Saturday, July 11, 2015

Weekly: High stress no reward WBA ULTA


It was a wild market week with 200 point Dow intra-day swings on many days. Readers know I tend not to like fast markets, so I didn't enjoy the week, basically broke even, got a few more white hairs from the stress. 

Highlights includes taking some losses on IWM JPM, new longs positions in WBA ULTA. Here are the trades:
(p = puts, c = calls, sell means sell-to-open, all are third week expiration unless noted)

Fri Sell WBA Aug 85 p @93.4 New long position in Walgreens Boots Alliance. WBA breaking out on earnings news. Chart base around 86.

Buy half position SKX shares @118.62 I hedge back to net long in Sketchers. I sold layers of puts and calls and am now buying shares in case there is an assignment on a move up past 120.

Thu Sell SPY Jul 198 p @207.2 Massive relief rally at the open. I continue to sell weekly puts on the S&P 500. This is the third week. I have a complicated position that includes a bear vertical put spread out to September. Selling weeklies against that pays for. The risk is that the decline happens right now and not further out in time. 198 is near the cluster of support levels early in 2015 and is about at the 10% probability line. By the time I type all this my put is 5 cents higher (shakes head). By the close, I am down over 130% on this leg.

Sell ULTA Aug 145 p @161.0 65 New long position in Ulta Beauty, as it breaks out from a flat base.

Wed In some parts of the world they say that if you don't like the weather, wait an hour, it will change. It is that kind of stock market with wide swings, dips and rallies. 

The Chinese stock market has some serious issues, a 150% run up in two years, and now a rapid 30% decline off the highs, with the government stepping in and being ineffective in stemming the decline. There is still Greece, and Puerto Rico so a lot of uncertainty for nervous investors. It is important to keep perspective. The U.S. market still hasn't seen a 10% correction from the top. VIX can barely get to 20.

Sell YUM Jul 95 c @86.2 Yum Brands diving today, likely because of exposure to the Chinese consumer market. Spreads are wide, and I hit the bid to sell these calls. Yikes. I sold the strangles 82.5/110, and it is getting uncomfortable.

Cover (buy to cover) IWM Jul 119 p @122.5 I reduce risk by closing this leg on the Russell 2000 etf for about a 100% loss. Don't want to sell more calls. Time to edge towards the storm shelter. The market weather is getting stormy.

Tue Sell JPM Jul 69.5 c @66.8 Rebalance in JP Morgan Chase as it moves down towards the 50 day moving average. The 5-year chart looks bullish, and that supports a bounce off the 50 dma. However, the overall market is not acting well and may tug JPM lower.

Cover (buy to close) JPM Jul 65 p @66.3. JP Morgan now down a full point. I reduce risk by taking a 125% loss on this layer of sold puts. I am still net long, but decide to move away from this falling piano. Again, it is at support, right here and technical traders may be buying. Rule #1 is to live to trade another day.

Sell IWM Aug 131 c @122.6 Rebalance in the Russell 2000 etf as the market moves lower. I am still net long, wary of a whipsaw back to the upside because it is that kind of choppy market.

Sell SKX Jul 110 p @117.1 Rebalance in Sketchers.

Mon Greece votes no. Market gaps lower then fades the gap.
Sell NKE Jul 105 p @109.9 I add to longs in Nike. 105 is the chart gap. NKE going positive for the day.

Sell SKX Aug 95 p @116.1 Sketchers continues its amazing upside run and I continue to rebalance sold strangles.If it moves up to about 118 I'll take a half position in stock to offset the layer of sold Jul 120 calls.

Sell SPY JulW2 p @207.0 It is looking like a complete route for the bearish camp. I sell a layer of weeklies on the S&P 500 at the 10% probability line. Tiny much premium considering the substantial margin requirement, but these are weeklies, and I have money available. Well, it was a wild ride for the day and the bears came back in for a while. Tough market.

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

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