Nothing to write home about, but I'll take that every year. As always, risk often correlates with reward. For a cautious trader, 11% is a good result.

I'm still too busy to be doing much deep thinking on the stock market. Sometimes overthinking is what gets me in trouble so being busy might be a blessing.
An early Merry Christmas to all. Cheers.

Saturday, December 19, 2015

Weekly: Rollercoaster market brings losses

I take some losses in this week's volatile market. I no longer enjoy rollercoasters. I'll post the monthly round up on Sunday.

Here are the trades (c = calls, p = puts, sell means sell-to-open, cover means buy-to-close, all are third week expiration unless noted).

Mon red ink as airlines dip
Cover JBLU Dec 23 p 75 300% loss
Cover JBLU Jan 23 p 140 600% loss
Cover LUV Jan 43 p 195 400% loss
Sell TSO Dec 109 c 32

Tue Sell BRKB Jan 125 p 52
Sell MCD Jan 100 p 27

Wed Sell DIS Jan 100 p 50

Thu Sell MCD Jan 105 p 30

Fri Sell DIS Jan 125 c 30
Cover BA Dec 139 p 5

Saturday, December 12, 2015

Pop goes the weasel (TSO)

Tough week for me. I took a 1000% loss on some sold Tesoro Petroleum TSO puts. Other than that, there was a large swath of red ink. Here are the trades: (c = calls, p = puts, sell means sell-to-open, cover means buy-to-close, all options are third week expiration unless noted)

Mon Sell ALK Jan 72.5 p 25
Sell JBLU Jan 23 p 20
Sell NKE Jan 150 c 28
Sell XOM Jan 60 p 19
Sell LUV Jan 43 p 30

Tue Turns into deep doo-doo as LUV declines
Sell LUV Jan 50 c 43
Sell FB Jan 120 c 25
Sell BA JanW2 157.5 c 22
Sell XOM Jan 85 c 27
Sell MCD Jan 125 c 20

Wed Sell ALK Dec 90c 22
Sell BRKB Jan 140 c 45

Thu Sell JBLU Jan 27 c 25
Cover TSO Dec 103 p 335

Saturday, December 05, 2015

Weekly: Blurred vision

I was so busy with other things, that the market week feels like a blur. I did make some trades, mostly erring on what I see as the side of extra caution. I didn't navigate the big dip and big rally very well. Rarely do I. I tend to balance back towards delta neutral and this results in whipsaws on the short sharp moves.

Here are the trades, not much stands out in my mind. A lot of cautious chicken-ish trades for not much premium, at a high probability. (c = calls, p = puts, sell means sell-to-open, cover means buy-to-close, all are 3rd week expiration unless noted).

Mon Sell BA Jan 130 p 53
Sell DIS Dec 122 c 20

Tue Sell IWM Jan 103 p 24
Sell FB Jan 87.5 p 30
Sell TSO Jan 95 p 50
Sell BRKB Jan 120 p 25

Wed Sell TSO Dec 130 c 24
Sell TSO Jan 135 c 41

Thu Sell BA Dec 152.5 c 19
Sell IWM Jan 124 c 20
Sell V Dec 82.5 c 17
Sell DIS Jan 125 c 31
Sell SPY DecW4 185 p 31
Cover FB Dec 95 p 37 for about a 66% winner

Fri Sell BA Dec 139 p 30
Sell DIS Dec 105 p 32
Sell V Dec 74 p 17
Sell SPY Dec 196 p 40
Sell SPY Jan 186 p 48

Saturday, November 28, 2015

Winner winner Chipotle dinner

I stumble into a huge winner on CMG. I was assigned last Friday at 545 and sold Monday for 567. Other than that the week was quiet. Here are the trades: (c = calls, p = puts, sell means sell-to-open, last number is price per contract, all are third week expiration unless noted with a W).

