Friday, January 16, 2015

Weekly: Cow patch crap

It is a trip through the cow patch for me, one misstep after another. During this stressful market week. I was short strangles in BBY when it tumbled, I sold puts on ILMN and watched it drop 16 points an hour after going long. Friday's relief rally means that I come out okay at the end, but may have a few more grey hairs for the experience. I'll post the monthly recap in a little bit. Here are this week's trades: (p = puts, c = calls, all are traditional 3rd Friday of the month expiration)

Fri Sell ILMN Mar 230 c @182.0. Hedge short puts by sellings calls on Illumina to reduce my delta. ILMN is 14 points lower from when I sold the March puts. The ILMN Jan 200 calls I sold are about to expire in my favor.

Sell AMGN Feb 175 c @153.5. Hedge short puts by selling calls on Amgen. Later in the day, I get the ping-pong effect as AMGN rallies after I get my fill. I rebalance again, by selling AMGN Feb 130 p @157.5.

Sell XOM Feb 77.5 p @90.9. Rebalance short strangles on Exxon/Mobil as some short January puts expire.

Thu Buy to close (cover short) BBY Jan 34.5 puts @34.0. Best Buy gaps lower after holiday results. This wasn't the earnings report, it was the Christmas holiday quarter sales. It is tough to trade the fast moving market. There seem to be some terrible fills on market orders. 

I get out for a -105% loss on this BBY leg, basis the premium collected. I am still short BBY Jan 32 puts and Jan 42 calls. I thought about shorting the stock to cover the short puts, but the market is moving too fast for me. What if there is a giant rally and I am caught short? Seems unlikely, but there have been some big mood swings. Holding is too risky for my timid tastes, given the wild market swings. If there is another big down day and that 105% loss might go to ten times that.

Wed Sell WHR Feb 230 c @195.0. I hedge my recent put sales in Whirlpool. With the wide spreads, my order is at the mid and I get a quick fill.

Sell JWN Feb 85 c @76.9. I hedge short Feb puts in Nordstroms by selling calls.

Sell IWM Feb 125 c @115.8. I rebalance my short strangles on the Russell 2000.

Tue Different day, more crap, morning upside and then more downside. I feel like I stepped into a pile of crap with some of my recent trades. All a trader can do is scrap the crap off their shoes/boots, and move on, and hopefully not step into too many more cow piles.

Sell IWM Mar 100 p @119.3. I rebalance short strangles on the Russell 2000 etf. The move up had me net short and I move back to near neutral.

Sell WHR Feb 155 p @202. I rebalance short strangles on Whirlpool.

Sell ILMN Jan 200 c @184.7. I hedge my short puts by selling some calls. Illumina down over 10 points from when I sold Mar 160 puts 23 hours earlier.

Sell IWM Mar 128 c @116.2. I rebalance again on IWM as I got whacked on the morning move.

Mon Stock market head fakes to the upside in the morning before it reverses and drops quickly. I add to longs in United Healthcare and Illumina, and rebalance short strangles on Exxon Mobil.

Sell UNH Feb 85 p @102.5.
Sell XOM Feb 97.5 c @90.0.

Sell ILMN Mar 160 p @196.1. ILMN options can be tough to trade because there are wide spreads and not much volume. I like the chart, and the way the stock has been strong during the shaky market start for 2015. Wowsers! A few minutes after I get my fill ILMN bumps up a couple of points than drops to 180 in a few minutes. Yikes! At the moment, there is nothing showing as far as news. ILMN is not the most liquid stock. It is coming back to 192 as I type so my thinking is that the most likely event is a fat finger mistake.

A bit later, there is a news report about ILMN presenting at a conference and giving luke warm earnings projections. Another factor is that it is a Investors Business Daily CANSLIM stock. The low of the day is about 8% below the buy point. The CANSLIM method preaches a 7% stop loss, so strict followers would have been taken out by the sharp drop. For those that want to sing the manipulation song, yes, it does happen. As small fish traders, not much we can do about it. Sometimes there are lawsuits and years later, it is the lawyers getting a slice, and the investors a slice.

Position Summary:
net long ILMN JWN XOM
net neutral AMGN IWM SPY WHR

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