Saturday, December 31, 2016

2016 Year end, 662-115, grade B-

I count 662 winners, 115 losers for calendar 2016. Win percentage is about 85%, which sounds good, but those are about the odds that I look for. The payouts tend to match the odds. So a few big whopper losers offset a lot of small and tiny profits. The vernacular description is eat like a bird, poop like an elephant. 

I was up about 9.8% for the year. I see this is as a cup half-full result. I started the year with a dip and was down -6% early on, so any positive result from there seems good. So not a champagne year, but a glass of wine or mug of beer seems right for the toast for this New Year's Eve.

Here are a few etfs I track, best to worst for 2016:

IWM +19.7% Russell 2000 U.S. small cap
SLV +14.6 Silver

SPY +9.6 S&P 500 U.S. large cap
EEM +8.8 Emerging market stocks

GLD +8.0 Gold
TLT -1.2% U.S. 20 year treasuries

So my +9.8% was right with SPY, but slightly lagged after factoring in the 2% SPY yield. TLT had the wild ride up over 15% at one point, only to give it all back after the election. 
I wish I knew what was going to happen next. I'd make a lot better than 10% if I knew. I still see quite a bit of online chatter about a stock market crash, so that seems like the least likely outcome. However, a -5% or -10% correction can come at virtually any time. 

The AAII sentiment reading (link) is at +45% bulls. To me, this seems more like a smart money indicator at this point. People in the American Association of Individual Investors tend to be older, wiser than the young hotshots that dominate some sections of the Internet. So I remain cautiously bullish.

For long term positions, it seems too early to rebalance into bonds. An inverted yield curve is the flashing red light indicator. We are long way from that. An inverted yield curve is also a flashing red light indicator to avoid the long side of the stock market. I'll flash the "Bat signal" for those that don't know what I am talking about. The yield curve tends to be a long term indicator, so there will be time to make moves as the curve flattens then inverts.

Weekly: ending with a whimper

The year ends with a whimper. I do a few trades. At the Christmas party, I told folks that my predictions are about as good as coin flips. Directional trading is not my cup-of-tea. Selling premium, managing risk, taking losses (vs. defending positions) are what I tend to do.
Sell means sell-to-open, number is price per contract.

Tue Sell TSLA Jan 190 p 92
Sell NVDA Jan 95 p 46

Sell UNH Feb 140 p 64
Sell DIA Feb 182 p 59

Thu Sell TSLA 255 c 40
Sell JPM Feb 70 p 17

Sell C Feb 50 p 25
Sell GS Feb 180 p 30

Fri Sell SPY Jan 211.5 p 34
Sell IWM Jan 123 p 18
Sell NVDA Jan 87 p 34

Happy New Year to all.

Saturday, December 24, 2016

Weekly: Cautious trade continues

I make a few trades, but caution remains the word of the day. Sell means sell-to-open, number is price per contract.

Mon Sell COST Jan 149 p 25
Sell XOM Jan 83.5 p 22

Tue Sell LMT Jan 230 p

Wed Sell TLSA DecW5 190 p 27

Sell FDX strangle 53: Sell FDX Jan 167.5 p 29
Sell FDX Jan 212.5 c 24

Sell SPY Feb 205 p 57
Sell IWM Feb 114 p 27

Sell SPG Feb 145 p 61
Sell BA Feb 125 p 34

Thu Sell NVDA DecW5 99 p 16

Sell COST Jan 150 p 31
Sell SPG Feb 200 c

Fri Sell BA Jan 170 c 21

To all those that celebrate the holiday, Merry Christmas. God bless us every one.

Sunday, December 18, 2016

Monthly: Blessing or a curse? 23-1 Grade B

I count 23 winners 1 loser for the December option cycle. Grade is B because I lagged behind the market during the sharp rally. More than a few premium sellers got burned by the rally. Some got burned badly. So perhaps I was fortunate to be too busy to do much trading. Some might see the other side, however, my history is that I lag behind during sharp rallies. So probably I was fortunate to be too busy to do much trading.

