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.