Weekly: TSLA VRX

Most of my trades this week are in Tesla and Valeant. With Sequoia fund dumping 1.5 million shares of VRX, a short term bottom may be in. Tesla has a big news event on Friday April 1st, the launch of the new car. 

As I often do, I am selling naked strangles. I start way out of the money, then add layers. I'm thinking that both these stocks are going to stabilize. My mental stops are the strike price of each layer of sold options.

Happy Easter everyone.

Here are the trades (c = calls, p = puts, weeklies denoted by W suffix, W1 is week1, sell means sell-to-open, cover means buy-to-close, number is price per contract).

Mon Sell TSLA AprW1 200 p 89

Sell BRKB May 125 p 47

Sell VRX strangles 73 gross

Sell Apr 15 p 54 / Apr 50 c 19

Tue Sell SPY strangles 54 gross

Sell Apr 191 p 33 / Apr 211 c 21

Sell VRX AprW1 19 p 20

Wed Sell VRX Apr 20 p 38

Sell TSLA AprW1 265 c 46

Thu Sell TSLA Apr 280 c 65

Sell VRX Apr 45 c 22

Sell TSLA AprW1 192.5 p 57

Sell IWM May 90 p 36

Good Friday market holiday.

Monthly: slump continues, 56-10, grade C

I count 56 winners, 10 losers for the March option cycle. I made money this month, but lagged the big stock market rally. SPY is back to flat for calendar 2016. I am down about -2.5% in my trading account. I am not happy with my results. I lagged the rally because I sold calls. I had some big losers in SPY and TSLA. CMG had another bad week to close the cycle.

Here are the year-to-date numbers for a few etfs, from best to worst:

GLD +18.1% gold

SLV +13.9% silver

TLT +7.0% U.S. 20-year Treasuries

EEM +5.7% Emerging market stocks

SPY +0.3% S&P 500 stocks

IWM -2.7% Russell 2000 stocks

I am right near the bottom of the barrel, right with the Russell 2000 (-2.7% vs. my -2.5%). If I were stubborn or panicky, some of the big losers would have been much worse. For the most part, I got out when my mental stop levels were breached.

Some might say bad luck, some might say bad trades. Whatever the case, the losses have been contained and I live to trade another day.

Weekly: CMG SPY TSLA

Oldtimers might remember the cartoon Wacky Races, featuring Dick Dastardly and his dog Muttley. Each cartoon episode, Dick would try to cheat his way to victory, and each time his plot would fail. His tag line was, drats, foiled again. That was my trading week. The continuing rally in SPY and TSLA had me covered sold calls for losses. A drop in CMG caused some April positions to go deep into the red. So I was down a bit for the week, overall about -2.5% for the year while SPY is about flat.

Here are the trades (c = calls, p = puts, weeklies denoted by W suffix, W1 is week1, sell means sell-to-open, cover means buy-to-close).

 

Mon Cover TSLA Mar 210 c 620 about a 500% loss. Crunch. Telsa gaps higher. I am still short 215 calls and 230 calls, so I am taking my lumps.

Sell HON Apr 97.5 p 32

Sell UNH Apr 110 p 39

Sell FB Apr 92.5 p 27

Sell MCD Apr 110 p 23

Cover TSLA Mar 215 c 415 about a 600% loss. Telsa holds its gains. It moved past my 215 stop level than came back a bit.

Tue Sell TSLA AprW1 255 c 101

Wed Sell MON Apr 80 p 53 rebalance

Sell CMG Apr 550 c 158 rebalance Chipotle tumbles again on news

Thu Rally rolls on and I scramble some more.

Cover SPY Mar 204 c 72 about a 10% loss.

Sell TSLA AprW1 185 p 85

Fri Sell CMG Apr 520 c 200 Chipotle continues lower.

Cover TSLA Mar 230 c 133 about a 300% loss.

Weekly: staying humble

Another up week for the stock market has me frustrated and disappointed. I did make money, but lagged the indexes. It is humbling. As many years I have in the stock market, I try to stay humble, try to stay in learning mode, try to always think about risk (vs. how much I am going ot make).

Are we back to bull mode? For the bull market to be officially back, we need to see new highs. For SPY that would be 214 or so. Highlights and low lights are a new long position in ULTA, more short covering, some bad news for CMG.

Here are the trades (c = calls, p = puts, weeklies denoted by W suffix, W1 is week1, sell means sell-to-open, cover means buy-to-close).

