Weekly: Getting hit v Getting run over

At my stock market meetup, I hear the following:

You are going to get hit, but avoid getting run over.


A football analogy follows. If a quarterback holds the ball too long, odds of a big hit increase. Sometimes an incomplete pass or even taking a safe sack is a relatively good outcome. Bad outcomes would be a turnover, or injury. This lines up with my Rule #1: Live to trade another day. I use position sizing and mental stop loss levels to achieve this goal. I observe many novices trying to turn every trade into some kind of win. Sometimes it is better to throw the ball away and start over.


I get whipsawed near the lows on a few positions. The losses are big, but manageable. SMH semiconductors and XLF financials are leading the market lower. Financials and semis are about a 40% weight in the S&P 500, so the broad market can’t sustain a rally without these two sectors participating.


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 Deep red floods my screen as trade war fears increase. I lose over 3% today. I take some profits, rebalance some other positions. A few underlyings are nearing my mental stop levels.


Sell BA Jul 365 c 93
Sell SPY Aug3 284 c 29
Sell IWM Aug 176 c 36
Sell NFLX Jul 480 c 315


Sell NVDA Jul 272.5 c 76
Sell QQQ Aug 185 c 46
Sell TSLA Jul 385 c 430
Sell BABA Jul 217.5 c 55

All these 12 covered for profit to reduce risk, if the move down continues.
Cover SPY Jul6 260 p 39
Cover SPY Jul 254 p 66
Cover SPY Jul13 254 p 68
Cover TSLA Jun29 300 p 144

Cover TSLA Jul 420 c 175 (roll down)
Cover QQQ Jul 153 p 46
Cover IWM Jul 148 p 32
Cover AAPL Jul 165 p 55

Cover FB Jul 175 p 84
Cover NFLX Jul 300 p 195
Cover NVDA Jun29 210 p 26
Cover QQQ Jul13 155 p 42

Tue Market has a mild up day after Monday’s steep sell off. I make up more than half the loss.
Sell SPG Aug 145 p 67
Sell GOOS Jul 67.5 c 17

Wed An ugly reversal day as the DOW loses a 300 point gain to close down over 160. I lose another 2.2%. I got busy the last hour of trading and several underlyings closed below mental stop levels. I plan to close them tomorrow.

Sell QQQ Jul 180 c 25
Sell SPY Aug 184 c 52

Sell TIF Aug 115 p 49
Sell TSLA Jul 290 p 263

Thu A mild rebound. I close out four positions for losses as they cross the mental stop level (strike price). Three of the four rebound by the end of the day, making for a frustrating whipsaw day. However, the theme it to take a hit, to avoid the chance of getting run over.

These four closed for losses:
Cover SPY Jun29 270 p 171
Cover CAT Jul 135 p 505
Cover WYNN Jul 165 p 635
Cover BABA Jul 185 p 715

I sell further out puts, but the main damage is done:
Sell BABA Jul 150 p 31
Sell CAT Jul 110 p 20
Sell WYNN Jul 135 p 17

Sell AMZN Jul 1900 c 140
Sell AMZN Jul 1380 p 158
Sell GRUB 121 c 22
Sell MA Jul 210 c 33

Sell XOP Aug 35 p 16
Sell RH Jul 175 c 15
Sell TIF Jul 145 c 22
Sell TSLA Jul27 300 p 550

Fri Another volatile day, as the market rallies then fades. Unfortunately, I add longs near the highs.

Sell QQQ Aug3 155 p 66
Sell MA Jul 180 p 36
Sell SPY Aug3 252.5 68

Sell NKE Jul 72.5 p 15
Sell SPY Jul 280 c 30
Sell IWM Jul 171 c 15