The six-pack of etfs that I track from best to worst YTD:
IWM +20.7% U.S. small cap stocks
SLV +15.8% silver

SPY +10.4% U.S. large cap stocks
EEM +9.2% Emerging market equity

GLD +6.9% gold
TLT -2.9% U.S. 20-year Treasuries

My trading account is at +9.8, so I am now behind SPY buy and hold. This is what tends to happen during sharp rallies. Factor in another 2% for the SPY annual yield and the underperformance becomes more annoying. Still, I'll repeat that if someone told me at the beginning of the year, I could sign up for +9%, I would have taken it. If they had told me that when I was down more than -5% during February, I might have been talked down to +5%. 

There are no guarantees for the trading that I do. The odds are in my favor, but even so, some will lose, some will lose big.

I'll take some time during the holidays to clear my head, and have more time for trading. We will see if that means more trades, and hopefully more profits.

Saturday, December 17, 2016

Weekly: not a creature was stirring

Not even a mouse. I do a few trades, but remain relatively inactive. Sell means sell-to-open, p means puts, number is price per contract. Cover means buy-to-close

Tue Sell TSLA DecW5 175 p 55
Sell XLE Jan 70 p 22
Sell XOP Jan 37 p 19

Wed Sell UNH Jan 135 p 42
Sell BA Jan 130 p 27

Sell NVDA Jan 120 c 22
Sell TSLA DecW5 227.5 c 41
Sell GS Jan 195 p 51

Thu Sell NVDA Jan 80 p 35
Sell C Jan 52.5 p 23

Sell JPM Jan 75 p 23
Sell APC Jan 60 p 32

Roll BRKB 359 debit per
BRKB Buy-to-close BRKB Dec 155 p 1099 for a 150% loss
Sell BRKB Jan 160 c 742

Fri Cover (buy-to-close) JWN Dec 50 p 03 for 90% profit

Saturday, December 10, 2016

Weekly: hibernation continues

Another quiet week for me, as the rally rolls on. I remain time-challenged until Christmas, so my trading will continue to be light.

Sell means sell-to-open, p means puts, number is price per contract.

Mon Sell BRKB Jan 140 p 36

Thu Sell IWM Jan 120 p 25
Sell SPY Jan 205 p 38
Sell RTN Jan 130 p 48

Fri Sell SPG Jan 150 p 45
Sell NVDA Jan 70 p 23

Saturday, December 03, 2016

Weekly: Small potato trader

With little time for trading, I do a few small potato trades just to keep some skin in the game. This week oil rallies on news of production cuts. I did about half as many trades in in November 2016 as I did in October.

Trades follow, sell means sell-to-open, p means puts.

Wed Sell SPY Dec 211 p 36
Sell IWM Dec 122 p 19

Sell APC Dec 60 p 31
Sell XLE Dec 69 p 22

Sell XOP Dec 36 p
Sell SPY Jan 190 p 28

Thu Sell NVDA Dec 72 p 19
Sell XLE Dec 71 p 24
Sell XOP Dec 38 p 15

Fri Sell GS Dec 205 p 49

Friday, November 25, 2016

Weekly: nap time

A very quiet week of trading. I do a few trades after Thanksgiving. All are way out of the money put sales.
Sell means sell-to-open, p means puts.

Fri Sell UNH Dec 140 p 40
Sell BA Dec 138 p 34
Sell LMT Dec 245 p 45
Sell SPG Dec 165 p 40

Sunday, November 20, 2016

Monthly: 37-7, Grade C, election trade results

I count 37 winners, 7 loser for the November option cycle. Grade is C. In the old days, there a term "gentleman's C." I am up a smidge for the trading month. Considering how surprised I was by the market reaction to the election, I did well to come out ahead. 

Of my four election trades placed in late August only one came in a winner. The bets had max payoffs with gold up 10%, bonds up 7%, stocks up 5% or down 10%. Up 5% in stocks was the only winner. Gold and bonds dropped. Bonds and interest rate stocks dropped hard on the election news.

I got stopped out on a lot of trades. Almost all of them would have been better had I held on. That said, sticking to rules is more valuable than a few positive outcomes. The worst case of selling naked options can be really, really bad. So I prefer to exit and take the loss rather than risk even bigger losses, by defending or doubling down.

