Weekly: Election rally

Wow what a week. Sorry for the late update, but my schedule is getting busier, so late updates or no updates might be expected for the next five weeks or so.

I was surprised by the market reaction to the election news. Especially because U.S. stock futures were down about 5% in Asia when the results were coming in. I came in light on positions and remain so. I added longs to defense related stocks such as BA, LMT, NOC. NVDA was another new long after a huge earnings gap up.

About two months ago, I did four election timed back ratios. Only one of the four is paying off. The other three are at break even or small loses. Overall, I think I am up a bit.

Here are the trades (c = calls, p = puts, all are third week expiration unless noted, sell means sell-to-open, cover means buy-to-close, number is price per contract):

Mon Massive rally on pre-election day news. I add a bit of long delta, but remain cautious. The new trades are way out of the money.

Sell EA Nov 74 p 18

Sell WYNN Nov 77 p 18

Sell CMG Nov 320 p 30

Sell BRKB Nov 138 p 23

Sell FB Nov 112 p

Tue Sell EXPE Nov 135 c 30

Wed Sell BRKB Dec 145 p 114

Sell FB Nov 116 p 19

Sell IWM Nov 112 p 14

Sell-to-close SPY Nov 205 p 27 for 90% loss, but I have offsetting trades

Sell RTN Dec 130 p 39

Sell BA Dec 125 p 29

Sell NOC Dec 220 p 70

Thu rebalance a few positions

Sell BA 141 p 24

Sell UNH Nov 138 p 30

Sell TSLA Nov 202.5 c 49

Sell SPY Nov 207 p 24
 

Fri Nvidia gaps higher on earnings.

Sell NVDA 65 p 28

Add to longs as the rally gets gathering steam.

Sell NVDA 75 p 12

Sell IWM 112 p 38

Weekly: Crunch time in ULTA

I continue to tread lightly. I get whacked in ULTA as it drops below my mental stop level. I am down for the week, but with my cautious stance, the damage is limited.

Here are the trades (c = calls, p = puts, all are third week expiration unless noted, sell means sell-to-open, cover means buy-to-close, number is price per contract):

Tue 11/1/16 Sell TSLA Nov 220 c 54 rebalance into the decline

Sell AAPL Nov 100 p 20 down five days in a row already, probably won't continue in a straight line down.

Wed Sell BABA Nov 110 c 24

Electronic Arts fades after a higher opening so I short it.

Sell EA Nov 85 c 18

Sell EA Nov 71 p 21

Then EA catches a bid and I hedge the short.

Thu Sell WYNN Nov 100 c 21

Sell FB 129 c 23

Sell WDC Nov 61.5 c 18

Fri Cover ULTA Nov 230 p 600 for a 800% loss. Crunch.

Weekly: Trading flurry

More internet connection woes for me so no trading early in the week. I do a flurry of put selling early Thursday morning. Many of those stocks falter, so I sell calls to hedge in the afternoon. By the end of the day I am in the red on both sides on some. No bueno. New longs in BA, PYPL, WFC.

Here are the trades (c = calls, p = puts, all are third week expiration unless noted, sell means sell-to-open, cover means buy-to-close, number is price per contract):

 

Thu Sell NOC 210 p 40 earnings

Sell BA Nov 132 p 34 earnings

Sell PYPL Nov 39 p 20 earnings

Sell TSLA Nov 177.5 p 56 earnings

Sell FB OctW4 128 p 16

Sell WDC Nov 54 p 27 earnings

Sell TSLA Nov 235 c 55 Tesla acting poorly, so I hedge the puts I sold in the morning

Sell FB OctW4 133 c 14 hedge

Sell BA Nov 152.5 c 21 hedge

Sell UNH Nov 150 c 16 hedge

Sell ULTA Nov 265 c 25 hedge

Fri Sell CMG Nov 415 c 62

Sell RCL Nov 65 p 20

Sell EXPE Nov 118 p 35

Sell NFLX Nov 150 c

Sell AMZN vertical: 

Sell AMZN Nov 835 c 182

Buy AMZN Nov 855 c 96

New shorts in CMG and AMZN, hedge NFLX, new longs on RCL EXPE.

