Friday, August 28, 2015

Weekly: Wild and Crazy, guys

A crazy week with a 1000 point drop in the DJIA on Monday, with the market up about 1% for the week. Wow. My mind brings back a memory of Steve Martin's bit about two wild and crazy guys. It was a market filled with landmines as well as pots of gold. For the most part I avoided extremes. I tend to stay in the middle, avoiding big bets. I was up for the week.

There were reports that a lot of new accounts were opened on Robinhood (a free trading app) where a lot of young, small investors congregate. I take this as an intermediate term negative. There was another article about how markets typically react after such wild swings. The conclusion was that new highs are likely 8 months to 15 months in the future.

I sold a lot of shorter term premium, thinking that the market will go back down at some point. How far down? That is the big question. There was a huge rebound in oil. There were wacky fills on Monday, on etfs such as SPLV, VIG. However, I didn't know what was going on and had some open positions to manage. When in doubt, stay out. Like I said, I usually take the middle and avoid big bets, or bold moves.

Here are the trades from a wild week. p = puts, c = calls, lot of weeklies in this report so note the W-suffix (eg: SepW1 for September week one expiration), sell means sell-to-open

Fri Sell NFLX SepW1 95 p @117.8 Rebalance in Netflix

Sell BRKB Sep 125 p @135.3 New long position in Berkshire Hathaway. Recent low around 125.

Sell TSLA Sep 300 c @248.4 Hedge sold puts by selling calls. Tesla nearing trendline resistance on the chart at 252. 287 is the recent high, and 300 is round number resistance.

Sell SPY SepW2 208.5 c @198.5 Late in the day I rebalance in the S&P500 etf.

Thu I rebalance on the opening rally, which then fades. Morning:

Sell SPY SepW1 185 p @197.5 Rebalance in the S&P 500 etf on a follow thru rally day.

Sell SPY SepW2 185 p @197.6
Sell NFLX Sep 95 p @115.3 Rebalance in NFLX

Sell IBB Sep 315 p @347.0 Rebalance in the biotech etf
Sell HON Sep 105 c @99.3 Rebalance in Honeywell

As the day continues, I do more rebalancing in SPY, NFLX, SKX, new long position in TSLA:
Sell SPY AugW4 192 p @197.2
Sell NFLX AugW4 108 p @117.4

Sell SPY AugW4 194 p @198.7
Sell SPY SepW1 192 p @198.7

Sell SKX SepW1 130 p @143.4
Sell SPY SepW2 192 p @199.2

Sell TSLA Sep 205 p @244.0 210 New long. Recent trading low was around 215.

Wed Sell SPY Sep W1 175 p @191.1 Rebalance in the S&P 500 etf.

After yesterday's late selloff I am thinking a rally into the close is likely. So during the last hour, more rebalancing trades:

Sell SPY AugW4 182 p @192.0 a minute later another layer as SPY rallies
Sell SPY Sep Sep W1 182 p @193.0

Sell NFLX Sep 85 p @108.5 Rebalance in Netflix
Sell IBB Sep 275 p @339.5 Rebalance in the biotech etf.

Tue Sell SPY SepW1 180 p @194.2 Rebalance in the S&P500 etf. A few minutes later: Sell SPY SepW1 205 c @193.6 My mediocre to poor intra-day timing continues. I add a third SPY trade a bit later: Sell SPY AugW4 200 c @192.5 At this point in the day, the rally is looking sad.

Sell IBB Sep 290 p @335 Rebalance in the biotech etf.
Sell NFLX Sep 122.14 c @103.9 Rebalance in Netflix

Mon Mini-crash at the open with the DJIA down over 1000 points in early trade. As the day continues, I am all over the place and take more losses.

Cover (buy to close) TGT Sep 77.5 p @76.2 Target moves past my stop loss level. I close this leg for a -1500% loss. Target options did not even open for trading until about 20 minutes after the open.

Sell half a position in HON @94.69 for about a -12% loss.

Sell SPY Sep 208 c @191.6 I sell some way otm calls and puts on the S&P 500 etf, legging in. Chart resistance at 205 and 207. The other leg: Sell SPY Sep 155 p @191.5 is at the 9% probability line.

Cover (buy to close) JWN Sep 72.5 p @72.5 Nordstroms hits my stop level and I get out with an order at the mid price, about a 600% loss, basis the premium collected.

