Weekly: Tug-o-war

Intraday swings are frequent during the short week. The bulls win the tug-o-war with a hard pull on Friday. I close one leg of sold calls on QQQ for a loss. Like the major indexes, my account is up a small amount for the week.

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 Sell DIS Mar 115 c 16
Sell WMT strangles Sell WMT Mar 85 p 18
Sell WMT Mar 105 c 22

Wed Markets turn lower after the release of Fed minutes. Unfortunately, I add some long delta before the turn. Walmart continues lower. I add layers and pivot to net short.

Sell QQQ MarW2 155 p 50
Sell QQQ MarW1 158 p 36

Sell WMT Apr 75 p 20
Sell WMT Apr 105 c 40
Sell WMT Mar 100 c 24

Sell IWM Apr 135 p 65
Sell SPY MarW2 257 p 65

Sell NFLX Mar 240 p 67
Sell TLSA MarW1 300 p 51

Thu Tug-o-war continues as market opens strong, then fades. ROKU down on earnings.
Sell ROKU strangles: Sell ROKU Mar 30 p 17
Sell ROKU Mar 58 c 15

Sell WMT Mar 86 p 19
Sell NVDA Mar 290 c 23

Sell QQQ MarW4 149 p 51
Sell JPM Mar 104 p 21

Fri Bulls win the week with a big pull. I add long delta, close out one sold call leg for a big loss. New legs tend to be way out of the money, as I am wary of another leg down.

Cover QQQ MarW1 167.5 c 163 for a 330% loss
Sell SPG Apr 130 p 58

Sell QQQ Apr 182 c 19
Sell QQQ MarW4 145 p 33

Sell CAT strangles: Sell CAT Mar 143 p 32
Sell CAT Mar 177.5 c 13

Sell JPM Apr 95 p 27

Sell NVDA strangles: Sell NVDA MarW4 207.5 p 70
Sell NVDA MarW4 300 c 19

Sell SPY MarW4 245 p 55
Sell AAPL MarW4 155 p 25

Sell RTN Apr 185 p 51
Sell TGT Apr 60 p 32

Sell BA MarW4 300 p 65
Sell IBB Apr 89 p 26

Monthly: Big W, 104-23 grade C-

I count 104 winners, 23 losers for the February option cycle. There is an old movie Mad, Mad, Mad World where they are looking for the Big W. The SPY chart looked like a big W as it made a double bottom. I sold too much premium when volatility was low, and paid for it when vol exploded.

I followed my trading rules and covered as the underlyings moved through the strike price. The losses were large. My stress level was high.

Here are a few etfs and the 2018 results:

EEM +5.1% Emerging market equity
GLD +3.5% gold

SPY +2.7% S&P 500 U.S. large cap
IWM +0.6% Russell 2000 U.S. small cap

SLV -1.6% silver
TLT -6.4% U.S. 20 year treasuries

My account -2.4%, so not good. That said, it could have been a lot worse. With the explosion in volatility more than a few accounts were wiped out. Going forward, I will remain humble, hopefully having learned something from the market turmoil.

Weekly: Bulls are back in town

The bulls reign supreme this week with six straight up days for SPY (five this week). My trading account recovers off the lows, but is down over 3% for 2018. As almost always, could have been better, could have been worse. Mostly, I added long delta all week, trying to stay delta positive on QQQ and SPY. One call leg on QQQ was closed for a loser, the rest came in.

Looks like big money at work. Small money tends not to move the markets so quickly. What next? I don’t know. I’ll try to stay on the correct side of the market, but the big money elephants may spook. Even though every day closed higher, there were some intra-day swings.

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 Markets move higher. The ride is bumpy. I add more layers, all way out of the money. My account recovers, up 4.7% for the day. Now down about 5% for 2018 after Monday’s close.

Sell IBB Feb 93 p 20
Sell NVDA Feb W4 265 c 20

Sell QQQ MarW1 135 p 23
Sell QQQ Feb 149 p 18

Sell SPY MarW1 225 p 41
Sell SPY Feb 252 p 33

Sell TSLA FebW4 240 p 30
Sell TSLA Feb 350 c 20

Sell WYNN Feb 180 c 22

Tue Sell IBB Mar 88.33 p 20
Sell NVDA FebW4 195 p 25

Sell QQQ FebW4 148 p 25
Sell SPY FebW4 244 p 25

Wed Stock market gaps lower on inflation news, then rallies for a decent up day. Some bears are dazed and confused by the action. It is their turn to be frustrated. I add long delta and keep adding as the rally builds.

Sell QQQ MarW1 148 p 39
Sell SPY MarW1 239 p 31

Sell QQQ MarW2 150 p 57
Sell IWM MarW1 140 p 27

Sell QQQ Mar W4 141 p 40
Sell SPY MarW4 232.5 p 58

Sell IBB Mar 95 p 35
Sell NVDA MarW1 205 p 38

Sell NFLX FebW4 240 p 33
Sell AAPL MarW1 150 p 21

Sell TSLA Mar 240 p 68

Thu The bulls have returned, running for the fifth straight up day. I add long delta all day long. I cover one call leg for a big loss. New legs are mostly way out of the money, just in case the bears come in. Up 0.8% for the day, which under normal conditions would be a good day, but feels like not enough given how strong the markets have been. I am still down about 3% for 2018.

