Weekly: Markets gone wild

The market rally rolls on. There are a few signs of froth. These include a record turn out at the live stock market meetup. The meetup was standing room only. A few of the young guns wanted to give advice, perhaps feeling like experts after a short time of making big profits. Another red flag is near record percentages of bulls in most market sentiment surveys such as MarketVane and AAII.

Okay, a few possible times to watch. Mercury goes retrograde on March 22. Bulls moves often last 18 to 24 months. Using election day as the start, 18 months projects to May, 24 months to November. Mid-term elections often provide two weeks of market turbulence. These are dates to watch. In isolation they mean near nothing.

Here are the trades (p=puts, c=calls, number near end is price per contract, sell means sell-to-open, cover means buy-to-close):

Mon Sell SPY Feb 264 p 38
Sell QQQ Feb 154 p 34

Sell IWM Feb 145 p 23

Sell BRKB Mar 190 p 51
Sell SPY Feb 265 p 32

Close out some bought options. These were hedges against a modest decline.
Sell-to-close SPY Apr 235 p 49 for loss
Sell-to-close QQQ Mar 150 p 53 for loss

Tue Sell NFLX Feb 215 p 54
Sell WYNN Feb 170 p 32

Wed Sell-to-close SPY Apr 255 p 106 for loss

Sell SPY Mar 263 p 77
Sell JPM Feb 108 p 28

Sell RCL Feb 120 p 45
Sell NFLX Feb 220 p 54

Sell SPG Mar 140 p 46
Sell TIF Feb 100 p 27

Thu Sell AAL strangles: Sell AAL Feb 60 c 15
Sell AAL Feb 49 p 35

Sell CAT strangles: Sell CAT Feb 182.5 c 56

Sell CAT Feb 145 p 19
Sell CAT Feb 150 p 28

Sell MMM Feb 235 p 64
Sell NOC Feb 300 p 65

Sell SBUX Feb 52.5 p 15
Sell VAR Feb 110 p 25

Fri Sell BA Mar 275 p 105
Sell IWM Mar 143 p 48

Sell RCL Feb 122 p 36
Sell SPY Feb 272 p 39

Sell TSLA strangle: Sell TSLA Feb 275 p 107
Sell TSLA Feb 405 c 95

Sell QQQ Mar 153 p 52

Sell WYNN Feb 220 c 14
Wynn hits an air pocket gapping $20 lower on news.

Monthly: Run your own race, 50-5, grade C-

I count 50 winners 5 losers for the January option cycle. The market went up like a rocket ship, leaving me behind. The grade is C-, a passing grade, but not a good one. There were some ghastly percentage losers in the 5. Some call buyers made 3000%+ on their way out of the money call buys. I was on the other side of some of those.

Year to date, my account is up 1.2%. Here are a few etfs, best to worst, for calendar 2018 (three weeks).

EEM +7.0% emerging markets equity
SPY +5.4% US large cap, SP500

IWM +4.1% US small cap Russell 2000
GLD +2.8% gold

SLV +0.3% silver
TLT -3.0% US 20 year treasury bonds
So it could be worse. I could be all in long on bonds.

The cliché that comes to mind is “run your own race.” Some readers might be marathon runners, or long distance bike riders. If the pack starts fast, or you get in with a fast group, it can be folly to try and match pace if that isn’t your plan. Option premium sellers, especially those that tend towards delta neutral strategies, are likely to suffer during sharp up, or down moves.

Rule #1 is to live to trade another day. Despite the huge unexpected up move in the market, I managed a small profit. If this is a "bad" month for me, it is going to be another good year for my account.

Weekly: more of the same

The rally rolls on, though slows a bit. One TV person said if the market kept going up this fast, it would be up 150% for the year. I struggle in strong trending markets. Delta neutral works a lot better in flat, directionless markets.