Sell SKX Sep 155 c @129.8 Rebalance my position in Sketchers.

Later on Monday, I am all over the place and flounder badly:

Sell (to close) SPY Sep 190 p @195.0 SPY crosses 194 resistance to the upside and I bail out of these puts for a 70% profit. 90 minutes later: Buy (to close) SPY Oct 193 p @193.5 for a 400% loss

Sell (to close) IBB Sep 330 p @339.0 The biotech etf goes green for the day and I close this leg for a 40% profit. I am still short Sep 300 puts. As IBB declines, I feel remorse and reestablish: Buy IBB Oct 325 p @334.0 Like I said, I am all over the place and taking more losses in this difficult market.

Saturday, August 22, 2015

That Sinking Feeling: 50 - 20 Grade D for August

I count 50 winners 20 loser for the August option cycle. The count may be a bit off because the trades were fast and furious this past week. Overall, I gave back about 60% of my modest gains for calendar 2015, but am still up for the year. 

There were five weeks for this option cycle. One week was positive, three were bad, one was really bad. For the most part, I stayed with my mechanical stop loss levels. As losses began to pile up, I got out early on more than a few occassions. With the market closing on its lows, for the most part taking the losses early turned out to be better.

For new readers, I tend to sell puts and calls naked at the 10% probability line, which is way out of the money. If the underlying crosses the strike price, that is my stop loss level.

This month there was the AMZN earnings day disaster, and big losses in AAPL DIS. The capper was a monster loss in NFLX as I got whipsawed back and forth. As always, I tend to be very conservative:

Rule #1 Live to trade another day.

So I survived. I have a few positions still open. Some positives are a backratio put spread in IBB that is going green, as are some vertical put spreads in SPY. These tiny winners are like enjoying a snack while the ship is sinking, but some people did not get that much.

Some other traders are taking on a lot of risk, seeing this dip as an opportunity. I have learned the hard way that fast moving markets are not my friend, so I am not one of those people. I go the other way and tend to be extra cautious after taking big losses. Obviously, not cautious enough to avoid the carnage. That said, I will live to trade another day.

Weekly: Clobbering Time

The stock market bombed about as badly as the recent Fantastic Four movie. I took big losses. Biggest one was in NFLX, but the list is long. On Friday, I moved into bomb shelter mode and started closing positions fearing a full melt down. The market closed on its lows, but it wasn't a full on melt down like down 10% or more for the day.

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

Fri More pain this morning:
Sell half a position in NFLX shares @105.15 leaving me with half a position. This is about a 19% loss.

Cover (buy to close) JPM Aug 65 p @64.9 JP Morgan breaks the strike price and I use the mechanical stop loss. I get out with a 15% profit.

Cover (buy to close) AMBA Aug 92.5 p @91.0 Ambarella breaks through the strike price and I cover for a 300% loss on this leg.

Cover (buy to close) GILD Aug 110 p @110.2 Gilead breaks the strike price and I cover for a 200% loss

Sell HON Sep 105 c @101.3 Rebalance in Honeywell

Cover AAPL Aug 109 p @109.6 110% loss
Cover AAPL Aug 108 p @109.3 200% loss

Mid-day Fri SPY breaks 200 and I move the bomb shelter, closing positions left and right just in case, the market is moving to melt down. I am too slow moving a trader, have too many open August positions to be watching everything if the world does go to heck into the close. So I am likely leaving a lot of money on the table. Rule #1 is to live trade another day, and that means playing it safe during fast markets.

Cover EBAY (pypl) aug 60 p 80% profit
Sell TSO Sep 110 c hedge sold puts

Cover IWM Sep 110 p close this leg for 400% loss near the mid-day lows

Cover BRKB Aug 135 p 40% profit
Cover SKX Aug 135 p 70% gain

Cover V Aug 71.5 p 12 33% gain
Cover HON Aug 100 p 25% loss
Cover GILD Aug 105 p 85% profit

Last hour:
Cover FB Aug 82.5 p 90% profit
Cover V Aug 69 p 90% profit

Thu Cover (buy to close) GLD Aug 111 c @109.8 Gold getting uncomfortably close to the strike price, so I close for a 25% profit while I still have one.

Cover (buy to close) AAPL Aug 113 p @113.6 I take a 350% loss on this leg on Apple. I don't like the way AAPL and the market is acting. In a parallel move, I cover some AAPL Aug 127 calls for a 96% profit to free up some buying power.