Monthly: Some hits, some misses 63-9 for October, B-

I count 63 winners, 9 losers for the October option cycle. Grade is B-, with a small gain for the month. Gains are good. I took a few losses this cycle. TWLO Twilio almost became a big banana, but I cut the loss before it ballooned any further. DB Deutsche Bank was a winner, though a small one. I had quite a few small winners. BRKB Berkshire was a problem child. I lost on my speculative backration on FB Facebook.

So far my election 2016 plays have not turned out well. I was looking for an up move in bonds and gold, but instead they fell and I took some losses. Overall, I think I am about break even for the election trades. Not bad, considering just how wrong I have been on direction.

Towards the end of the trading month, I had some Internet connection problems. I also have less time for trading in the fall. So I'll have a lot of capital available. The election still could be a wild card.

Some people have been talking about the 29th anniversary of the 1987 stock market crash. Some mention a 29 year cycle. I feel like I have escaped the doom and gloom camp, but I often still go to cautious mode. I no longer am an all-in, all-out, all-short kind of trader. Considering how bad I can be on directional trades, that's probably a wise course.

/edit: I forgot to add the performance numbers. From best to worst a few etfs 2016 YTD performance (no dividends):

SLV +35.4% silver

GLD +19.1% gold

EEM +16.8% emerging market equities

TLT +10.6% U.S. Treasury bonds

IWM + 7.5% Russell 2000, U.S. small cap

SPY + 5.0% S&P 500 U.S. large cap

My trading account +8.1%. So I move slightly in front of IWM in the yearly horse race. I have another positive month. Considering how badly the year started for me (-5% first month), +8% is progress, it is good news. I'm sure some of the aggressive YOLO crowd will boo and hiss at being happy with +8%. However, I'm not here to please them, or any one else. Sure it would be great to be up 20% or 30%. If I knew better, I'd do better.

 

I mostly have traded equity options, but the grass has been greener in metals and bonds. Though gold and bonds edged lower this month.

Weekly: Internet down

I have Internet connection issues for much of the week, so I only made a few trades. Thankfully, the market mostly cooperated, though there were some close calls. The monthly update is coming soon.

Tue 10/18/16 Sell UNH Nov 130 p 54 earnings

Sell NFLX Nov 100 p 47 earnings

Fri Sell AXP Nov 60 p 13

Sell MSFT Nov 55 p 13

Weekly: One lump or two? TLT TWLO BRKB ULTA

In the old days of sugar bowls, the question for coffee or tea drinkers was sometimes "one lump or two." This week I took a some lumps in TLT, TWLO, and did damage control on BRKB. Overall, it was a quiet week of trading. I take a new long position in ULTA. 

During the fall months, I have less time for markets, so I am doing fewer trades. For TWLO there was a double whammy of more stock for sale, and disappointing earnings.

Here are the trades (c = calls, p = puts, all are third week expiration unless noted, sell means sell-to-open, cover means buy-to-close, number is price per contract):

Mon 10/10/16 Cover TLT Oct 133 p 129 about a 500% loss

Sell FB Oct 125 p 25

Sell TWLO Oct 60 c 22

Tue Sell BRKB Oct 146 c 45

Thu Cover TWLO Oct 50 p 340 about a 750% loss

Sell BRKB Nov 145 c 157 rebalance

Fri Sell BRKB Nov 135 p 55 rebalance

Sell ULTA Nov 230 p 70

Weekly: Gold bust

Gold has a really bad day on Tuesday, and I take a big loss on a small position. The rest of the week looks rather lean. My schedule became busier, so less time for trading. Long time readers know that this is my pattern in the fall, less time for trading and blogging, usually fewer trades.