Here is the YTD summary:
SLV +19.3% silver
IWM +16.3% U.S. small cap stocks
GLD +13.5% gold
EEM +7.5% emerging market stocks
SPY +7.2% U.S. large cap stocks

My trading account is +8.6% so right about even with SPY when factoring in the dividends. Not great, but not bad either. If you had offered +8% for the year on January 1st, I would have taken it. For the year, U.S. Treasury bonds have given up all of their substantial. Gold and silver have slipped back to the pack, allowing U.S. small cap stocks to get near the top.

My schedule is busier than ever, so trading and blogging will tend to be light. Have a Happy Thanksgiving. Anyone reading this with time and money to invest, has a whole lot to be grateful for. Of course, there are those with more, those with less, but we can all be grateful.

Friday, November 18, 2016

Weekly: Duck and Cover

A lot of my mental stops were threatened or taken out. I gave some positions some rope, others I just closed. Overall, it was a difficult Monday. I take a lot of big percentage losses, but the dollar amounts are small. Mostly, I would have been better off hanging in there, but my rule is to take the loss if the strike price is violated. 

For newer readers, I tend to sell way out of the money options, usually at the 10% probability line, but sometimes a bit closer, sometimes a bit further out. I use the strike price as a mental stop level.

Here are the trades (c = calls, p = puts, all are third week expiration unless noted, sell means sell-to-open, cover means buy-to-close, number is price per contract):

Tue Cover UNH Nov 150 c 305 for a 2000% loss
(tiny premium, big percentage loss, small dollar amount)

Sell CMG Nov 380 p 45
Sell JWN Dec 50 p 29

Wed Cover PYPL Nov 39 p 43 about a 150% loss
Cover FB Nov 116 p 103 about a 500% loss
more tiny premiums, turning into big losses.

Thu Close IWM backratio (election trade from late August)
Sell-to-close IWM Nov 125 c 522
Buy-to-close 2x IWM Nov 130 c 75 each
About 60% profit on the long leg, 20% on the short leg

Fri Roll BRKB for 830 debit:
Buy-to-close Nov 145 c 1260 for a 700% loss
Sell BRKB Dec 155 c 430

Buy-to-close CMG 415 c 225 for a 270% loss
A galling loss, had I held a few more hours, I would have won this one. Of course had the rally continued, the lossses can become astronomical.

New longs on two bank stocks.
Sell JPM Dec 70 p 19
Sell C Dec 50 p 18

Sunday, November 13, 2016

Weekly: Election rally

Wow what a week. Sorry for the late update, but my schedule is getting busier, so late updates or no updates might be expected for the next five weeks or so.

I was surprised by the market reaction to the election news. Especially because U.S. stock futures were down about 5% in Asia when the results were coming in. I came in light on positions and remain so. I added longs to defense related stocks such as BA, LMT, NOC. NVDA was another new long after a huge earnings gap up.

About two months ago, I did four election timed back ratios. Only one of the four is paying off. The other three are at break even or small loses. Overall, I think I am up a bit.

Here are the trades (c = calls, p = puts, all are third week expiration unless noted, sell means sell-to-open, cover means buy-to-close, number is price per contract):

Mon Massive rally on pre-election day news. I add a bit of long delta, but remain cautious. The new trades are way out of the money.

Sell EA Nov 74 p 18
Sell WYNN Nov 77 p 18

Sell CMG Nov 320 p 30
Sell BRKB Nov 138 p 23

Sell FB Nov 112 p

Tue Sell EXPE Nov 135 c 30

Wed Sell BRKB Dec 145 p 114
Sell FB Nov 116 p 19

Sell IWM Nov 112 p 14
Sell-to-close SPY Nov 205 p 27 for 90% loss, but I have offsetting trades

Sell RTN Dec 130 p 39
Sell BA Dec 125 p 29

Sell NOC Dec 220 p 70

Thu rebalance a few positions

Sell BA 141 p 24
Sell UNH Nov 138 p 30

Sell TSLA Nov 202.5 c 49
Sell SPY Nov 207 p 24
Fri Nvidia gaps higher on earnings.
Sell NVDA 65 p 28
Add to longs as the rally gets gathering steam.
Sell NVDA 75 p 12

Sell IWM 112 p 38

Friday, November 04, 2016

Weekly: Crunch time in ULTA

I continue to tread lightly. I get whacked in ULTA as it drops below my mental stop level. I am down for the week, but with my cautious stance, the damage is limited.