Sell NFLX AugW4 127 c @120.0 Rebalance in Netflix. NFLX has become yet another horror show for me. My current position is very long and deep in the red. A bit later I lighten up some more: Sell NFLX shares, I had two units, cut to one sold @115.38 as NFLX careens lower. This is about a 9% loss on my average cost around 124. A couple of hours later, I hedge even more: Sell NFLX Sep 130 c @113.8 Breathe, breathe, keep breathing.

Sell IWM Sep 124 c @118.2 Rebalance in the Russell 2000 etf.

Cover (buy to close) DIS Aug 100 p @102.4 I cover this leg for a 50% gain, though Disney has been a huge loser for this cycle.

Sell JWN Sep 82.5 c @78.2 Hedge sold puts by selling calls.

Sell SKX Sep 175 c @148.0 Hedge sold puts by selling calls on Sketchers.

Sell HON Sep 110 c @103.1 Rebalance a complicated position in Honeywell.

A lot of pain for bulls at the moment on Thursday. It feels like I have a hole in the row boat and am bailing water with a bucket, then a second hole opens. Awuuga Awuuga. [Little did I know how bad Friday would be.]

Wed Cover (buy to close) AMBA Aug 100 p @102.0 I close this leg for about a 25% loss. Ambarella has been a frustrating stock for me. AMBA rebounds to 105+ now up for the the day, so I got whipsawed out. Crunch.

Sell TGT Sep 77.5 p @83.5 New long position in Target. TGT higher after earnings. More crunchy carp as TGT drops after their conference call. I hedge my position by selling calls: Sell TGT Sep 85 c @80.5

Sell IWM Sep 126 c @119.0 I hedge sold puts by selling calls on the Russell 2000 etf. Fed minutes are now out and market is rallying off the lows. I add more long market exposure: Sell IWM Sep 110 p @120.4

Mon Sell AAPL Aug 113 p @117.5 Rebalance in Apple as it moves up. I see chart support at 114.

Saturday, August 15, 2015

Weekly: out of synch JWN SPY insurance

My account was up this week, but it felt like I was out of synch with the markets. There was a huge whipsaw dip with SPY down 3 full points early, then rallying back to about unchanged. I didn't navigate the chop all that well, but didn't get destroyed either. 

Highlights include a new long position in JWN, and adding a bearish SPY put spread. Here are the trades (p = puts, c = calls, all are third week expiration unless noted, sell means sell-to-open):

Fri Sell NFLX Sep 140 c @123.5 Rebalance in Netflix. I have second thoughts about closing out so many layers of calls on Netflix and make this conservative move. Overall, I am net long and deep in the red on my current complicated position.

Sell JWN Sep 72.5 p @79.3 41 Nordstroms gaps up after earnings. Chart support at 72.5. New long position.

Thu Cover (buy to close) NFLX AugW2 130 c @124.0 Netflix is up 3 points. I am going to have limited computer access tomorrow, so I close this leg for a 35% profit, rather than take the 8% chance that it comes into the money. 15 minutes later I close two more legs:
Cover NFLX Aug 135 c @125.0 for about a 35% profit.
Cover NFLX Sep 135 c @125.0 335 about a 5% profit.

Sell AAPL Aug 109 p @116.0 29 I rebalance again in Apple as it drifts higher. What a mess I have made.

Wed Cover (buy to close) AMBA Aug 105 p @108.0. I take about a 200% loss on this leg as Ambarella breaks the 50 day moving average to the downside. I sold multiple layers of puts and calls so getting out here lets me have an overall profit for the cycle on AMBA, if the rest come in.

Cover (buy to close) JPM Aug 67.5 p @66.8 I take about a 350% loss on this leg on JP Morgan Chase bank. JPM breaks the strike price as it gaps lower.

Sell AAPL Aug 120 c @110.8 Rebalance in Apple as it moves lower. Chart is beginning to look like bear market action. Resistance at 120. Late in the day, I rebalance again: Sell AAPL Aug 103 p @115.3 24 Some might tell me to stop digging, that my timing is awful.

Sell IWM Sep 109 p @120.1 I add some long stock market delta by selling some Russell 2000 puts. Another crazy day. Another difficult day of trading for me.