Mon Sell TSLA Apr 140 p 140 rebalance

Sell DIS Apr 87.5 p 32

Sell TSLA Mar 172.5 p 80

Wed Sell IWM Apr 94 p 41

Sell CMG Apr 610 c 95 More bad news from Chipotle

Sell DPZ Apr 115 p 30 add long

Sell TSLA Mar 180 p 104

Thu Sell TSLA Apr 260 c 92

Cover TSLA Mar 130 p 02 97% profit

Fri Sell ULTA Apr 160 p 90 New long position in Ulta Beauty, UTLA gapping higher on earnings

Cover SPY Mar 202 c 172 about a 200% loss

Cover UNH Mar 125 c 140 about a 300% loss

Weekly: short covering

A nice 2% up week for the stock market has me scrambling. I cover four layers of SPY calls for big losses as the rally unfolds. The rally in DIS and TSLA is getting uncomfortable close to my mental stop levels. I initiate a new long in DPZ Dominos Pizza, a new short in MON Monsanto.

Here are the trades (c = calls, p = puts, weeklies denoted by W suffix, W1 is week1, sell means sell-to-open, cover means buy-to-close).

Tue Big rally today. I came in net short. I cover some SPY call legs for big losses.

Sell DPZ Apr 115 p 70 new long position in Dominos Pizza

DPZ recently broke out on earnings news.

I add to position as it rallies:

Sell DPZ Mar 125 p 65

Sell TSLA Mar 155 p 88 rebalance

Sell SPY Mar 190 p 105

Cover SPY MarW1 197 c 165 about a -600% loss

Cover SPY MarW1 178 p 01 for a 98% gain

Sell BRKB Apr 120 p 50

Sell TSLA Mar 210 c 111 Tesla lower on news of hedge fund Citron shorting it.

Cover SPY MarW2 180 p 05 about a 90% gain

Cover SPY Mar 198 c 252 about a 500% loss

Sell V Apr 65 p 36

Thu Buy MON vertical put spread 240 debit

Buy Jul MON 80 p 398

Sell Jul MON 70 p 158

Sell TSLA Apr 125 p 93

Cover SPY MarW2 199 c 220 about a 700% loss

Fri Sell TSLA Mar 165 p 94

Cover SPY Mar 200 c 256 about a 150% loss

Cover SPY MarW2 200.5 c 162 about a 600% loss

Sell MON Mar 100 c 15

Roll CMG: Cover Mar 430 p 62 about a 70% gain

Sell CMG Apr 430 p 233 gross 175 credit

Weekly: upward bias

The stock market edged higher then faded on Friday. For the week, it was an upward bias. We will see if the big moves return, or if a slower moving market returns. I kept rebalancing back towards delta neutral in SPY. That meant a lot of buying high and selling low, but I had a positive week overall. 

I did burn through a lot of dry powder, but I can always close positions and roll the traditional way, if the need arises. I continue my adventures in CMG and TSLA. These two popular stocks have been good to me recently.

Here are the trades (c = calls, p = puts, weeklies denoted by W suffix, W1 is week1, sell means sell-to-open, cover means buy-to-close).

Mon Rally rolls on, I rebalance by selling more puts

Sell TSLA Mar 130 p 81

Sell CMG Mar 395 p 110

Sell SPY Mar 180 p 75

Sell DIS Mar 90 p 59

Sell UNH Mar 108 p 53

Sell SPY MarW2 180 p 35

Sell FB Mar 95 p 52

Sell SPY MarW1 185 p 30

Tue Sell TSLA Mar 135 p 92

Sell CMG Mar 430 p 205

Wed Sell SPY MarW2 199 c 33

Sell TSLA Mar 215 c 68

Sell SPY MarW1 197 c 25

Thu Sell SPY MarW2 182 p 42

Fri Sell SPY MarW2 186 p 43

Sell SPY Mar 186 p 96

Sell TSLA Mar 150 p 96

Monthly: Treading water 67-19, grade C-

I count 67 winners, 19 losers for the February option cycle, grade is C-. It was a month punctuated by some huge percentage losers. Boeing BA, Facebook FB, Under Armor UA were the main culprits. I did make some money in Chipotle CMG and Telsa and was mostly profitable on the index trades IWM and SPY. Overall, I eek out a tiny profit for the month. I am down close to -5% for calendar 2016.

Year to date from best to worst:

GLD +18% gold

TLT +8% treasuries

SPY -5.8% U.S. large cap

EEM -6% emerging markets

VEA -8% developed markets

IWM -10.8% U.S. small cap

The wide swings in the U.S. market were not good for naked option selling, at least not the options I was selling. I got hurt on both sides on some wide swings. The vexing thing is that had I held my initial position(s), often times I would have ended up just fine. Instead, I often blundered by edging back to delta neutral, only to get whacked on both ends of the sold strangle. These things happen, and are certainly frustrating when they do happen.

