Friday, April 10, 2015


I figured some big name ticker symbols might get some attention. I initiate complicated positions in Facebook and Tesla Motors. I dipped my big toe in the water with new longs in Apple and the China Large Cap ETF. Stock market is up about 1.6% for week, which is a pretty good week. With the gap down on Monday after the Good Friday employment report, aggressive bears got skewered. Traders that keep trying to call a trading top have to be discouraged at the up week after a gap lower open on weekend news. 
I was tempted to use the topic header Spring has Sprung. After a couple of tepid weeks, making only a few trades, I made a bunch of trades this week. I already gave the highlights, so on to the trades. (p = puts, c = calls, all are third week expiration unless noted).

Fri Sell FXI May 44 p @50.2. New long position in the China Large Cap ETF. On the chart, 44 is the break out base. 44 is also at the 10% probability line, where I prefer to establish new positions.

Sell AMBA May 60 p @76.3. I add delta to a complicated position in Ambarella as it moves up. AMBA is a supplier to GPRO and some police camera makers. Probably moving up on news of more orders by police departments.

Thu Sell FB Apr 79.5 p @82.6. I add delta to what has become a complicated position in Facebook.
Cover (buy to close) XOM Apr 75 p @84.2. Close a layer on Exxon Mobil for a buck per, to free up buying power.

Wed Sell TSLA Apr 190 p @210.2. Tesla gaps up and I rebalance again.

Sell PANW May 125 p @146.0. I open a May position in Palo Alto Networks.

Cover (buy to close) 2x SPY Apr 174 p @208.1. I free up some buying power by covering this leg of the put backratio for a buck per contract. I am to the yellow line on buying power, this gives me more room to maneuver.

Sell JWN May 72.5 p @80.1. Add to longs by opening a May position in JW Nordstroms.

Sell WHR May 165 p @195.0. I open a May position in Whirlpool. WHR down in sympathy with Electrolux which says appliance sales are weak.

Cover (buy to close) DIS Apr 95 p @106.0. Cover this layer on Disney, for a couple of bucks to free up money.

Sell FB call backratio / 
Buy May 85 c / Sell 2x May 90 c @82.2
I add to longs in Facebook with a call backratio, which is something new for me. This is a debit spread, max profit occurs on a move to 90 at May expiration. Unchanged, down or a big rally past 95 makes for losses. Delta positive, theta slightly negative, small debit. Why this? I am bullish on Facebook, but think any earnings rally will meet resistance at 90. Past moves have been more like 5 points. A five point rally would be good for this position.
Cover (buy to close) IWM Apr 110 p @125.5. Russell 2000 cover, to free up money.

Tue Sell BRKB May 135 p @143.9. Add to longs by opening a May position in Berkshire Hathaway.

Sell KMX strangles May 67.5 p / May 80 c @73.9
Car dealer CarMax recently gapped up on earnings. The last couple of times it did that, KMX drifted lower, but not quite filling the gap. A short strangle is a bet on a trading range.

Sell TSLA Apr 222.5 c @201.5. Tesla Motors moving lower after a big up day yesterday. I go net short by selling calls (was short puts). I now have a short strangle. By the time I type this, TSLA goes green for the morning. Sheesh.
A few minutes after selling the calls I rebalance by selling another layer of puts:

Sell TSLA Apr 185 p @203.4. (shakes head) Readers can see this as Exhibit A as to why I favor delta neutral, high probability option selling vs. buying premium and being directional. My intra-day timing is often poor.

Sell DIS May 95 p @106.0 I open a May position on Disney. On the chart, 95 is the old breakout level.

Sell VRX May 145 p @200.5 I open a May position in Valeant Pharma, way way out of the money to the 93% probability line. 145 is an old break out level on the chart.

Mon Stock market gaps lower at the open, but now is up for the day.

Sell FB Apr 77.5 p @81.7. New long position in Facebook. FB tried to break out from a base and is now back down. I see 80 as chart support, 79 is the 50 day moving average.

Sell TSLA Apr 175 p @202.5. New long position in Tesla Motors. TSLA reporting a 55% year-over-year sales gain. TSLA tested chart support and on the news is popping up. I am going way out of the money, to give myself lots of room. This means a higher probability but a much smaller premium (profit).

Sell SPY backratio @206.5: buy Jun 185 p, sell 2x Jun 180 p I sell these put backratios on SPY as a hedge against a 10% correction for my net long portfolio. If the market is up or sideways, I keep the small credit. If there is a 10% decline into expiration, there can be an explosive profit. If SPY crashes through the lower strike, losses occur. These add delta (net long).

Sell AAPL Apr 119 p @127.0. Renewed long position in Apple. Market rally continues to gather steam. 120 is chart support. Premium is tiny, but the market has been so choppy, I am giving myself some room.

Sell XOM May 77.5 p @85.1. Rebalance short strangles on Exxon Mobil back to net long.

Later in the day I add some more delta (add to longs):
Sell APC May 72.5 p @86.3. Add to longs on Anadarko Petroleum with a May position.
Sell IWM May 114 p @125.3. Rebalance short strangles on the Russell 2000 etf.

Position Summary:
net short TSLA

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