Here are the trades (c = calls, p = puts, all are third week expiration unless noted, sell means sell-to-open, cover means buy-to-close, number is price per contract):

Tue 11/1/16 Sell TSLA Nov 220 c 54 rebalance into the decline

Sell AAPL Nov 100 p 20 down five days in a row already, probably won't continue in a straight line down.

Wed Sell BABA Nov 110 c 24

Electronic Arts fades after a higher opening so I short it.
Sell EA Nov 85 c 18

Sell EA Nov 71 p 21
Then EA catches a bid and I hedge the short.

Thu Sell WYNN Nov 100 c 21
Sell FB 129 c 23

Sell WDC Nov 61.5 c 18

Fri Cover ULTA Nov 230 p 600 for a 800% loss. Crunch.

Saturday, October 29, 2016

Weekly: Trading flurry

More internet connection woes for me so no trading early in the week. I do a flurry of put selling early Thursday morning. Many of those stocks falter, so I sell calls to hedge in the afternoon. By the end of the day I am in the red on both sides on some. No bueno. New longs in BA, PYPL, WFC.

Here are the trades (c = calls, p = puts, all are third week expiration unless noted, sell means sell-to-open, cover means buy-to-close, number is price per contract):
Thu Sell NOC 210 p 40 earnings
Sell BA Nov 132 p 34 earnings

Sell PYPL Nov 39 p 20 earnings
Sell TSLA Nov 177.5 p 56 earnings

Sell FB OctW4 128 p 16
Sell WDC Nov 54 p 27 earnings

Sell TSLA Nov 235 c 55 Tesla acting poorly, so I hedge the puts I sold in the morning

Sell FB OctW4 133 c 14 hedge
Sell BA Nov 152.5 c 21 hedge

Sell UNH Nov 150 c 16 hedge
Sell ULTA Nov 265 c 25 hedge

Fri Sell CMG Nov 415 c 62
Sell RCL Nov 65 p 20

Sell EXPE Nov 118 p 35
Sell NFLX Nov 150 c

Sell AMZN vertical: 
Sell AMZN Nov 835 c 182
Buy AMZN Nov 855 c 96

New shorts in CMG and AMZN, hedge NFLX, new longs on RCL EXPE.

Friday, October 21, 2016

Monthly: Some hits, some misses 63-9 for October, B-

I count 63 winners, 9 losers for the October option cycle. Grade is B-, with a small gain for the month. Gains are good. I took a few losses this cycle. TWLO Twilio almost became a big banana, but I cut the loss before it ballooned any further. DB Deutsche Bank was a winner, though a small one. I had quite a few small winners. BRKB Berkshire was a problem child. I lost on my speculative backration on FB Facebook.

So far my election 2016 plays have not turned out well. I was looking for an up move in bonds and gold, but instead they fell and I took some losses. Overall, I think I am about break even for the election trades. Not bad, considering just how wrong I have been on direction.
Towards the end of the trading month, I had some Internet connection problems. I also have less time for trading in the fall. So I'll have a lot of capital available. The election still could be a wild card.

Some people have been talking about the 29th anniversary of the 1987 stock market crash. Some mention a 29 year cycle. I feel like I have escaped the doom and gloom camp, but I often still go to cautious mode. I no longer am an all-in, all-out, all-short kind of trader. Considering how bad I can be on directional trades, that's probably a wise course.