As always predictions are mostly for entertainment. Money is made by risk management and execution. If I had to guess I would guess, that lower lows are out there. The bull case is that this is a correction and the correction is over. The bear case is that this is a bear market and there will be another 3 to 15 months of prices moving lower.

Weekly: relief rally

This week I add some long delta as the market moves up. The rally lifts some boat. My "boat" feels like it has been battered. More details in the monthly update.

Here are the trades: (c = calls, p = puts, sell means sell-to-open, cover means buy-to-close)

Tue Sell SPY MarW1 175 p 51 rebalance on the rally

Cover UA Feb 80 c 200 Another leg closed for a huge loss on Under Armor (700% loss).

Sell DIS Mar 80 p 31 Rebalance

Wed Sell DIS Mar 85 p 47 rebalance again

Sell SPY MarW1 178 p 42

Sell UNH Mar 105 p 67

Sell HON Mar 95 p 48

Sell IWM MarW1 92.5 p 29

Sell SPY MarW1 180 p 47

Cover CMG Feb 380 p 05 98% profit

Weekly: The hits keep on coming

It was another bad trading week for me. Some mental stop loss levels were triggered and I got washed out of some legs on: Facebook FB, Under Armor UA, Boeing BA. The move in BA was the most frightening and the biggest percentage loser (2700% loss) I have had in a while. BA came under investigation for accounting practices and the stock dove lower

Bottom line: I've been trading badly. I am about 7% for calendar 2016. This is my worst few weeks in a while. The market holiday for President's Day comes at a good time. What do I tell folks in a slump: trade smaller, take on less risk, perhaps take a break.

Here are the trades (c = calls, p = puts, weeklies denoted by a W, the rest are third week expiration, sell means sell-to-open, cover means buy-to-close):

Mon Bang Zoom mental stops are triggered and I take more losses on the gap open lower

Cover VLO Feb 55 p 242 about a 300% loss

Cover FB Feb 100 p 355 about a 600% loss

Sell-to-close FB Feb 101 c 340 about a 100% gain

Cover DIS Feb 90 p 320 about a 500% loss

Sell UA shares @70.79 about a 14% loss

Cover SPY Mar 178 p 442 about a 140% loss

Sell half position in FB shares (all gone now) 98.57 about a 9% loss

Looks like the last four trades are near the lows of the move. Not good. I feel like I've been ground up and spit out by a meat grinder market. 

 

Tue Sell FB Feb 89 p 38 rebalance

Sell FB Feb 87 p 24

Got flushed out of most of my FB longs, on my mental stop levels, so cautiously add positive delta.

Wed Sell UNH Mar 95 p 58

Sell HON Mar 90 p 51

Sell DIS Mar 100 c 31

Sell TLSA FebW2 95 p 54

Thu Sell TLSA Mar 90 p 50

Sell TSLA Mar 230 c 35

Telsa moving higher after their report. Looks like short covering. I've been trading so badly, I go way, way out to sell premium.

Sell SPY Mar 198 c 52

Boeing under investigation by Feds. omg. I get out at the ask, taking two huge hits.

Cover BA Feb 105 p 473 about a 900% loss

Cover BA Feb 110 p 787 about a 2700% loss

By the end of the day BA recovers to 108+. I covered when it was below 104. Sh*t.

Sell UNH Mar 125 c 37

Sell FB Mar 120 c 39

 

Fri Sell FB FebW4 90 p 31

Cover CMG Feb 550 c 15 90% gain

Cover CMG Feb 325 p 05 95% gain

Sell CMG Mar 350 p 193

Sell CMG Mar 600 c 90

Sell SPY FebW4 170 p 30

Sell MCD Mar 105 p 58

Weekly: More pain, no gains

It was Ground Hog day this week, and the January sell off blues came back. There were a number of huge landmines such as Linked In (LNKD) and Tableau Software (DATA). I got caught in a couple of difficult trades, Facebook FB and Under Armor UA. It is looking more and more like a bear market. If so, the time frame projects out to July 2016 before the skies clear, perhaps even July 2017 if it is a nasty bear market.

It is a time to regroup, and perhaps even become more cautious. Bear market rallies tend to be violent and quick, so it is not a time to get complacent on the short side.

Here are the trades (c = calls, p = put, sell means sell-to-open, cover means buy-to-close, all option are third week expiration).