Mon My lucky day as I sell CMG shares for a big winner.
Sell CMG shares @567.79

Sell BA Dec 135 p 31 reestablish long
Sell XOM Dec 70p 22 new long

Sell JBLU Dec 23 p 20 reestablish long
Sell AMZN Jan 555 p 277 rebalance

Tue Sell AMZN Jan 800 c 151
Sell FB DecW1 111 c 19

Sell IWM Jan 98 p 23
Sell MCD Dec 100 p 18

Wed Sell NKE Jan 110 p 48
Sell TSO Dec 103 p 38

Sell V Jan 70 p 28
Sell DIS Jan 97.5 p 28
Sell AMZN Dec 580 p 113

Fri Sell DIS Jan 130 c 37
Sell DIS Jan 92.5 p 33

Saturday, November 21, 2015

Monthly: Big losers ruin the month, 52-7 Grade C-

I count 52 winners, 7 losers for the November option cycle. Unfortunately, some of the losers were big whoppers (CMG was the biggest loser) and my account was down a bit for the month. So the grade is C- which is below average. Overall, a disappointing month of trading. I have less time for the stock market during the fall. The time crunch will tend to get worse until Christmas.

The good news? I stayed relatively disciplined, following my trading rules and for the most part avoiding the temptation of revenge trading. Typical revenge trading is trying to make up for a loss by being more aggressive.

Friday, November 20, 2015

Weekly: Bush-whacked again

Two stop losses triggered near the worst levels, ruining my trading week. CMG and EXPE dipped then rallied. The dip taking some positions at near the worst levels. As I often write, this will happen to any trader that uses stop losses, or mental stops. The alternatives are not to use stops, or perhaps use time related stops. A few will even double down on losers. My schedule hasn't left all that much time for stock or option trading or blog updates. I'll do what I can but I few posts may be a day or two late.

Here are the trades from my sour week of trading (c = calls, p = puts, sell means sell-to-open, cover means buy-to-close, weeklies denoted by w suffix, NovW4 would be November week 4, all others are third week expiration)

Mon 11/16/15 Sell FB Nov 108 c 19
Sell EXPE Nov 130 c 28

Sell MCD Dec 95 p 32
Sell AMZN Dec 740 c 94

Tue Sell FB Dec 95 p 58
Sell V Dec 70 p 22

Two options cross their strike price and that is my mental stop. I get out for huge percentage losses:

Cover EXPE Nov 120 p 104 about a 300% loss
Cover CMG Nov 580 p 603 about a 600% loss. Ouch!

Sure I could hold and hope, but my trading plan is to cover if the sold option crosses over strike price. The most pain cases are when the stock immediately reverses. That ugly and painful scenario has happened more times than I want to think about.

Wed Sell FB DecW1 100 p 39

Thu Sell AMZN Dec 570 p 233
Sell NKE Dec 110 p 60

Fri Sell AAPL Dec 100 p 23

Saturday, November 14, 2015

Weekly: Thoughts and prayers for Paris France

First, our thoughts and prayers go out to the people of Paris France. Events on that scale, that keep investment losses or gains in perspective. 

The U.S. stock market tumbled. Some stocks such as Nordstroms JWN got hit incredibly hard. Part of me wants to say I saw it coming, but that might be revisionist hindsight thinking. Just a week ago, I wrote about missing the boat for the most recent rally. 
In any case, it was a decent time to be a chicken, and that may have been the best description for my market stance. I was down for the week, but the damage was modest. I some some strangles on AAPL, AMZN and FB, and went far out of the money. I believe every new position for the week is in the red, but that will tend to happen when the market moves down sharply.

Here are the trades: (c = calls, p = puts, sell means sell-to-open, all are third week expiration unless noted).

Mon 11/9/15 Sell BRKB Dec 125 p 53

Wed Sell CMG Nov 580 p 75

Sell AAPL Dec 90 p 25 (strangle)
Sell AAPL Dec 130 c 53

Sell AMZN Dec 550 p 136 (strangle)
Sell AMZN Dec 800 c 58

Thu Sell IWM Dec 100 p 21 (strangle)
Sell IWM Dec 124 c 17

Sell FB Dec 92.5 p 25 (strangle)
Sell FB Dec 125 c 20

Saturday, November 07, 2015

Weekly: Missing the boat

For the most part I have been too cautious, too delta neutral during the recent big rally. I expected another leg down into late November. Instead, it has been rally mode for SPY and many stocks. AMZN has had a huge move after the earnings pop and I feel like I missed that boat and many others. Interest rates ticked higher this week after the employment report.