Tue Sell NFLX AugW2 130 c @121.4 Rebalance in Netflix as it declines. A few hours later, I sell another batch of calls Sell NFLX Aug 131 c @120.8

Buy SPY vertical put spread:
Buy SPY Oct 199 p / Sell Oct 193 p @208.0 
I buy another small insurance policy against a 10% market correction. 193 is 10% off the all time SPY high of 213+. This is for debit and I may sell shorter term options around this position to pay for cost.

Mon Sell TSO Sep 85 p @104.5
I open a September position in Tesoro. TSO reported strong earnings last week. I am giving myself plenty of room with the way out of the money put sale.

Friday, August 07, 2015

Weekly: Cluster ducks AAPL DIS NFLX

It was a cluster-fxxx kind of week for me. There was red ink from sharp moves down in AAPL and DIS, and a sharp rally in NFLX. It wasn't all bad, I had a few small winners. However, the big train wreck losers made for my worst week of 2015. 

When big whopper losers happen, I find that the best thing to do is to take it slow, sort things out, clear my head, reduce risk as needed using my mechanical rules. The bigger picture is that I am still up for the year, but I was up a good deal more three weeks ago. 

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

Fri Sell NFLX Sep 135 c @122.9 My misadventures in Netflix continue. I rebalance my complicated net long position by selling calls.

Thu The carnage in Disney continues and I close some positions for big losses:

Sell my half position in DIS shares @107.79 for about a 9% loss (from 118.xx)

Cover (buy to close) DIS Aug 110 p @107.8 I take a 1200% loss on this leg basis the premium collected.

Cover (buy to close) DIS Aug 105 p @106.5 This leg is about a 250% loss.

In this case I wanted to wait for the first ten minutes of trading, thinking it might be margin calls and then DIS would bounce. Wrong. These things happen. Trending moves, gap moves, are the bane of premium, and I suffered multiple losses. The ironic thing, was that going into earnings I was more concerned about an upside surprise because I sold some Aug 125 calls. At this point my position consists of sold Aug 115 calls, 125 calls, Aug 100 puts, still a net long position. DIS ends the day at 108.55 so I go whacked badly on the intra-day dip. All my closing transactions were at lower prices than the close. Whipsaws like this sometimes happen to traders that use stop-loss levels and it is never pleasant.

Wed Another manic morning for me as I scramble on DIS and NFLX.

Buy half a position in NFLX shares @129.05. Yikes! Netflix screams higher and I sold two layers of calls. After this move I have enough shares to cover all the sold calls, but man oh man. NFLX backs down to 126.xx in early trade, so I have been yanked again. Mid-day I do more damage control and 

Sell NFLX Aug 135 calls @123.7 (!) 130. This one is FUBAR, others might rhyme with cluster-duck. Some days/weeks/months are like this. Sigh.

Sell DIS Aug 115 c @110.8 Disney craters with over a 10 point gap to the downside. I have a complicated net long position which includes half a position in shares. DIS back over 113 in the first hour of trade, and am could have gotten 100% move money for selling these calls. It has been a difficult few weeks of trading for me.

Buy half a position in HON shares @106.11 I sold the Aug 105 calls and am filling out to a full position in case of assignment.

Cover (buy to close) SPY AugW1 203.5 I free up more buying power by covering some of option for a profit.

Cover (buy to close) GLD Aug 111 c @103.9 for a profit, another buying power move.

Tue Cover (buy to close) AAPL Aug 115 p @115.8 Yeowch! Apple careening lower again. I get out for about a 1000% loss basis the premium collected. There is no real news, so to me, it looks like some big funds are getting out and/or going short. These 115 puts were a rebalancing trade, so a painful loss. I still have some sold 108 puts. The three layers of AAPL calls I sold look to be safe, but are small consolation when there is a whopper loss on the put side of the complicated sold strangle. I was tempted to do damage control by buying some Sep or Oct puts and hold on to the August position. However, complicating positions isn't the best idea for a falling knife scenario. "When in doubt, get out."

Buy one-and-a-half units of NFLX shares @122.38 to do damage control on some sold calls. It is another painful story as Netflix soars higher. I sold the Aug 120 calls and 125 calls. Hindsight is always 20/20. This is another painful one, especially because the 120 calls were another rebalancing trade. (Shakes head.) By the time I type this, NFLX is about $2 lower from my share purchase. Triple ouch for today.