/edit: I forgot to add the performance numbers. From best to worst a few etfs 2016 YTD performance (no dividends):

SLV +35.4% silver
GLD +19.1% gold

EEM +16.8% emerging market equities
TLT +10.6% U.S. Treasury bonds

IWM + 7.5% Russell 2000, U.S. small cap
SPY + 5.0% S&P 500 U.S. large cap

My trading account +8.1%. So I move slightly in front of IWM in the yearly horse race. I have another positive month. Considering how badly the year started for me (-5% first month), +8% is progress, it is good news. I'm sure some of the aggressive YOLO crowd will boo and hiss at being happy with +8%. However, I'm not here to please them, or any one else. Sure it would be great to be up 20% or 30%. If I knew better, I'd do better.
I mostly have traded equity options, but the grass has been greener in metals and bonds. Though gold and bonds edged lower this month.

Weekly: Internet down

I have Internet connection issues for much of the week, so I only made a few trades. Thankfully, the market mostly cooperated, though there were some close calls. The monthly update is coming soon.

Tue 10/18/16 Sell UNH Nov 130 p 54 earnings
Sell NFLX Nov 100 p 47 earnings

Fri Sell AXP Nov 60 p 13
Sell MSFT Nov 55 p 13

Friday, October 14, 2016

Weekly: One lump or two? TLT TWLO BRKB ULTA

In the old days of sugar bowls, the question for coffee or tea drinkers was sometimes "one lump or two." This week I took a some lumps in TLT, TWLO, and did damage control on BRKB. Overall, it was a quiet week of trading. I take a new long position in ULTA. 

During the fall months, I have less time for markets, so I am doing fewer trades. For TWLO there was a double whammy of more stock for sale, and disappointing earnings.

Here are the trades (c = calls, p = puts, all are third week expiration unless noted, sell means sell-to-open, cover means buy-to-close, number is price per contract):

Mon 10/10/16 Cover TLT Oct 133 p 129 about a 500% loss
Sell FB Oct 125 p 25
Sell TWLO Oct 60 c 22

Tue Sell BRKB Oct 146 c 45

Thu Cover TWLO Oct 50 p 340 about a 750% loss
Sell BRKB Nov 145 c 157 rebalance

Fri Sell BRKB Nov 135 p 55 rebalance
Sell ULTA Nov 230 p 70

Friday, October 07, 2016

Weekly: Gold bust

Gold has a really bad day on Tuesday, and I take a big loss on a small position. The rest of the week looks rather lean. My schedule became busier, so less time for trading. Long time readers know that this is my pattern in the fall, less time for trading and blogging, usually fewer trades.

Here are the trades (c = calls, p = puts, all are third week expiration unless noted, sell means sell-to-open, cover means buy-to-close, number is price per contract):

Mon 10/3/16 Sell TSLA OctW2 195 p 85

Tue Sell SPG Oct 210 c 56 rebalance
Cover GLD Oct 122 p 187 about a 750% loss as gold drops hard

Wed Sell SPG Oct 210 c 25

Thu Sell TSLA OctW2 217.5 c 45
Sell TLT NovW1 141 c 19

Fri Sell TSLA OctW2 210 c 36

Saturday, October 01, 2016

Weekly: Deutsche Bank

New long in Deutsche Bank. I bought near the low. Other trades were mostly about rebalancing to the delta that I want. Here are the trades (c = calls, p = puts, all are third week expiration unless noted, sell means sell-to-open, cover means buy-to-close, number is price per contract):

Tue Sell FB OctW1 123 p 25
Sell TSLA OctW1 185 p 48

Sell BRKB OctW1 147 c 26

Sell NVDA strangle: 
Sell NVDA Oct 59 p 32
Sell NVDA Oct 75 c 13

Sell SPY OctW1 207 p 25
Sell IWM OctW1 118 p 21

Wed Sell BRKB Oct 147 c 40

Sell XLE Oct 64 p 21
Sell TWLO Oct 50 p 35

Thu Sell BRKB OctW1 146 c 39 rebalance

SPY backratio 50 credit: 
Buy SPY Dec 195 p 175
Sell 2x SPY Dec 188 p 112.5 each

Sell DB Nov 6 p 30 New long

Sell TSLA OctW1 225 c 27 rebalance
Sell TLT Oct 133 p 23 rebalance

Fri Sell DB Sep 10 p 20
Sell WYNN Oct 116 c 23

Saturday, September 24, 2016

Weekly: Fed Monster Truck Rally

Wednesday was Fed day. Stocks, bonds, and gold all rallied. There was a bit of a fade later in the week, but overall the shorts were wrong. I did okay with my cautiously bullish stance. I was relatively happy with my results. Yes, some big swingers made big money by being aggressive. Long time readers know that I describe myself as a cautious trader.