Highlights of a relatively quiet and tepid week of trading for me include small new long positions in FB and TSLA on earnings. I didn't have the guts to add to CMG on news and a downgrade. 

Here are the trades (c = calls, p = puts, sell means sell-to-open, weekly options have the W suffix, NovW2 means week two, all others are third week expration. The last number is price per contract.

Mon 11/2/15 Sell CMG Nov 690 c 35 rebalance as Chipotle moves down on news

Sell IBB Nov 280 p 55 rebalance
Sell DIS Dec 100 p 71 rebalance

Tue Sell DIS Nov 104 p 38 rebalance

Wed Sell TSLA NovW2 200 p 40 earnings
Sell SPY Nov 199 p 31 rebalance

Thu Sell FB Nov 100 p 28 earnings
Sell IWM Dec 104 p 43 add to longs

Sell DIS Dec 130 c 34 rebalance
Sell TSO Dec 95 p 57 rebalance

Saturday, October 31, 2015

Weekly: burned in IBB

A rally in biotech stopped out some position in IBB for huge losses. IBB rallied over my 330 strike price on sold calls and that is the stop level.

Overall, a tiny loss for the week. Other highlights include new long positions in EXPE on earnings, and HOT on takeover rumors. The weekly options I sold on TSLA came in, despite some turbulence in the price action.

Here are the trades (c = calls, p = puts, sell means sell-to-open, weekly options denoted by W suffix, so NovW2 would be November week two, all others are third week expiration) The number at the end is price of option, usually the premium collected from selling the option.
Mon 10/26/15 Sell IBB OctW4 282.5 p 44 rebalance
Sell SPY NovW1 199p 25 rebalance

Tue Sell MCD Nov 120 c 25 hedge
Sell JBLU Nov 27 c 15 hedge
Sell IBB OctW5 300 p 35 rebalance

Wed Sell IBB NovW1 290 p 62 rebalance
Sell IWM Nov 107 p 23 add
Sell HOT Nov 65 p 25 chart

Cover (buy-to-close) IBB OctW5 330 c 390 huge losses as biotech rallies about a 400% loss
Sell SPY NovW2 199 p 36 rebalance

Thu Sell TSO Nov 92.5 p 25 rebalance

Fri Sell IBB Nov 365 c 52 reestablish
Sell EXPE Nov 120 p 30 new long on earnings

Saturday, October 24, 2015

Weekly: Boom goes the dynamite

Stock market explodes to the upside on Thursday and Friday. Unfortunately, I have a painful down week. SKX Sketchers craters -30% on their earnings report and I take about a 1300% loss on some sold puts. It is always painful to lose money, but it seems like it hurts more when the overall market is up. Another big loss was on some sold AAPL calls. A third gut wrencher was selling strangles on TSLA Telsa and then having Consumer Reports pan the Model S car and the stock gets hit.

The philosophical perspective is that I've had a decent run for a little bit and my luck was due to revert to the mean and balance out to the bad side. If a trader sells enough premium some big moves are going to against you.
I initiate new long positions in BA Boeing, BRKB Berkshire, and MCD McDonalds.

Here are the trades (c = calls, p = puts, sell means sell-to-open, weeklies denoted by W suffix, e.g. NovW1 is November week one, all others are third week expiration).

Mon 10/19/15
More layers on the biotech etf:
Sell IBB OctW4 290 p 45
Sell IBB OctW4 335 c 30

Sell BRKB Nov 125 p 54 new long, strike is below recent lows

Tue Sell AAPL OctW5 92 p 20 rebalance
Sell IBB OctW5 330 c 95 rebalance

Sell TSLA strangles, way otm. A short time after I get in, Consumer Reports sends TSLA stock down, dropping the Model S from its best car short list.
Sell TSLA OctW5 195 p 35
Sell TSLA OctW5 250 c 24

Wed Sell IBB OctW4 320 c 35

Sell IBB OctW5 330 c 70
Sell TSLA OctW5 230 c 65

Sell Disney strangles:
Sell DIS Nov 95 p 34
Sell DIS Nov 124 c 20

Thu Sell MCD Nov 97.5 p 37 new long
Sell BA Nov 120 p 20 new long position

Sell SPY NovW1 196 p 36
Sell MCD Nov 100 p 42 add to longs

Fri Cover AAPL OctW4 116 c 234 1500% loss
Cover SKX Nov 35 p 500 about a 1300% loss

Saturday, October 17, 2015

Back in the saddle 44 - 12 for October, grade B-

I count 44 winners, 12 losers for October. The good news is that my trading account has recovered all the losses and then some from the summer swoon. Yippee! The bad news is that my overall positioning was a bit too cautious. I thought the market would be lower. I covered some sold calls for losses in DIS Disney, NKE Nike, SKX Sketchers and others.

