Saturday, June 27, 2015

Weekly: AMBA FB UNH -MCK


Modest losses for the week. Highlights include new positions in AMBA FB UNH. Sold layered strangles in Ambarella, sold puts in Facebook, Sold strangles and rebalanced in United Healthcare. Took a 130% loss in MCK Mckesson. Elsewhere, the stock market waited on news from Greece. As of this writing on Saturday, it looks like no deal and Greece may be kicked out of the Euro, but things can and will change. China's stock market had a 7% down day, though FXI didn't fully reflect that damage.

Bonds TLT continues its down trend. For the year the losses in bonds are modest, however, from the late January top, the losses feel a lot worse. TLT high was about 138 and now about 115 for about a 20% haircut. That's ouch for those that rode the train up and now down. For the moment, it seems like investors are selling bonds and putting that money into stocks. How long can that game continue? Hard to say. I often let the chart action tell me what to do instead of trying to predict.

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

Fri Sell AMBA Jul 80 p @107.1 Rebalance sold strangles in Ambarella. AMBA up again, so I sell another layer of puts to balance back near neutral. Later in the day, I sell a second layer of calls as AMBA retreats. Sell AMBA Jul 131 c @102.4. I know, I know I got it wrong, it is supposed to be buy low, sell high not the other way around, but some days are like that. Delta neutral traders often find themselves doing the opposite to balance out a position.

Thu Sell UNH Jul 130 c @119.9 Hedge sold puts by selling calls in United Healthcare. Position is now a sold strangle, which is a bet on a trading range (110 to 130). Later in the day I sell another layer of puts: Sell UNH Jul 113 p @122.6 46 as UNH rallies. Oops.

Cover (buy to close) MCK Jul 230 p @229.7. McKesson reaffirmed guidance yesterday and the stock dropped. Good enough was not good enough. I am getting out for a 125% loss on this leg as MCK crosses the strike price to the downside. Half an hour MCK is bouncing, so it looks like I got whipsawed. Again, this can and will happen if a trader uses stops. Just seems to be happening a lot lately (JBLU MRK two other recent losses).

Wed Sell AMBA strangles @99.4 Jul 130 c / Jul 75 p New position in Ambarella. The recent high was 128, and I see that as resistance. AMBA in the news with a parabolic chart formation, a short seller making comments crashing the stock, then Cramer and two analysts coming in to defend the stock. Bias is down, with support at 75. Selling a strangle is a bet on a trading range.

Tue Sell JPM Aug 65 p @69.5 Rebalance JPM Chase again as it continues to climb.

Sell DIS Jul 108 p @114.1 Rebalance to net long in Disney.

Sell UNH Jul 110 p @122.2 New long position in United Healthcare.

Sell FB Jul 80 p @87.5 New long position in Facebook. FB at all time highs on news. I am selling puts way out of the money for a tiny premium, so am only dipping my big toe back into FB on the long side.

Mon Sell JPM Jul 65 p @68.8 Rebalance in JPM Morgan Chase bank.

Sell SKX Jul 125 c @113.9 Something a bit different, I sell into strength on Sketchers and am now net short. SKX has had a two-month run up after stellar earnings.

Position Summary:
long BRKB DATA DE EL FB
net long DIS HON JPM SKX YUM
net neutral AMBA IWM MRK SPY UNH
short MCK

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