Here are the trades (c = calls, p = puts, all are third week expiration unless noted, sell means sell-to-open, cover means buy-to-close, number is price per contract):

Mon 10/3/16 Sell TSLA OctW2 195 p 85

Tue Sell SPG Oct 210 c 56 rebalance

Cover GLD Oct 122 p 187 about a 750% loss as gold drops hard

Wed Sell SPG Oct 210 c 25

Thu Sell TSLA OctW2 217.5 c 45

Sell TLT NovW1 141 c 19

Fri Sell TSLA OctW2 210 c 36

Weekly: Deutsche Bank

New long in Deutsche Bank. I bought near the low. Other trades were mostly about rebalancing to the delta that I want. Here are the trades (c = calls, p = puts, all are third week expiration unless noted, sell means sell-to-open, cover means buy-to-close, number is price per contract):

Tue Sell FB OctW1 123 p 25

Sell TSLA OctW1 185 p 48

Sell BRKB OctW1 147 c 26

Sell NVDA strangle: 

Sell NVDA Oct 59 p 32

Sell NVDA Oct 75 c 13

Sell SPY OctW1 207 p 25

Sell IWM OctW1 118 p 21

Wed Sell BRKB Oct 147 c 40

Sell XLE Oct 64 p 21

Sell TWLO Oct 50 p 35

Thu Sell BRKB OctW1 146 c 39 rebalance

SPY backratio 50 credit: 

Buy SPY Dec 195 p 175

Sell 2x SPY Dec 188 p 112.5 each

Sell DB Nov 6 p 30 New long

Sell TSLA OctW1 225 c 27 rebalance

Sell TLT Oct 133 p 23 rebalance

Fri Sell DB Sep 10 p 20

Sell WYNN Oct 116 c 23

Weekly: Fed Monster Truck Rally

Wednesday was Fed day. Stocks, bonds, and gold all rallied. There was a bit of a fade later in the week, but overall the shorts were wrong. I did okay with my cautiously bullish stance. I was relatively happy with my results. Yes, some big swingers made big money by being aggressive. Long time readers know that I describe myself as a cautious trader.

Highlights include new longs in ADBE, FDX, SCTY, SRPT. Here are the trades (c = calls, p = puts, all are third week expiration unless noted, sell means sell-to-open, cover means buy-to-close, number is price per contract):

Mon Sell WYNN Oct 125 c 41

PCLN vertical: 

Sell PCLN Oct 1300 p 357

Buy PCLN Oct 1250 p 212

Sell SCTY Oct 11 p 25

Sell BRKB Oct 148 p 103

Sell TSLA SepW5 185 p 51

Sell FB SepW5 122 p 22

Sell SRPT Oct 35 p 35

Thu Sell FDX Oct 160 p 44

Sell ADBE Oct 100 p 29

Sell IWM Oct 116 p 34

Sell GLD Oct 122 p 24

Sell TWLO strangles: 

Sell TWLO Oct 50 p 82

Sell TWLO Oct 90 c 50

Sell NTES Oct 300 c 50

Monthly: Weathering the storm, 51-5 grade B+

Volatility ticks up. My cautious approach works fairly well. Stocks, bonds and gold all moved lower for this cycle. I made modest gains. I count 51 winners, 5 losers for the September option cycle.

The year-to-date etf tracking follows, best to worst, dividends not included:

SLV +35.4% silver

GLD +23.3% gold

EEM +13.4% emerging market stocks

TLT +11.8% U.S. treasury bonds

IWM +8.2% U.S. small cap stocks

SPY +4.7% U.S. large cap stocks

my trading account +6.8%.

Good news: I finally leap frog out of last place, moving ahead of SPY for calendar 2016. Considering how the year started, with about a 9% drawdown, being positive, moving ahead of the S&P 500 is all good news. Cynics can say that "good traders" made much more. Just look at the big gains in other asset classes, such as silver, gold, treasury bonds.

Going forward I continue to be cautious. That said, a surge to the upside in stocks, might be the most frustrating thing the market can do. Last month I wrote about some election trades. All were mediocre to dead wrong. I thought gold and bonds would go up, and both went down. I thought stocks would be more volatile, and that was true, but my positions did not move much.