Highlights include new longs in ADBE, FDX, SCTY, SRPT. Here are the trades (c = calls, p = puts, all are third week expiration unless noted, sell means sell-to-open, cover means buy-to-close, number is price per contract):

Mon Sell WYNN Oct 125 c 41

PCLN vertical: 
Sell PCLN Oct 1300 p 357
Buy PCLN Oct 1250 p 212

Sell SCTY Oct 11 p 25
Sell BRKB Oct 148 p 103

Sell TSLA SepW5 185 p 51
Sell FB SepW5 122 p 22

Sell SRPT Oct 35 p 35

Thu Sell FDX Oct 160 p 44
Sell ADBE Oct 100 p 29

Sell IWM Oct 116 p 34
Sell GLD Oct 122 p 24

Sell TWLO strangles: 
Sell TWLO Oct 50 p 82
Sell TWLO Oct 90 c 50

Sell NTES Oct 300 c 50

Saturday, September 17, 2016

Monthly: Weathering the storm, 51-5 grade B+

Volatility ticks up. My cautious approach works fairly well. Stocks, bonds and gold all moved lower for this cycle. I made modest gains. I count 51 winners, 5 losers for the September option cycle.

The year-to-date etf tracking follows, best to worst, dividends not included:

SLV +35.4% silver
GLD +23.3% gold

EEM +13.4% emerging market stocks
TLT +11.8% U.S. treasury bonds

IWM +8.2% U.S. small cap stocks
SPY +4.7% U.S. large cap stocks

my trading account +6.8%.

Good news: I finally leap frog out of last place, moving ahead of SPY for calendar 2016. Considering how the year started, with about a 9% drawdown, being positive, moving ahead of the S&P 500 is all good news. Cynics can say that "good traders" made much more. Just look at the big gains in other asset classes, such as silver, gold, treasury bonds.

Going forward I continue to be cautious. That said, a surge to the upside in stocks, might be the most frustrating thing the market can do. Last month I wrote about some election trades. All were mediocre to dead wrong. I thought gold and bonds would go up, and both went down. I thought stocks would be more volatile, and that was true, but my positions did not move much.

Friday, September 16, 2016

Weekly: Apple blow out

I got blown out for a loss on some sold AAPL calls. Thankfully, that was the worst of the damage to my chicken coop, as the markets moved up, down, up, and down again. Being short way otm options was a decent place to be this week, so I came out ahead. GLD and GDX positions also became uncomfortable.

Market rollercoaster may continue with Fed next week, then the first presidential debate on the 26th. It may be concidence that the Fed meeting is Wednesday, and Mercury goes direct on Thursday, but hey, whatever works. The monthly update will be posted soon.

Here are the trades (c = calls, p = puts, all are third week expiration unless noted, sell means sell-to-open, cover means buy-to-close, number is price per contract):

Mon Sell FB Sep 124 p 16
Sell BRKB SepW4 143 p 31
Sell AAPL SepW4 100 p 33

Tue Sell TLT Oct 143 c 21
Sell GLD Oct 135 c 35
Sell IWM Oct 128 c 29

Sell BRKB SepW4 149 c 60
Sell GDX SepW4 29 c 25

Wed Cover AAPL SepW4 110 c 252 for a 1800% loss. Ouch. Thankfully a small dollar amount.

Sell TWLO Oct 40 p 70
Sell VRX Oct 20 p 34

Sell WYNN Oct 85 p 47
Sell BABA Oct 85 p 22

Thu Sell GLD SepW4 130 c 17

Sell AMZN vert: 
Buy AMZN Oct 650 p 124
Sell AMZN Oct 675 p 193

Sell NTES Oct 195 p 102
Sell AAPL SepW4 123 c 15

Fri Sell TLSA SepW4 185 p 36