Here are the trades (p=puts, c=calls, number near end is price per contract, sell means sell-to-open, cover means buy-to-close):


Tue Finally a reversal day.
Sell BA Feb 295 p 112
Sell KSS Feb 55 p 35


Sell TIF Feb 97.5 p 45
Sell UNH Feb 210 p 50 earnings

Wed The moon shot rally resumes.
Sell FB 182.5 c 20
Sell LRCX Feb 165 p 60


Sell BA 290 p 90

Sell MU strangle: Sell MU Feb 38 p 37
Sell MU Feb 50 c 14


Sell BRKB Feb 200 p 53
Sell UNH Feb 220 p 54


Sell BA Feb 285 p 67
Sell BA 280 p 60


Cover SPY Jan 256 p 02
Cover SPY Jan 240 p 01
Cover QQQ Jan 149 p 01


Thu Sell BA Feb 450 c 22
Sell UNH Feb 260 c 23


Fri Sell SHAK Feb 37.5 p 20
Cover KSS Jan 67.5 c 10 for a tiny gain.

Weekly: close your eyes and buy

The zombie bull tramples would-be bears as the market accelerates up. I eek out a minor gain for the week. It is galling to watch the market rocket higher, and get so little. With all that, if this is as bad as it gets for me, to have tiny gains, during a terrible trading week, that isn’t all bad. Some of the more bearish, more stubborn traders suffered huge losses on the week.

Overall, not a lot worked for me this week. I made a foray into KODK and got burned, though can get out with a small profit if it doesn’t rocket up from here. I rolled BRKB and watched it continue to roar higher. I cover some positions for huge percentage losses. So far this year, the bulls feasted, All I have is a small morsel, but am thankful for that because true market bears have been completely destroyed.

Here are the trades (p=puts, c=calls, number near end is price per contract, sell means sell-to-open, cover means buy-to-close):

Mon Cover NFLX Jan 210 c 545 for a 3000% loss. Well that one hurt.
Sell NFLX Jan 235 c 19
Sell NVDA Jan 255 c 16
Tue Roll BRKB for 197 credit
Cover BRKB Jan 200 c 437 for 35% loss
Sell BRKB Feb 200 c 634

Sell BA Feb 380 c 24
Sell BA Feb 265 p 73
Wed Sell AVB Feb 155 p 35
Sell AVB Feb 180 c 45

Sell BA Jan 290 p 15
Sell SPG Feb 180 c 35

Sell KODK strangles: Sell KODK Jan 7.5 p 50
Sell KODK Jan 17.5 c 25
Thu More losses as the rally rolls on.
Cover BA Jan 325 c 465 for a 3000% loss. Ouch again
Cover KODK Jan 7.5 p 75 for a 50% loss
Cover AVB Jan 170 p 140 for 50% loss

Sell BA Feb 400 c 22
Sell BA Feb 275 p 80
Sell BA Jan 300 p 18

Sell KODK Jan 15 c 15
Fri The rally rolls on. Boeing chart looks parabolic. Facebook stumbles.
Sell BA Feb 275 p 57
Sell FB Jan 190 c 18

Sell JPM strangle Sell JPM Feb 105 p 42
Sell JPM Feb 120 c 27

Sell KSS strangle Sell KSS Jan 67.5 c 15
Sell KSS Jan 59 p 15

Don’t do anything stupid

The market roars up four days in a row, up about 2% for the week. I am left at the train station, mostly left behind by the rocket rally. The phrase that comes to mind is “don’t do anything stupid.” Meaning, don’t chase the rally, don’t ignore it either, don’t stand in front of the train. What does that leave? A few measured moves, waiting for good setups post-earnings.

Yes, we would all like to be brilliant traders, able to ride every move, but reality is not that way for me. My predictions are about like coin-flips, and I would have guessed down, if I had to guess a direction for the first week of the year. Thank goodness I didn't do that. As is, I eek out a small profit for the week and regroup for the upcoming earnings.

Here are the trades (p=puts, c=calls, number near end is price per contract, sell means sell-to-open, cover means buy-to-close):

Tue Tech stocks lead the way higher on the first day of trading in 2018.

Sell FB Sell Jan 170 p 35
Sell NFLX Jan 230 c 19
Sell NFLX Jan 182.5 p 65
Thu QQQ backratio for credit
Buy QQQ Mar 150 p 127
Sell 2x QQQ Mar 145 p 81 each

Fri The 2018 rocket launch rally continues for a fourth day. It gets uncomfortable in some calls I sold. I eek out a small gain for the week, but the opportunities were so much greater than the result.

Sell BA Jan 235 c 18
Sell FB Jan 175 p 31

Sell IWM Feb 140 p 28
Sell NFLX Jan 190 p 36

Sell NFLX Jan 190 p 38
Sell QQQ Feb 145 p 27