Weekly: Apple blow out

I got blown out for a loss on some sold AAPL calls. Thankfully, that was the worst of the damage to my chicken coop, as the markets moved up, down, up, and down again. Being short way otm options was a decent place to be this week, so I came out ahead. GLD and GDX positions also became uncomfortable.

Market rollercoaster may continue with Fed next week, then the first presidential debate on the 26th. It may be concidence that the Fed meeting is Wednesday, and Mercury goes direct on Thursday, but hey, whatever works. The monthly update will be posted soon.

Here are the trades (c = calls, p = puts, all are third week expiration unless noted, sell means sell-to-open, cover means buy-to-close, number is price per contract):

Mon Sell FB Sep 124 p 16

Sell BRKB SepW4 143 p 31

Sell AAPL SepW4 100 p 33

Tue Sell TLT Oct 143 c 21

Sell GLD Oct 135 c 35

Sell IWM Oct 128 c 29

Sell BRKB SepW4 149 c 60

Sell GDX SepW4 29 c 25

Wed Cover AAPL SepW4 110 c 252 for a 1800% loss. Ouch. Thankfully a small dollar amount.

Sell TWLO Oct 40 p 70

Sell VRX Oct 20 p 34

Sell WYNN Oct 85 p 47

Sell BABA Oct 85 p 22

Thu Sell GLD SepW4 130 c 17

Sell AMZN vert: 

Buy AMZN Oct 650 p 124

Sell AMZN Oct 675 p 193

Sell NTES Oct 195 p 102

Sell AAPL SepW4 123 c 15

Fri Sell TLSA SepW4 185 p 36

Weekly: Live long and prosper

This week Star Trek fans celebrated the 50th anniversary of the show. The Vulcan farewell is "live, long and prosper." Friday, the stock market hit its first bit of real turbulence since the Brexit scare. I am down for the week. I was cautious, but still got hit. For those tracking planet Mercury, it comes out of retrograde on 9/22/16.

I don't think this is the "big one," but as always we can only tell in hindsight. One trading buddy moved to 100% cash on Thursday. Good move. I don't do all-in, all-out, all-short kind of moves, so would never do that. My market timing tends to be no better than flipping coins, so mostly I manage risk, and mostly sell premium.

I thought a stock market decline would be good for bonds and gold, but on Friday all three went down. Highlights include a whipsaw loss in GDX, a new long position in AMZN that quickly went to red, a bearish ratio spread in FB. 

Here are the trades (c = calls, p = puts, all are third week expiration unless noted, sell means sell-to-open, cover means buy-to-close, number is price per contract):

Mon Sell SPG Sep 200 p 19

Sell GDX SepW4 25 p 19

Sell GLD SepW4 123 p 31

Cover GDX Sep 28.5 c 83 for a 500% loss

Sell SPG Oct 190 p 59 add

AMZN 730/750 credit put vertical: 

Buy AMZN Sep 730 p 47

Sell AMZN Sep 750 p 97 gross 50

Big sell off on Friday. I came in light, but still took it on the chin. I sell calls, I short FB, I turn my put vertical AMZN into an iron condor. With gold, bonds and stocks all down, my thesis so far has been wrong. I thought a decline in stocks would mean a rally in bonds and gold. It ain't working out so far.

Fri Sell BRKB Oct 155 c 50

FB ratio spread: 

Buy FB Oct 110 p 118

Sell 2x FB Oct 110 p 27 each

Sell TLT Oct 126 p 25

Sell TLT Oct 145 c 18

Sell AMZN vertical: 

Sell AMZN Sep 792.5 c 98

Buy AMZN Sep 802.5 c 44

Sell TSLA Oct 235 c 83

Sell TSLA Sep 210 c 38

Sell GDX Oct 32.5 c 18

Sell GLD Oct 137 c 31

Sell SPG Oct 230 c 43

Sell BRKB SepW4 150 c 72

Sell BRKB Oct 155 c (2nd) 36

Weekly: CMG SPG TSLA UAL

New positions in Simon Property Group SPG and United Airlines UAL. I reenter CMG and TSLA. I adjust my GLD and GDX positions.