Sell NVDA FebW4 220 p 31
Sell QQQ FebW4 153 p 16

Sell QQQ MarW1 155 p 57
Sell SPY MarW1 155 p 51

Sell NVDA Mar 200 p 61
Sell QQQ Mar 150 p 54

Sell AAPL Mar 155 p 62
Sell IWM Mar 135 p 30

Sell BRKB Mar 180 p 46
Sell QQQ Apr 143 p 83

Sell SPY Apr 235 p 113
Sell RTN Mar 190 p 33

Sell BA MarW1 320 p 78
Cover QQQ Feb 165 c 86 for loss

Fri Sell SPY FebW4 262 p 32
Sell QQQ FebW4 157 p 18

Weekly: Hell Week

This week included, two huge down days, two up days and one balancing day result in my worst week since starting this blog. My account down about 9% for the week, down about 10% for 2018. For the most part I stayed mechanical, about taking my losses. The big Tuesday rally and strong open on Wednesday were another trap and I fell for it. Overall, a lot of red ink.

Again, I’ll repeat the signs of a market top: inverted yield curve, transports leading the market lower, popular sentiment wildly bullish. The yield curve is getting closer. The transports are falling but are more coincident than leading. Some might say that semiconductors are a better leading indicator.

I made a lot of trades, but not much helped. 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 Disaster! DJIA down 1175 points, 4.6%. SPY down 11, 4.1%. My account down about 9% at the close, then shows -11% a few minutes after as late trades shows more selling. Yikes! This is probably my worst day of trading since starting this blog about ten years ago. I make a bunch of trades, selling calls, but can not bail water fast enough. More holes appear as the market sinks.

Sell BA Feb 385 c 27
Sell SPY Mar 290 c 26

Sell BRKB Mar 220 c 146
Sell QQQ Mar 176 c 31

Sell VIX Mar 45 c 20 looks like free money, then VIX doubles from 17 to 35 by the end of the day.

Sell SPY Feb 283 c 25
Sell QQQ Feb 171 c 18

Sell TIF Feb 112 c 16
Sell RCL Feb 138 c 21

Sell AAPL Feb 175 c 19
Sell UNH Mar 250 c 117

Sell GS Feb 280 c 29
Sell MCD Feb 175 c 28

Sell MMM Feb 255 c 22
Sell JPM Feb 121 c 17

Sell IWM Feb 159 c 18
Sell RTN Feb 220 c 22

Sell ATVI Feb 83 c 17
Sell KSS Feb 70 c 25

Sell BRKB Feb 210 c 63
Sell BA Mar 395 c 98

Sell NFLX Feb 300 c 29

Several mental stop levels are breached during the day, I cover multiple legs for huge losses, ranging from -500% to 2000%. Ouch. More stops may be breached on Tuesday. This isn’t the time to get cute and try and pick bottoms. Rule #1 is to live to trade another day, and using stops is one way to do that. Other ways are defined risk, or large cash reserves.

Cover SPY Feb 272 p 384 first stop level for SPY
Cover UNH Mar 230 p 755
Cover GS Feb 255 p 815

Cover MMM Feb 235 p 720
Cover SPY Feb 265 p 670, SPY falls another 7 more points in about an hour. This is after 100 days of no more than a 2 point decline for a full day.

Tue I cover during mid-morning. I do so mechanically, unemotionally. Turns out that a strong rally into the close made these closing trades look like mistakes. It is not a mistake to follow my trading rules. Outcomes will vary. Trading by the seat-of-the-pants, has almost always resulted in poor results. Overall, I recover about 40% of Monday’s steep losses. -11% on Mon, +4.5% on Tue

Cover SPY Feb 264 780
Cover UNH Feb 220 p 670
Cover SPY Mar 263 p 1009
Cover BRKB Feb 200 p 620

Later in the day, with the rally on firm footing, I rebalance a bit and sell some further out puts on those same underlyings (in hindsight this turned out to be another mistake):
Sell SPY Feb 224 p 49
Sell SPY Mar 218 p 88

Sell BRKB Mar 170 p 50
Sell AAPL Feb 145 p 20

Sell GS Feb 220 p 24

Wed Roller coaster ride continues, SPY up early then closes lower. WYNN has a new CEO.

Sell WYNN Feb 160 p 54
Sell WYNN Mar 145 p 97

Sell SPY Feb 250 p 40
Sell SPY Mar 227 p 66

Sell NVDA Feb 185 p earnings tomorrow
Sell WYNN Mar 140 p 60

Sell UNH MarW1 200 p 71

Thu Another hard down day for stocks. The major averages are above Monday’s lows, but my account is at a new low for 2018. I lose about 8.5% today. The day starts calmly enough, then the bottom drops out again.

