My AMZN disaster might not be what you are thinking. After the earnings news was out, I got over confident, and legged into sold strangles on AMZN JulW4 540 puts and 590 calls. I bought back the put leg for about a 750% loss as AMZN fell. Yikes! The rest of the week was also bad, with the overall stock market suffering big losses for the week. I don't track it closely, but I believe this is my worst week of the year.
Other highlights include selling strangles on GLD, GPRO, TSO and a quick profit on SWKS after earnings.
Here are the trades: (p = puts, c = calls, third week expiration unless noted)
Fri Sell AMZN JulW4 540 p @567.0 One-day long position in Amazon. AMZN gaps higher on earnings. This is near the 10% probability line and 550 is support from the overnight trade. If it gets threatened I will roll down and out. ShadowTrader just said AMZN had a 2.5 standard deviation move (about 2% or 3% probability) and call sellers and short sellers were crushed by the gap. After 15 minutes I am down 100% as AMZN dips below 560.
Half an hour after my first trade I sell some calls to hedge: JulW4 590 c. 560 looks to be the neighborhood for now, but markets have a way of frustrating people.
Yeouch! Mid-day I cover AMZN JulW4 540 p @539.0 365 I take a 750% loss on these sold puts! I got over confident, a bit too big for my britches and paid for it.
Sell HON Aug 105 p @103.4 Rebalance in Honeywell as it drifts lower. Earnings were out last week and the follow through has been to the downside.
Cover SWKS Aug 80 p @98.6. I close my position in Skyworks Solutions for a 45% gain. I don't like the tape action and overall market after earnings.
Thu Sell AMBA Aug 105 p @126.9 Rebalance Ambarella as it continues to rally, up another 4 points this morning. Looks like it wants to take out the old high around 128 to get some short sellers to cover. Well, I am the one that got head faked as AMBA drops a point in the two minutes it takes for me to type this.
Sell AAPL Aug 115 p @126.6 Rebalance in Apple as it drifts higher. For now, my bearish stance is wrong.
Wed Sell GLD Aug 111 c @104.5 Rebalance in gold as it moves lower.
Sell AAPL Aug 135 c @124.1 New short position in Apple. Talking heads on TV and a lead story on Marketwatch seem far too happy about buying this dip. The recent high was around 134. Later in the day, I hedge as the sold calls by selling some puts: Aug 108 p @124.8. So the position is sold Aug 108/135 strangles.
Sell SWKS Aug 80 p @99.4 New long position in Skyworks Solutions. SWKS is a supplier to Apple and is down on that news. SWKS reports earnings after the close today, and I am looking for a rebound. If there is bad news, some of it is baked in by today's sympathetic decline.
Sell AMBA Aug 100 p @122.4 Rebalance Ambarella as the rally rolls on.
Sell JPM Aug 67.5 p @70.3 Rebalance JP Morgan Chase as it moves to a new 52-week high.
Tue Sell TSO Aug 120 c @98.0 30 As Tesoro moves lower, I hedge the sold puts by selling some calls.
Sell GPRO JulW4 strangles @60.1. I sell some weekly GoPro strangles ahead of earnings. I am going way out on the wings. My thinking is that there have been some recent big movers on earnings (GOOG NFLX IBM) so some premium sellers are either gun shy or lost big on some of these movers. I looking for about a 10% move on the news. My strikes are at 20% lower and 30% higher, which I see as a large margin of safety.
Mon Sell AMBA Aug 92.5 p @117.0 Rebalance in Ambarella as it moves higher. The AMBA bulls seem to be back in charge.
Sell SPY AugW1 203.5 p @212.4 Rebalance in S&P 500 by selling some August weeklies. These are around the 10% probability line, and the recent low was around 204.
Sell DIS Aug 110 p @119.7 Rebalance in Disney as the rally rolls on. I have a complicated position, net long.
Sell TSO Aug 85 p @100.2 New long position in Tesoro. Chart shows a nice break out from 94.
Sell GLD strangles @106.1 Aug 95 p / Aug 111 c
Selling strangles is a bet on a trading range. This one skews bearish. It's been a long time since I traded gold. Chart pattern is a break down of major support, with resistance at 110. On the downside 95 on GLD translates roughly to $1000 on physical gold, which I see as psychological support. It is a small fish trade, not much premium. However, I often add sell more layers as the underlying moves.
Sell SKX Aug 110 p @124.0 Rebalance in Sketchers as it continues to move higher.
net neutral IBB TSO
net long AAPL AMBA DIS HON IWM JPM NFLX SPY
net short GLD
long BRKB EBAY NKE UA ULTA WBA
closed/expired AMZN GPRO SWKS