Here are the trades (c = calls, p = puts, all are third week expiration unless noted, sell means sell-to-open, cover means buy-to-close, number is price per contract):

Mon Sell BRKB Sep 142 p 27

Sell SPG Oct 190 p 81 new long Simon Property Group

Sell TSLA strangles: 

Sell TSLA Sep 190 p 56

Sell TSLA Sep 240 c 38

Sell CMG strangles: 

Sell Sep 375 p 72

Sell Sep 470 c 62

Tue Sell SPG Oct 230 c 53 hedge

Sell GDX 28.5 c 17 hedge

Sell AAPL Sep 98 p 18 add

Sell BRKB Sep 144 p 28 rebalance

Sell GLD Sep 131 c 16 hedge

Wed Sell UAL Sep 45 p 17

Thu Sell TSLA Sep 230 c 35

Fri Sell GDX Sep 25 p 17

Sell TLSA Sep 215 c 63

Sell GLD Sep 123 p 17

Sell BRKB Oct 140 p 54

Weekly: Four election trades

I'm looking for volatility to pick up so plan to trade cautiously, with big reserve. This week I initiated, four election ratio spread trades. These back ratios target a 5% up move in IWM, or 10% down move in SPY, and a 10% up move in GLD, 7% up in TLT. These are pilot positions, so I am add, subtract, perhaps even reverse as time goes on. For easy tracking: IWM ~ 123, SPY ~ 217, GLD ~126, TLT ~138.

Here are the trades (c = calls, p = puts, all are third week expiration unless noted, sell means sell-to-open, cover means buy-to-close, number is price per contract):

Wed Sell VRX Sep 26 p 18 rebalance as Valeant rallies

Sell WYNN Sep 75 p 21

Election trades. I am targeting a 5% up move in IWM, or 10% downside in SPY. Also a 10% up move in GLD. Initial outlay is small for IWM, GLD. I get a small credit for SPY.

IWM ratio: Buy IWM Nov 125 c 289

Sell 2x IWM Nov 130 c 98 each

SPY ratio: Buy SPY Nov 205 p 249

Sell 2x SPY Nov 195 p 135.5 each

GLD ratio: Buy GLD Dec 135 c 209

Sell 2x GLD Dec 145 c 82 each

Sell BRKB Sep 152.5 c 36

Sell GDX Oct 22 p 24

Thu TLT ratio: Buy TLT Nov 145 c 122
Sell 2x TLT Nov 150 c 50 each

Fri Roll BRKB: Cover BRKB AugW4 147 c 43 (40% profit)

Sell BRKB Sep 148 c 143

Sell ADSK Oct 57.5 p 29

August: Pretty Good B+ 67-7

A pretty good, though I feel like I left some money on the table. I count 67 winners, 7 losers for the August option cycle, grade is B+. I didn't have any major blow ups, though I did take a few large percentage losses. 

Going forward I am looking for volatility to pick up. An acceleration to the upside might be the scenario that frustrates the most market participants.

Long time readers know I sometimes mention Mercury retrograde. This is coming August 30 and lasts about three weeks. Often times, markets go turbulent during that time. Combine that with September often being a month with wide swings, a lot of uncertainty over the U.S. presidential election, and a September or October surprise is something to look for.

Results from best to worst:

SLV 39.1% silver

GLD 26.1% gold

EEM 16.8% emerging markets equity

TLT 15.0% U.S. 20 year treasuries

IWM 9.2% U.S. small cap

SPY 7.2% U.S. large cap

My trading account still lags at +6.2 for the year. Real world results are a bit worse, because the table above doesn't include the dividends, while my account total does. Add another 1% or so to SPY and TLT for dividends. There is good news and bad news. Good news is that I am up. Bad news, is that I could have done a lot better. My retirement accounts are more conservatively invested and up less than the 6%. I tend to be a market chicken, though I take an occasion big swing for small amounts.

