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

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