Cover (buy to close) IWM Aug 131 c @121.9 I free up some buying power by covering this layer for a profit.

Mon Sell GILD Aug 110 p @119.0 Rebalance in Gilead Pharma as it moves higher.

Sell AAPL Aug 127 c @118.3 Rebalance in Apple. AAPL breaks the 120/121 support level. 127 is the chart high after earnings.

Sell AMBA Aug 130 c @113.0 Rebalance in Ambarella. AMBA getting hit today. All time high was 129+. I sold multiple layers of puts. The closest is the 105 strike, so it is getting uncomfortable.

Saturday, August 01, 2015

Weekly: SKX blowout GILD V

Stock market rallies this week. I make some money, though it never seems like enough. SKX had blow out earnings, gapping higher, and I had to scramble. Elsewhere the strangles I sold on FB are profitable as the stock fizzled after their earnings report. So far, my modestly bearish position in GLD, sold Aug 95 p / 111 c strangles, is green on both ends. 

The major oil companies spiked lower on their earnings, but I did not play. I think it is too early to be buying oil. The oil stock trade attracted so many novices in 2014. Now, almost all of them are underwater. Markets do this. I have a small position in TSO, but refiners are benefiting from lower crude.

Bigger questions are when the Fed will hike and how much, and how the markets will react. If I had to guess, first hike in September, markets will yawn. A second hike in February 2016 and the stock market will start down.

China is another wildcard. A relief rally would be normal behavior, but the Chinese markets are manipulated, so any positions need to be extra small.

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

Thu Buy SKX shares full position @142.26 to cover the Aug 135 calls I sold. This works out to about a 600% basis the premium collected on the calls. Two minutes later I sell another layer of puts: Sell SKX Aug 125 p @143.7 60. The bright side is this is the 6th layer of puts I sold for August so the overall loss on SKX is medium sized, despite the big gap. As is usually the case on a thinner stock, the markets are wide and fast after the news. That's one reason I bought shares for assignment instead of closing out the sold calls. A few hours later, my third SKX trade is to Sell SKX Aug 135 p @147.8. It is amazing how strong Sketchers is. In a low growth world, this is a mid-cap with spectacular earnings and sales growth.

Sell GILD Aug 125 c @114.9 I hedge the sold puts by selling calls on Gilead, legging into a strangle. Recent high is around 124. GILD drifting lower after the gap up on earnings.

Wed Sell GILD Aug 105 p @118.0 New long position in Gilead. GILD gaps higher on earnings. 105 is near the 10% probability line and also chart support.

Sell HON Aug 100 p @105.0 Rebalance in Honeywell. My ongoing struggle with poor timing on Honeywell continues. Thanks to theta (time decay) it has been modestly profitable, though of course if my timing was even average, the profits would be much larger.

Sell V Aug 71.5 p @76.0 Add to longs in Visa as it continues to move higher.

After the close, Sketchers SKX has great earnings and the stock gaps higher. This is troubling because I sold the Aug 135 calls and now am deep in the hole. Facebook FB earnings are getting a negative reaction in the after-hours.

Tue Sell NFLX Aug 120 c @104.8 Rebalance Netflix as it drifts lower.

Sell SPY AugW1 212 c @207.0 Rebalance in the S&P 500 etf. These are at the 10% probability line. Before this, I sold the AugW1 203.5 puts. I also own a put vertical out to September to hedge these weekly positions. Wowsers, stock market is in rally mode! I got burned on this layer. So a few hours later I rebalance again by selling another layer of SPY AugW1 203.5 puts @209.2

Sell AAPL Aug 132 c @122.6 Rebalance Apple. I have a complicated position with sold strangles at 110 and 115 puts, 132 and 135 calls. 
Mon Stock market down hard again this morning, perhaps due to news from China.

Sell AMBA Aug 145 c @116.1 Rebalance Ambarella. This one is getting uncomfortable because I sold layers of puts at 105, 100 and below. 
Sell FB Aug 120 c @95.3 I hedge the puts I sold by selling some calls on Facebook. The premiums are fat because earnings come out this week. My sold strangles are 82.5/120, and I am betting the move will be 10% or less.

Sell V Aug 69 p @73.8 New long position in Visa. V reacted well to recent earnings. Chart support at 70.

Position Summary:
net neutral FB IBB IWM