Modest losses for the week. Highlights include new
positions in AMBA FB UNH. Sold layered strangles in Ambarella, sold
puts in Facebook, Sold strangles and rebalanced in United Healthcare.
Took a 130% loss in MCK Mckesson. Elsewhere, the stock market waited
on news from Greece. As of this writing on Saturday, it looks like no
deal and Greece may be kicked out of the Euro, but things can and
will change. China's stock market had a 7% down day, though FXI
didn't fully reflect that damage.
Bonds
TLT continues its down trend. For the year the losses in bonds are
modest, however, from the late January top, the losses feel a lot
worse. TLT high was about 138 and now about 115 for about a 20%
haircut. That's ouch for those that rode the train up and now down.
For the moment, it seems like investors are selling bonds and putting
that money into stocks. How long can that game continue? Hard to say.
I often let the chart action tell me what to do instead of trying to
predict.
Here
are the trades (p = puts, c = calls, sell means sell-to-open, all are
third week expiration unless noted):
Fri
Sell AMBA Jul 80 p @107.1 Rebalance sold strangles in Ambarella. AMBA
up again, so I sell another layer of puts to balance back near
neutral. Later in the day, I sell a second layer of calls as AMBA
retreats. Sell AMBA Jul 131 c @102.4. I know, I know I got it wrong,
it is supposed to be buy low, sell high not the other way around, but
some days are like that. Delta neutral traders often find themselves
doing the opposite to balance out a position.
Thu
Sell UNH Jul 130 c @119.9 Hedge sold puts by selling calls in United
Healthcare. Position is now a sold strangle, which is a bet on a
trading range (110 to 130). Later in the day I sell another layer of
puts: Sell UNH Jul 113 p @122.6 46 as UNH rallies. Oops.
Cover
(buy to close) MCK Jul 230 p @229.7. McKesson reaffirmed guidance
yesterday and the stock dropped. Good enough was not good enough. I
am getting out for a 125% loss on this leg as MCK crosses the strike
price to the downside. Half an hour MCK is bouncing, so it looks like
I got whipsawed. Again, this can and will happen if a trader uses
stops. Just seems to be happening a lot lately (JBLU MRK two other
recent losses).
Wed
Sell AMBA strangles @99.4 Jul 130 c / Jul 75 p New position in
Ambarella. The recent high was 128, and I see that as resistance.
AMBA in the news with a parabolic chart formation, a short seller
making comments crashing the stock, then Cramer and two analysts
coming in to defend the stock. Bias is down, with support at 75.
Selling a strangle is a bet on a trading range.
Tue
Sell JPM Aug 65 p @69.5 Rebalance JPM Chase again as it continues to
climb.
Sell
DIS Jul 108 p @114.1 Rebalance to net long in Disney.
Sell
UNH Jul 110 p @122.2 New long position in United Healthcare.
Sell
FB Jul 80 p @87.5 New long position in Facebook. FB at all time highs
on news. I am selling puts way out of the money for a tiny premium,
so am only dipping my big toe back into FB on the long side.
Mon
Sell JPM Jul 65 p @68.8 Rebalance in JPM Morgan Chase bank.
Sell
SKX Jul 125 c @113.9 Something a bit different, I sell into strength
on Sketchers and am now net short. SKX has had a two-month run up
after stellar earnings.
Position
Summary:
long
BRKB DATA DE EL FB
net
long DIS HON JPM SKX YUM
net
neutral AMBA IWM MRK SPY UNH
short
MCK
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