Sell TSLA Feb 380 c 42
Sell CAT Feb 165 c 13

Sell QQQ Mar 172 c 24
Sell IWM Mar 162 c 19

Sell SPY MarW2 281 c 31
Sell TLSA Feb 365 c 54

Sell BA Feb 365 c 52
Sell QQQ MarW2 167.5 c 40

Sell WYNN Mar 200 c 110
Sell NVDA Feb 280 c 22 just before earnings

Sell QQQ Feb 165 c 19

Five more stops get run. Losses range from 400% to 1200%
Cover CAT Feb 150 p 285
Cover LRCX Feb 165 p 490

Cover TIF Feb 100 p 197
Cover AAL 49 p 137

Cover XLU 49 p 88

Fri I cover another batch of five for big losses on the dip. As much as I want to believe in a positive turn, I follow my rule to use the strike price as a mental stop level. I sometimes give it some room, another point, a close below, but this is not a market to get cute in.

Cover MCD Feb 160 p 305
Cover IBB Mar 105 p 490

Cover QQQ Feb 154 p 326
Cover IWM Feb 145 p 260
Cover CAT Feb 145 p 425

Sell TSLA FebW4 365 c 46
Sell CAT Feb 130 p 50
Sell IBB Mar 80 p 25

Sell NVDA FebW4 185 p 49
Sell DIS Mar 80 p 21
Sell GS Feb 205 p 19

Weekly: bull is wounded but not dead

All of my 2018 gains evaporate as the market careens lower. I lose about 2.5% for the week, am now down about -0.5% for 2018.

I have often described as the bull as zombie lurching forward, seemingly impervious to slings and arrows. The bull accelerated in January and is now hurt and stumbling. Is this the end? If this were a movie, monster movies rarely end on the first damage to the monster. That is often just the first act. I believe this zombie bull will be similar, that it will get a second wind, a third wind. New highs? I think more likely, is a period of three to six months of side ways action.

Some might say the market declines like this happen once in a blue moon. Well, we had a blue moon on Jan 31. The DJIA falls an eerie 666 points. The bear market low on SPY was also 666 in 2009.

For most of the week, I stumble around. I am staggered by WYNN on Monday and then UNH, a bit dumb founded by the market action and a bad turn of luck. I close one leg for a loss on WYNN. UNH gets hit, but I am not stopped out yet. Most of what I did, didn’t seem to work. I made a lot of trades, but mostly just got a bigger hole. The activity didn’t translate into progress.

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 Wynn continues lower, I close one leg for a huge loss
Cover WYNN Feb 170 p 780 for 2500% loss
Sell WYNN Feb 200 c 41
Sell WYNN Mar 210 c 80
Sell WYNN Feb 125 p 25

Sell NFLX Feb 220 29
Sell NFLX Feb 360 c 28
Sell NFLX Feb 230 p 43

Sell UNH Mar 230 p 135
Sell LMT Feb 325 p 100

Sell MCD Feb 160 p 20
Sell CAT Feb 180 c 60

Sell GS Feb 255 p 80

Tue Sell MCD Feb 185 c 20
Sell UNH Feb 252.5 c 66

Wed Boeing up on earnings.
Sell BA Mar 300 p 81
Sell BA Feb 315 p 48

Sell IBB Mar 105 p 65
Sell IBB Mar 130 c 15

Sell SPY Feb 292 c 20
Sell SPY Mar 300 c 21

Sell ATVI Feb 62.5 p 21
Sell TSLA Feb 290 p 107

Sell MMM Feb 270 c 16
Sell GS Feb 300 c 20

Sell AAPL strangle: Sell AAPL Feb 195 c 23
Sell AAPL Feb 150 p 69

Thu Sell UNH Mar 260 c 85
Sell SPG Mar 175 c 30

Sell BA Mar 290 p 48
Sell WYNN Mar 130 p 67

Sell SPY Apr 307 c 16

Fri Markets swoon, with major averages falling 1.5 to 2.5% by the close. I take on water, but haven’t been stopped out yet. I make a bunch of trades, selling lots of out of the money calls.

Sell AAPL Feb 180 c 18
Sell UNH Feb 245 c 92

Sell BABA Feb 210 c 47

Roll BRKB for 170 credit Cover BRKB Feb 200 c 1462 for loss
Sell BRKB Mar 200 c 1632

Sell SPY Feb 289 c 14
Sell TLSA Feb 425 c 22

Sell IWM Mar 168 c 15
Sell IBB Feb 120 c 15

Sell BRKB Mar 240 c 47
Sell BABA Feb 165 p 17

Sell GS Feb 290 c 22
Sell CAT Feb 175 c 17

Sell QQQ Mar 180 c 15
Sell BRKB Feb 222.5 c 34

Sell BA Mar 420 c 41
Sell SPY Feb 287 c 16

Sell SPY Feb 286 c 25
Sell BABA Feb 207.5 c 54