Saturday, May 30, 2015

Weekly: More Red than Blue

William O'Neill, founder of Investors Business Daily marks up paper charts using a blue pen and a red pen. Anything he likes he marks blue, anything that he thinks is not so good he marks red. Blue a reason to buy, red a negative, but not necessarily bearish. My week was more red than blue, down a bit for the week. Mostly the misadventures were rebalancing moves in SKX. Mostly I did rebalancing moves, which means I sold another layer of options to adjust my net delta. I often skew bullish, but occasionally start out neutral, rarely bearish. It's been a bull market and the bull market is still intact.

For example, if start with a sold strangle (both puts and calls) as the stock moves down, the delta will go positive. I might rebalance by selling another layer of calls to reduce the delta. Same the other way if the stock is moving up, my original position goes delta negative (net short) so I might sell another layer of puts to rebalance back to neutral or net long.

Here are the trades for the modestly negative week:
(p = puts, c = calls, sell means sell-to-open, all are third week of expiration)

Fri Sell GME Jun 40 p @43.7 New long position in Game Stop. GME up after earnings. Chart gap is around 40.5.

Sell YUM Jun 98 c @90.7 Rebalance my position in Yum Brands as it declines.

Sell MRK Jun 58 p @60.9 Rebalance Merck. MRK higher on drug news. I sold 57.5/61.5 strangles so it is getting close.

Thu Sell SKX Jun 110 c @102.9 Rebalance my position in Sketchers as it declines. At this point, I have been making a mess, selling low, buying high. OMG! SKX up to 106.7 a few hours after I sell these calls. The calls are at over a 100% losss. I sell some SKX Jun 95 puts and 100 puts to rebalance. Some days it isn't worth turning on the computer. The initial sold strangle 95 puts, 115 calls is in the green. However, for now, the multiple rebalancing moves have gotten me into the red. Sheesh.

Sell EL Jul 82.5 p @88.2 Add to longs in Estee Lauder.

Wed Sell MRK Jul 55 p @59.6 Rebalance my position in Merck.
Sell JPM Jul 60 p @66.3 Rebalance my position in JP Morgan Chase.

Sell IWM Jun 116 p @124.6 Rebalance for Russell 2000

Sell DIS Jul 100 p @110.4 Add to longs in Disney

Tue Sell HON Jul 110 c @105.0 Rebalance my complicated position in Honeywell. HON has been a difficult stock for me most of 2015, but I am still up for the year on the ticker.

Sell IWM Jul 130 c @123.1 Rebalance short strangles on the Russell 2000 etf.

Sell JBLU Jun 21 c @19.6 Hedge my sold puts by selling calls on JetBlue.

Sell JPM Jul 70 c @65.5 Ditto on JP Morgan Chase bank, hedge sold puts by selling calls.

Sell MCK Jun 250 c @237.9 Rebalance the July strangles I sold on McKesson by selling June calls.

Sell MRK Jun 61.5 c @59.0 Hedge sold puts by selling calls on Merck.

Position Summary:
net long DATA FXI YUM
net neutral ACT ASH MRK SPY
net short JBLU SKX / short LOCO

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