Back to the good side, I played IBB the biotech etf rather well, with mostly winners, and a lot of them. IBB is not all that liquid, so I sold options a bit further out of the money than usual to lessen the chance to have to cover.

Going forward? I think the correction isn't over. New lows might still be out there. The parallel is to the 2010 flash crash correction, which took four months to bottom. If 2015 keeps similar time, late November 2015 would be the bottom.

If this is the start of a bear market, all bets are off. I am open to that possibility. However, am not willing to place heavy bets on the bear becoming dominant. It is just a possibility.

Weekly: upward bias

Market tilts up. I cover some calls for losses. I sell strangles in AAPL, CMG and IBB. I make money, though when covering for losses, it feels like I am leaving significant money on the table. The bigger picture is the overall profit level. As always, I tend to be a cautious, hedging trader. Low risk, low reward, and hopefully steady profits are what I am mostly looking for, with the occasional big swing for the fences.

Here are the trades (p = puts, c = calls, weeklies have the W suffix, NovW1 for first week in November).
Mon Sell IBB Oct 327.5 c 35 Rebalance in the biotech etf

Tue Another day, another whipsaw. This time it is Disney making a new high then fading.

Cover DIS Oct 107 c 77 about a 500% loss on this leg
Sell IBB strangles:
Sell IBB OctW4 330 c 99 / Sell IBB OctW4 270 p 77

Sell SKX Nov 105 p 130

Sell AAPL strangles:
Sell AAPL Nov 90 p 54 / Sell AAPL Nov 130 c 19

Wed Sell TSO Nov 120 c 25 rebalance in Tesoro

Sell AAPL OctW4 116 c 18 rebalance in Apple

Sell CMG strangles:
Sell CMG Nov 545 p 200 / Nov 885 c 100

Thu Sell NKE Nov 115 p 41 rebalance in Nike

Sell SPY OctW5 189p 29 rebalance

Sell ALK Nov 65 p add to longs

Fri Rally in Nike and Sketchers cost me some money

Cover NKE Oct 129 c 49 about a -15% loss

Sell V Nov 67.5 p 38 add
Sell TSO Nov 85 p 34 rebalance

Cover SKX Oct 45 c 20 (after 3-for-1 split) about breakeven

Saturday, October 10, 2015

Weekly: air pocket in SKX

Sketchers SKX suffered a dramatic drop on no news, and I exit my long positions for big losses. Other highlights are a bevy of winners in IBB the biotech etf, and new long positions in ALK JBLU TSO (Alaska Air, Jet Blue, Tesoro Energy). I also took some small losses in GoPro GPRO Honeywell HON and a big whopper covering some IWM calls I sold. 
Overall, my account was up nicely, as the market rallied all week. It is nice to be wrong and yet still make money. It is a by product of the hedging, low risk, low reward style. Some ask why I trade that way, and the answer is weeks like this, when I am mostly wrong on market direction (I was too cautious), but still made decent money. Those that are better at directional trading do that.

Here are the trades (c = calls, p = puts, weeklies have the W suffix (OctW5 for October week 5), all others are third week expiration. The number is the price paid per contract (eg: 25 = $25 per contract)

Mon A WTF? rally. I am positioned okay because IBB doesn't participate in the rally.

