Sunday, January 29, 2017

Weekly: Plowing ahead

The bull market plows ahead. Happy Year of the Rooster for those that follow that lunar calendar. The lunar calendar is where my screen name comes from (year of the Tiger).

Anyway, Dow 20,000 came in with modest celebration. I went to a local IBD meetup. The market is in good relatively shape. So I added more longs. With option expiration, I came into the week with a lot of buying power.

Here are the trades, p = puts, c = calls, sell means sell-to-open, the number at the end is the price per contract.

Mon Sell QCOM strangle: 
Sell QCOM Feb 50 p 51
Sell QCOM Feb 63 c 23

Tue Sell BRKB Mar 155 p 138
Sell BABA Feb 92 p 25

Sell NFLX Feb 125 p 33

Sell XLE strangle: 
Sell XLE Mar 68 p 33
Sell XLE Mar 80 c 20

Sell UNH Mar 140 p 59
Sell IWM Feb 125 p 22

Sell SPY Feb 216 p 30

Thu Sell IBM Feb 165 p 37

Sell RCL Feb 85 p 25
Sell RCL Mar 82.5 p 52

Sell BRKB Feb 160 p 67
Sell BRKB Mar 160 p 1.7

Sell QCOM Feb 60 c 14
Sell AVGO Feb 187.5 p 74

Fri Sell WYNN Mar 85 p 49
Sell BA Mar 150 p 60

Sell MSFT Mar 60 p 19

Saturday, January 21, 2017

So far so good, 40-1 grade A-

I count 40 winners, 1 loser for the January option cycle, for a grade of A-. This results in the small but useful gain of +1.7%. Minor negatives were some over trading in BRKB and being a bit too cautious.

Precious metals and emerging markets rebound sharply to start the year, after ending 2016 near their lows. A few etfs for 2017 year to date, best to worst:

SLV +7.1% silver
GLD +5.0% gold

EEM +4.0% emerging market stocks
SPY +1.4% S&P 500 U.S. large cap

TLT +0.7% U.S. 20 year treasuries
IWM -0.3% Russell 2000 U.S. small cap

Again, my account up 1.7%. So far so good, for three weeks. I still see a lot of online negativity and chatter about a steep stock market decline. This makes the odds of that happening exceedingly small. I am still looking at banks, defense, oil, as some secular bullish themes. The overall optimism about the economy may extend further into airlines and hotels.

Weekly: regrets?

At the end of the week, I regret some of my BRKB trades. BRKB closed at 160.22 so both side of the 160 strangle would have come in. Instead, I take a loss on one leg, and roll the other leg. There is the illusion of perfection,. that a trader can or should know future prices. As many expected the presidential inauguration did not move markets.

Here are the trades: Cover means buy-to-close, sell means sell to open, p = puts, c = call. The number at the end is the price per contract.
Tue Cover BRKB Jan 160 p 112 for a 200% loss
Sell UNH Feb 170 c 47

Thu Sell TSLA strangle: Sell TSLA JanW5 222.5 p 34
Sell TSLA JanW5 262.5 c 34

Roll BRKB: Cover BRKB Jan 160 c 55
Sell BRKB Feb 160 c 246

Fri Sell SWKS Feb 77.5 p 40
Sell MRK Feb 57.5 p 20

Saturday, January 14, 2017

Weekly: Managing a trade vs. Mangling

Most have heard of the term "managing a trade." There are any number of ways to do this, rolling, getting stopped out, doubling down. I tend to favor rebalancing back closer to delta neutral by selling more layers of options and committing more capital. Mangling is what happens when managing goes haywire. My misadventures in BRKB this week were close to the line. 
Here are the trades: p = puts, c = calls, number at the end of the line is price per contract. Cover means buy-to-close.

Mon Sell UNH 172.5 23
Mildly bearish play on Facebook earnings. The debit backratio max profit occurs if FB declines to 110 (currently 124.4) at Feb expiration. If it is up or steady, it loses. A decline below 100 also loses. I sell a layer of closer in puts to make it delta neutral for now. Earnings are out after the JanW4 puts expire.

Sell FB backratio 131 debit: Buy FB Feb 120 p 299
Sell 2x FB Feb 110 p 84

Sell FB JanW4 115 p 30
Sell FB Jan 118 p 19

Tue Sell BRKB Feb 150 p 48
Sell BRKB Feb 165 c 155

Wed Sell BRKB Feb 155 p 92

Thu Sell SPY Feb 236 c 17
Sell DIA Feb 206 c 21

Sell BRKB Mar 165 c 225
Sell BRKB Jan 157.5 p 31

Sell IWM Feb 144 c 14

Sell SPY backratio: 
Mar 199/205 Buy SPY Mar 205 p 92
Sell 2x SPY Mar 199 p 58

Fri I took the "head fake" and sold on the steep decline on Thursday. I rebalance to limit the damage.

Sell BRKB Jan 160 p 39
Sell FB Jan 120 p 25

Cover (buy-to-close) SPY Jan 211.5 p 03 for a 90% profit
Sell IWM Feb 122 p 30

Saturday, January 07, 2017

Weekly: Trump rally rolls on

The rally rolls on, with a few fits and starts. Overall, I find the strength to be remarkable. I expect more profit taking with some folks booking their gains for 2017. I did a few more trades, but remain cautiously bullish. I sold some out of the money calls this week, so don't believe in a runaway bull scenario. Cautious bull yes, rocket ship bull no.

Sell means sell-to-open, number at end of line is price per contract.

Tue Sell XLE Feb 67 p 22
Sell GM Feb 30 p 23

Sell NVDA Jan 125 c 34
Sell NVDA Jan 120 c 37

Wed Sell Feb SPG 150 p 44
Sell RTN Feb 125 p 33

Thu Sell SPY Feb 238 c 17
Sell TSLA Jan 192.5 p 31
Sell XLE Feb 83 c 15

Fri Sell GM Feb 42 c 13
Sell BA Feb 180 c 20

Sell COST strangle: 
Sell COST Feb 145 p 39
Sell COST Feb 175 c 30

Sell AMGN Jan 145 p 23
Sell SPY FebW1 216 p 33

Sell IWM Feb 120 p 32
Sell NVDA JanW4 87.5 p 36