Saturday, February 07, 2015

Weekly: Best week in a year

I heard on the radio that the stock market had its best week in a year (52 week period). SPY made up all of January's losses and sits near break even for 2015. Gold and bonds had a down week, but are still outperforming stocks for calendar 2015.

I don't track my week-to-week progress that closely, but it was a good week for me. A few of my short calls went into the red, but it was close to a Goldilocks scenario, just right for my positioning. For newer readers, understand that I tend to be a cautious trader, often taking small positions and hedging them, so a good week for me, is going to be like watching paint dry for the all-in river boat gambler types.

I did a lot of rebalancing trades. I scramble to add delta by selling puts as the market rallies. Here are the trades:
* Sell means sell-to-open, p = puts, c = calls, all are third week expiration

Fri Sell GLD Mar 130 c @119.4. I rebalance short strangles on gold on the decline. GLD had a news driven pop, but is now fading.

Sell IWM Feb 113 p @120.1. 25. Rebalance short strangles on the Russell 2000 again, as the market nudges higher. Even with this add, I am net short, with the short Feb 123 call leg deep in the red.

Buy to close IWM Feb 92 p @120.0.
Buy to close BABA Feb 105 c @86.4.
Buy to close DIS Feb 80 p @102.0

I close several positions for a 90%+ profit (basis premium collected), to free up some buying power. With my recent flurry of sell to open activity, the margin needle is in the yellow zone. I prefer keep a decent amount of dry power to allow more flexibility. The current situation means my typical strategy of selling to open naked puts on some high value stocks such as BWLD or LNKD (AMZN, NFLX even worse) might use up too much of my remaining buying power.

Thu Sell IWM Feb 112 p @119.3. I rebalance short strangles on the Russell 2000 as the rally continues to roll.

Sell BABA Feb 94.5 c @86.8. I rebalance short strangles on Alibaba as it drops. A big move down on a big rally day is a bearish indication.

Sell JWN Mar 67.5 p @79.1. I rebalance short strangles on Nordstroms by adding a March leg.

Sell HON Mar 92.5 p @102.2. I rebalance short strangles on Honeywell as it rallies.

Wed Sell DIS Mar 90 p @99.5. Add to longs on Disney as it moves higher on earnings.
Sell WHR Feb 190 p @213.0. Rebalance short strangles on Whirlpool as it moves up on earnings.

Tue I scramble to rebalance and add longs as the market continues to rally. Many options have wide spreads and I place my orders at the mid or one tick below mid and mostly get filled. I am mildly surprised by the rally.

Sell IWM Mar 103 p @118.0. Russell 2000
Sell XOM Mar 82.5 p @91.4. Exxon Mobil
Sell APC Mar 65 p @85.2 Anadarko Petroleum
Sell ASH Mar 100 p @119.9. Ashland
Sell WHR Mar 160 p @200.0. Whirlpool
Sell HON Mar 92.5 p @100.8. Honeywell

After that flurry of six morning trades, I make it seven with a trade late in the day:
Sell XOM Feb 84.5 p @92.1. More rebalancing for Exxon Mobil.

Mon Sell UNH Feb 115 c @105.9. I rebalance short strangles on United Healthcare. The stock moved up nicely on earnings, but has been fading. I have a complicated net long position.

Sell HON Mar 105 c @97.9. I hedge short puts on Honeywell by selling calls. HON had a similar pop-and-drop on earnings.

Sell SPY put backratio @199.3:
Buy SPY Apr 179 p / Sell 2x Apr 174 p
This is for a credit, delta positive, theta positive, a net long position. If the market is up or unchanged, I get to keep the modest premium. Max profit occurs if the market moves down to the lower strike at expiration. If there is a crash below SPY 169, it starts to lose a lot of money.

Sell BABA Feb 80 p @89.3. I hedge short puts by selling calls on Alibaba. My thinking, is if this was going to crash, the earnings report would resulted in follow through to the downside. The trading low is in the 82 range, IPO price 68. Both those numbers are support.

Position Summary
net neutral GLD ILMN JWN WHR XOM
net short IWM

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