Sell V Oct 67.5 p 22
Sell IBB Oct 285 p 156

Sell IWM Oct 107.5 p 35
Sell IBB OctW2 335 c 45

Sell JBLU Nov 22 p 25
Sell IWM Nov 100 p 60
Sell SPY OctW4 186.5 52

Tue Sell IBB Oct 327.5 c 76
Sell TSLA Oct 270 c 26

Wed Sketchers dives lower on no news. Again WTF? I get out near the lows :(
Cover SKX Oct 118 p 338 for about a 250% loss
Cover SKX Oct 120 p 380 for about a 300% loss

Cover V Oct 72.5 c 122 for about a 200% loss
Sell DIS Oct 107 c 15 hedge sold puts

Thu Sell ALK Oct 70 p 25 New long position in Alaska Air
Sell SKX Oct 115 p 64 I go back into Sketchers
Sell TSLA Oct 250 c 26 Rebalance in Tesla Motors

Cover GPRO Oct 24 p 27 Close this leg on GoPro for a 20% loss.

Fri Cover IWM Oct 115 c 158 for about an 800% loss in the Russell 2000

Cover HON Oct 105 c 29 about a 10% loss in Honeywell

Sell DIS Nov 92.5 p 70 rebalance in Disney
Sell SPY OctW5 187 p 46 rebalance in S&P500

Sell TSLA Oct 190 p 28 add to a net long position in Tesla
Sell TSO Nov 85 p 68 new long in Tesoro

Saturday, October 03, 2015

Weekly: Batman market Wham Pow

What comes to mind is the old Batman TV shows featuring Adam West. In the fight scenes, there are big captions: WHAM POW. Here is a short youtube link Batman tells Penguin "surrender that giant pie" link

In particular, Friday, saw over a 5 point swing from low to high on SPY. It looked to me like a massive short squeeze. Highlights of this week include my biggest long premium winner of the year in terms of dollar amounts. 

The IBB Oct 325 puts were sold to close for a 60% profit. The biotech etf continues to have wild swings. I did okay overall, but felt like I left a lot of money on the table. The realistic view is that "half a loaf" is what my cautious strategies tend to get. Can't expect big winners, if I am usually hedging. I sold a strangle on TSLA.

Here are the trades. I am changing the format to start with Monday end with Friday. Not a big deal but it may read a little better. (c = calls, p = puts, sell means sell-to-open, weeklies indicated by w suffix, all other options are third week expiration, numbers are prices in dollars per contract)

Mon Sell NKE Oct 129 c 49
Cover SPY OctW1 185 p 81 About a 25% profit
Sell SKX Oct 150 c 75

Cover BWLD Oct 175 p 65 About a 27% profit
Cover PANW Oct 155 p 85 About a 16% profit

Tue Sell IBB OctW2 270 p 280
Sell IBB OctW1 270 p 85
Sell IWM Oct 115 c 21

Sell GPRO Oct 38 c 19
Cover IWM Oct 107 p 222 About a 200% loss

Sell IBB Oct 342.5 c 57
Sell IBB OctW2 320 c 103

Cover SPY OctW2 185 p 265 About a 350% loss
Sell V Oct 72.5 c 26

Wed Sell-to-close IBB Oct 325 p @2462 about a 60% gain, biggest long premium winner of the year.

Sell SPY Oct 177 p 56
Sell IBB Oct 250 p 110

Sell SKX Oct 118 p 100
Sell NKE Oct 112 p 54

Sell IBB OctW1 320 c 56
Sell IBB OctW1 315 c 55
Sell IBB Oct 335 c 80

Thu Sell IBB Oct 240 p 63

Fri Sell IBB OctW2 280 p 153
Sell IBB Oct 270 p 170

Sell SPY Oct 181 p 42
Cover (buy-to-close) IBB 315 c 40 about a 20% gain

Sell TSLA Oct 205 p 60
Sell TSLA Oct 285 c 27

Sell IBB OctW2 285 p 90
Sell NKE Nov 110 p 72
Sell SPY Oct 183.5 p 47

Saturday, September 26, 2015

Weekly: Biotechs fall

A quieter week for me. Market as measured by SPY down a bit, my account up a bit, mostly from puts on IBB. 

Highlights are IBB falling while I am short, new long positions in GPRO and NKE. Here are the trades: (c = calls, p = puts, sell means sell-to-open, weeklies use the W suffix so OctW1 means October week one)

Mon Sell SPY OctW2 185 p @197.0 Rebalance in the SP500 etf. I came in net short, so am adding long delta on the morning rally.

