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

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