Saturday, July 16, 2016

Weekly: Massive Short Covering

Fark! I had a miserable week in the stock market. Some say selling naked options is like picking up nickels in front of a steam roller. This week, I got crushed as the rally rolled on. I took multiple losses on sold calls. It is most galling to lose money when the stock market is going up. Casual market observers assume that because the market went up that anyone involved is making money. 
My rule #1 is: Live to trade another day. This means taking losses when they are manageable. Third week expiration gives me a chance to regroup with a lot of dry powder. Hopefully clear my head, to do better. It has been a mediocre 2016 for me so far, with my trading account now lagging the buy-and-hold investors in SPY and IWM.

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 Rally rolls on and I cover some sold calls for big losses
Sell SPY JulW5 204 p 34 rebalance
Cover FDX Jul 157.5 c 155 big losses on two traunches of calls

Cover AVGO Jul 157.5 c 205 about a 300% loss

Cover TSLA Jul 222.5 c 610 about a 150% loss
Cover TSLA Jul 225 c 590 about a 450% loss

Cover VGK Jul 46 c 75 about a 230% loss
Cover WFC Jul 50 c 07 about a 20% gain

Half an hour into trading, it is a bad morning for my account balance. I could have gotten out at better levels on almost all the above. However, with so many underlyings going into the money against me, I followed my mechanical rule rather than waiting. This time the out come is not so good.

Sell SPY AugW1 202 p 41
Sell COST Aug 150 p

Sell PEP Aug 100 p 21
Sell MCD Jul 120 p 12

Cover SPY Jul 201 p 03 95% profit
Cover MCD Jul 122 c 60 100% loss
A sour end to a sour day.

Tue More short covering as the rally keeps rolling
Cover SPY Jul 214 c about a 400% loss

Roll Chipotle:
Cover CMG Jul 305 p 03 95% profit
Sell CMG JulW4 300 p 75 in front of earnings

Sell BRKB Aug 135 p 54 rebalance

Cover IWM Jul 119 c 111?? 600% loss?
Cover ULTA Jul 255 c 140 about a 170% loss

Sell GLD Aug 140 c 29 rebalance

Another down day for me, though the damage was modest. S*cks to have the stock market go up and lose money.

Wed Roll CMG: 
Cover CMG Jul 465 c 04
Sell CMG JulW4 500 c 84

Sell VRX strangles Aug 15/35
Sell VRX Aug 15 p 47
Sell VRX Aug 35 c 24

Thu Cover SPY Jul 216 c 78 about a 200% loss
Buy BRKB shares 146.64 to cover sold Jul 146 calls
Sell YUM Aug 80 p 33

Sell MON strangles Aug 90/125:
Sell MON Aug 90 p 81
Sell MON Aug 125 c 50

Sell BRKB JulW4 148 c 30

Fri Sell TSLA JulW4 240 c rebalance

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