Sell GPRO Oct 25? p @32.9 New long position in GoPro. Barrons has a negative story on the camera maker.

Thu Wash out lows take me out.
Roll: Cover IBB SepW4 325 p @325.8 / Sell IBB OctW1 Oct 290 p / The closed leg is for about a 400% loss, but I have an offsetting position.

Sell HON shares half position (last batch of shares) @92.12 about a 13% loss

Fri Sell NKE Oct 115 p @125.4 New long position in Nike. NKE higher after earnings.

Saturday, September 19, 2015

White Caps 71-5, grade A- for September

When the wind picks up, there are white caps on the ocean. After last month's big losses, I made profits. I am not all the way back, but neither is the market. This cycle, I sold a lot of weekly options and most came in safe. Unfortunately, some of the losers were whoppers, and winners are all small to tiny. So even with above average win rate (80% is average for this method) the grade is A minus.

I got whipsawed in SPY and NFLX. I did a lot of trades in SPY and IBB. Despite a couple of bad whipsaws where I got stopped out in SPY, overall it was a big winner for me this cycle. Same with IBB.

One trite saying: "if I knew better I'd do better," meaning that if knew where prices were going, of course I'd make more money. After getting burned a couple of times, I moved further out in price and closer in on time, for higher probability and lower profit. This helped the win percentage, and also brought in some decent profits.

Going forward, my market predictions tend to be no better than coin flips, so mostly I watch the market action and try to listen to what it is saying. This tends to be better than me trying to predict. I do use support and resistance on the chart, and do trade off news events. The market reaction to the Fed news seems rather bearish, but we have all seen the wide swings in mood and price.

Will the lows hold? If I had to guess, I'd guess no, that lower lows are coming. If I get that first question correct, the next question becomes when. Some are looking at experience of the 2010 flash crash. 

Back in 2010, it took four months for that market to find a bottom before a rally took hold. For this 2015 action, we are only one month in, so it is still early in the correction process. Time and price can be equally important for options traders.

There is a chance that this correction becomes a bear market. The German and Chinese stock markets and many others around the world, are already in bear market mode, defined as down over 20% from their highs. I am still thinking the bear comes to the U.S., after the second Fed rate hike (whenever that is), but that is only a guess, a working trading theory. Sometimes I am wrong.

Friday, September 18, 2015

Weekly: Bass-akwards

The week felt backwards to me. I thought we might get a decline into Fed day and then a small rally. Instead, there was a rally, then a decline, for a slightly down week. As a premium seller, I came out with a profit.

Highlights include lots of options expiring worthless, especially in IBB and SPY, plus new long positions in BABA CLR (already closed) PANW V. I am out of NFLX, which is currently my worst trading ticker for 2015. Might be best to avoid it for a while. The monthly report will be out in a little while.

Here are the trades (p = puts, c = calls, weeklies are indicated by the W suffix, eg: OctW1 is October week one, all the rest are third week options).

FriSell IWM Oct 122 c @115.8 Rebalance in Russell 2000

Cover (buy to close) SPY SepW4 191 p @195.8 I take a 15% profit on this leg while it is still in the green.

Sell HON Oct 105 c @98.8 Rebalance in Honeywell.

Sell SKX OctW1 160 c @140.6 Hedge sold puts by selling calls on Sketchers.

Cover (buy to close) CLR Oct 21 p @27.6 I don't like the action in Continental Resources so get out for a 40% profit.

Wed Close two trades for a buck per contract to free up buying power:
Cover (buy to close) SPY Sep 155 p / Cover NFLX 130 c

Sell SKX Oct 120 p @142 Open an October long position in Sketchers

Sell IWM Oct 105 p @116.6 Add more long stock market delta in the Russell 2000 etf. I am net short on SPY, and am doing some offsetting longs in IWM because the margin requirement is lower.

Tue Sell SPY Sep 191 p @198.4 Rebalance in the S&P 500 etf.
Sell IBB SepW4 325 p @357.8 Rebalance in the biotech etf.

Sell SPY SepW4 191 p @198.5 Rebalance in the S&P 500 etf (again). 
Sell IWM Oct 107 p @115.8 Add stock market delta via the Russell 2000 etf.