Weekly: ACIA TWLO

I am up just a tiny bit for the week. I take a flyer on new positions, selling strangles on two hot stocks: ACIA and TWLO. I took losses on some sold calls on AAPL and BRKB. As almost always, I could have done better, could have done worse. I am looking to reduce risk going into September, because it can be a volatile month. The monthly wrap up will be up before Sunday.

Here are the trades (c = calls, p = puts, all are third week expiration unless noted, sell means sell-to-open, cover means buy-to-close, number is price per contract):

Mon Cover FDX Aug 140 p 01 for 98% profit

Cover AAPL Aug 97 p 01

Cover BRKB Aug 125 p 01

Cover PEP Aug 100 p 01

Cover WYNN Aug 108 c 42 for a 45% gain

Cover AAPL Aug 109 c 96 about a 600% loss on the rally

Wed Sell VRX Sep 22.5 32 rebalance

Sell BRKB AugW4 47

Sell TWLO Sep 44/90 strangles: 

Sell TWLO Sep 44 p 114

Sell TWLO Sep 90 c 43

Cover BRKB Aug 150 c 24

Cover BRKB Aug 148 c 134

Thu Sell to close WYNN Sep 110 c 95 for about a 70% loss

Fri Sell MON Sep 90 p 40

Sell TWLO strangles (2nd layer): 

Sell TWLO Sep 40 p 106

Sell TWLO Sep 90 c 35

Sell ACIA strange: 

Sell ACIA Sep 75 p 75

Sell ACIA Sep 170 c 40

Weekly: whiff on DIS NVDA also BABA VRX

I took a couple of swings on Disney and Nvidia before their earnings reports. I whiffed on both. DIS was most frustrating, because 15 minutes after I bailed out, an analyst upgrade and rally would have gotten me to a big winner. As is, I lost on both. NVDA was bad enough that there was nothing to salvage (bear bet). Overall, I was up for the week. I also sold strangles on BABA and more strangles on VRX.

Here are the trades (c = calls, p = puts, all are third week expiration unless noted, sell means sell-to-open, cover means buy-to-close, number is price per contract):

Mon Sell BRKB AugW4 147 c 72 rebalance

Sell AAPL AugW4 102 p 22 rebalance

Tue Sell BRKB AugW4 142 p 38 rebalance

Sell BRKB Aug 143 p 22 rebalance

Cover BRKB Aug 148c 66 about a 45% loss

Sell SPY SepW1 209 p 37

Sell VRX strangle: 

Sell VRX Sep 20 p 29

Sell VRX Sep 35 c 17

Cover AAPL Aug 88 p 01 for a 97% profit

Cover TLT Aug 130 p 01 95% profit

Buy DIS ratio: 

Buy DIS Aug 97 c 134

Sell 2x DIS Aug 101 c 27 each

Cover BRKB Aug 135 p 05 for a 90% profit

Sell BRKB AugW4 143 p 31

Wed Cover IWM Aug 107 p 02 97% profit

Sell-to-close DIS Aug 97 c 57 took a shot at earnings, wiffed for a 60% loss

still short some Aug 101 calls, overall position is a loser. Unbelievable, minutes after I bail out DIS rips to the upside. Cheese.

Cover DIS Aug 101 calls x2 18 each for a 10% profit

I bail out on the other legs, stunned at the turn of events. A decent winner was minutes away and I walked away, ending up with a loss. If I knew better, I'd do better. These things happen.

Sell TSLA AugW4 200 p 56

Bearish bet on Nvidia earnings:

NVDA ratio: 

Buy NVDA Aug 55 p 134

Sell 2x NVDA Aug 50 p 34 each

Thu Cover ULTA Aug 230 p 04 for 95% profit

Sell AAPL SepW1 102 p 21

Fri Sell BABA strangle: 

AliBaba gapping higher on earnings

Sell BABA Sep 87.5 p 34

Sell BABA Sep 115 c 12

Sell BRKB SepW1 142 p 28

Cover to free up some buying power:

Cover CAT Aug 77 p 04 for a 90% gain

Cover AAPL Aug 102 p 04 for a 70% gain