Sell PANW Oct 155 p @183.5 New long position in Palo Alto Networks. 
Mon Sell BABA Oct 45 p @62.0 New long position in Alibaba. BABA down because of a bearish cover story in Barrons. Sure it could decline, but buying puts based on negative cover stories tends to be a losing strategy. This means selling puts tends to be the percentage play.

Sell V Oct 62.5 p @70.0 New long position in Visa.

Saturday, September 12, 2015

Weekly: Whippy market continues

Overall market is up about 2% for the week, after being down about 3% the week before. I took some more losses in my problem tickers HON and NFLX. I opened new long positions in BWLD CLR and sold strangles on AAPL ahead of their event. 

Another story from the coffee shop: one guy is waiting for the Fed news before making his move to buy mutual funds. I told him, that I thought the Fed day would be a non-event, and that surprised him. My thinking is that no matter the news, a lot of people have a lot of energy on the event. Most have prepared for the most likely outcomes, so a big move due to the widely anticipated news is unlikely. 
Here are the trades for the week (p = puts, c = calls, sell means sell-to-open, all options are third week expiration unless otherwise noted with a W suffix, eg: OctW1 would be first week of October)

Fri Sell CLR Oct 21 p @28.1 New long position in Continental Resources. CLR down with the group with a Goldman Sachs report citing a $20 per barrel target for crude oil. Goldman sometimes will be a few days within a turning point. In this case, oil has been trending lower for a while and this may mean we are close to a bottom.

Wed This morning, the rally getting uncomfortable for me because I sold calls on the dip.

Cover (buy to close) HON Sep 100 c @100.8 Cover this leg for a 110% loss.

Sell SPY SepW4 185 p @198.8 Rebalance in the S&P 500 etf. I am short some 200 strike calls so it is getting warm in here. Right after this, I sell another layer:
Sell SPY OctW1 185 p @198.8 I am still way net short SPY which for now is a market timing mistake.

Sell BWLD Oct 175 p @201 New long position in Buffalo Wild Wings

Sell NFLX SepW2 90 p @100.8 Rebalance in Netflix

Sell SPY SepW4 204.5 c @196.8 Rebalance in the S&P 500 etf. Hours later:
Sell SPY OctW1 204 c @195.0 Rebalance in the S&P 500 etf. Sheesh, another wild day.

The wide swings tip my "boat." It again feels like I am buying the highs and sold the lows, though some of that is mechanical stop losses kicking in. I continue to take losses. Honeywell and Netflix have been particularly frustrating. My mental stop on Netflix got taken out yesterday, and today it is rallying. This morning, I got stopped out on Honeywell and it is fading. A minor positive so far, Apple's big press day is turning out to be a non-event for the stock, which is the perfect scenario for me, the strangle seller.

I've been telling people I meet in person about watching golf on TV. Golfer Bubba Watson used to get upset and lose his cool after missing a shot, or a putt. He is working on remaining calm after average mistakes. This is a lesson for me too, divorcing myself from the outcome. Humorously, "if I knew better, I'd do better." I have some rules in place, and the best thing to do is follow those rules. Sure there are times to change what a person is doing, both in golf and in the market, but not based on emotion, not based on one missed shot, or one losing trade. 
Tue I add long delta to rebalance on the gap open up:
Sell IWM Sep 108 p @114.6 Russell 2000 etf
Sell SPY Sep 183 p @196.5 S&P 500 etf

Sell NFLX SepW2 110 c @96.0 Rebalance in Netflix. Tape action is disappointing on a big rally day.

Cover (buy to close) NFLX Sep 95 p @94.0 I close this position for about a 300% loss as Netflix crosses below the strike price. A few minutes later I roll down with:
Sell NFLX Sep 75 p @94.3

Sell IBB 310 p @346.0 Rebalance in the biotech etf. Later in the day a second rebalancing trade:
Sell IBB 312.5 p @349.3 
Sell AAPL strangles @111.2: AAPL Sep 98 p / Sell AAPL 120 c

Saturday, September 05, 2015

Weekly: Whipsawed

Market action was all over the place. I feel out of synch with the markets, and was down just a bit of rht week. SPY was down about 3%. I got whipsawed out of some SPY option positions on Tuesday, with the big rally on Wednesday it felt painful. Then Thursday saw a big rally fade, and Friday another gap down.

A few neighborhood observations: I saw that Bloomberg magazine had a cover full of bear faces. At the local coffee shop I mentioned my stop loss frustration this week. A stranger interjected "why would you do that?" She went on to tell me that this time she wasn't going to sell. A third anecdote is a 30-something on the Boglehead forum decided to bail out. The bears on the cover is bullish. The lady in the coffeeshop saying she wasn't going to sell "this time," bearish. The young index investor bailing due to panic, bullish.

The local Canslim meetup on Thursday was well attended with about 40 people. There was a look back at the 2010 flash crash. In 2010 there were four distinct waves down, lower lows and four months before the low. As of this writing, for 2015, the market is working on wave two down. The lows have not been broken. The clock started Aug 19, 2015, so not even one full month yet. Corrections usually take some time.

Here are the trades. Not a lot of highlights, half jokingly it felt like it was mostly me buying highs selling lows and making it up on volume. Sheesh. That said, I was only down a bit for the week so it could have been a lot worse. (p = puts, c = calls, sell means sell-to-open, all are third week expiration unless noted)

Fri Another day, another gap down at the open.
Sell SPY SepW2 200 c @192.8 Rebalance in the S&P 500 etf.

Sell NFLX shares half position @99.36 Last of my NFLX shares. This batch goes out at a 25% loss. I am still net long via options.

Sell SPY Sep 202.5 c @192.7 30 Rebalance in the S&P 500 etf (again).

Buy SPY Nov put vertical: @192.3
Buy SPY Nov 185 p / Sell SPY Nov 175 p A bit of insurance against a decline to new lows.

Thu Sell-to-close SPY Oct 199 p @196.3 Close this leg for about a 175% profit. This long put position served it purpose. Selling it rebalances me closer to delta neutral, though I am still slightly net short SPY.

Sell SPY Sep 195 p @197.0 Another rebalancing move as the S&P 500 continues to rally.

Sell TSLA Sep 200 p @252.0 Rebalance in Tesla Motors. I am going way out of the money.

Sell NFLX Sep 120 c @100.3 Rebalance in Netflix as it declines. Closest sold options are the 95 puts.

Sell SPY Sep 205 c @196.4 Rebalance in the S&P 500 etf.

Buy SPY Dec put vertical spread @195.9:
Buy SPY Dec 190 p / Sell Dec 182 p I nudge back to slight bearish on SPY as the rally fails. In isolation this vertical put spread might be considered a bet on a retest of the flash-crash lows around SPY 182 before December.

Wed Sell SPY SepW2 182 p @193.8 Rebalance in the S&P 500 etf.

Sell NFLX Sep 120 c @102.7 Rebalance in Netflix

Sell SPY SepW2 183 p @194.0 Rebalance in the S&P 500 etf (second for today).

Tue Market gaps down over 4 SPY points. I sold layers of SPY 192 puts so it is a scary move.

Sell SPY SepW1 200 c @193.8 Rebalance in the S&P 500 etf.

Sell BRKB Sep 140 c @131.3 Hedge sold puts by selling calls.

Sell SPY SepW2 203 c @193.3 Second rebalance in the S&P 500 etf.

Sell HON Sep 100 c @96.8 Rebalance a complicated position in Honeywell.

Sell SPY Sep 203.5 @192.5 Third rebalance in the S&P 500 etf.

Sell NFLX SepW2 120 c @104.6 Rebalance in Netflix.

Tue Last half hour cover for losses and rebalance:
Cover (buy to close) SPY SepW1 192 p @191.9 About an 800% loss

Cover (buy to close) SPY SepW2 192 p @191.8 About a 140% loss

Sell IBB Sep 370 c @332.4 Rebalance in the biotech etf
Sell TSLA Sep 285 c @238.2 Rebalance in Tesla Motors

Tuesday ended up as another meat-grinder day, with signficant losses for my account.

Mon Sell SPY SepW1 204 c @197.4 Rebalance in the S&P 500 etf

Sell IBB Sep 375 c @345.2 Rebalance in the biotech etf.