Tue Roll FB puts up:

Cover FB Feb 97 p 11

Sell FB Feb 106 p 40

Cover FB Feb 85 p 03

Wed Cover UA Feb 80 p 280 about a 300% loss

I got clobbered on both ends on Under Armor, and still have open positions in the red. Yikes.

Sell BA Feb 110 p 33

Sell FB Feb 123 c 29

Sell V Mar 62.5 p 27

Thu Rebalancing moves:

Sell NFLX Feb 107 c 29

Sell MCD Feb 127 c 17

Sell UA Mar 92.5 c 40

Sell FB Mar 125 c 81

Cover AAPL Feb 120 c 02 (buying power moves)

Cover BA Feb 145 c 01

Cover CMG Feb 300 p 05

Fri Cover NFLX Feb 80 p 156 about a 140% loss

I am still short several layers of Netflix calls, and the profit from those is about the loss from this leg. So am getting out while the overall is near break even.

Cover FB Feb 106 p 266 about a 800% loss

Sell FB Feb 118 c 28

I was way too long Facebook on this sharp pullback. Hate to do it, but covered the 106 puts even though I think that is a good support level. 117 was the recent high so may be resistance. FUBAR on what coulda, shoulda been a good winner.

Cover UA Feb 75 p 280 stopped out for a 600% loss

Cover FB Feb 123 c 05 80% profit

Sell FB Feb 114 c 48 roll

Sell V Mar 80 c 16 hedge 

Cover SPY Feb 180 p 82 40% profit

Cover DIS Feb 115 c 02 95% profit

Cover VLO Mar 57.5 p 357 about a 600% loss

Sell half position in FB shares 103.58 about a 4% loss

Weekly: too clever by half

I got a bit too cute this week. I eek out a gain, but traded myself into all sorts of crap. Overall, I am still down for 2016. This week, I took a big loss in Tesoro, and got scorched by huge earnings moves in Facebook and Under Armor. 

Here are the trades (c = calls, p = puts, sell means sell-to-open, cover means buy-to-close, all are third week expiration)

Mon Sell MCD Mar 105 p 56

Sell MCD Mar 130 c 39

Sell SPY Mar 200 c 113 rebalance

Tue Sell SPY Mar 170 p 156 rebalance

Sell MCD Mar 105 p 49 rebalance

Wed Sell BA Feb 126 c 48 Boeing gaps lower earnings.

Sell AAPL Feb 105 c 28 Apple also lower on earnings.

Sell NFLX Feb 121 c 23

Cover TSO Feb 82.5 p 435 about a 600% loss

Buy FB call backratio 50 debit:

Buy FB Feb 101 c

Sell 2x FB Feb 106 c

Thu Facebook and Under Armor gap up on earnings. I buy shares to compensate for sold calls.

Buy UA shares 81.61

Buy FB shares 107.21

Sell to close IWM Feb 117 c 01 for buying power

Sell UA Feb 87 c 45 Rebalance as Under Armor fades.

Sell FB Feb 97 p 49

Sell FB Mar 97.5 p 144

Sell UA Mar 70 p 97

Sell UA Feb 75 p 61

Fri Need to free up some buying power

Cover DIS Feb 110 c 05

Cover BA Feb 140 c 05

Cover BA Feb 150 c 02

Cover TSO Feb 120 c 03

Cover V Feb 60 p 05

Cover CMG Feb 365 p 310 about a 5% profit

Cover 1x FB Feb 106 c 649 about a 1200% loss on this leg

New record high for FB and I am taking some lumps. My position after this move is extremely complicated, net long: long some shares and short a bunch of different options, and long the Feb 101 calls.

Sell FB Feb 100 p 50

Cover MCD 130 c 32 about a 10% gain

Cover UA Feb 87 c 225 about a 500% loss

Sell UA Feb 80 p 90

Sell SPY Mar 178 p 180

Weekly: Relief rally

It felt like another difficult trading week for me. I got washed out of a couple of positions (BA, USO, SPY) near the lows. Overall a positive week as I cut my losses for the year. Am now about -3.3% was at about -5% last Friday, and down about 7% at the intra-day lows this week. We'll see what next week brings. It felt like at least a minor selling climax.

Here are the trades: (c = calls, p = puts, sell means sell-to-open, cover means buy-to-close, all are third week expiration options)

Tue Morning rally is followed by a sharp sell off. I rebalance by selling out of the money calls.

Sell SPY Feb 200 c 38 rebalance

Sell TSO Feb 108 c 45

Sell GPRO Feb 15 c 23

Sell DIS Feb 105 c 23

Sell BA Feb 140 c 30

Sell FB Feb 111 c 45

Sell SPY Mar 202 c 68

Sell UA Feb 80 c 35

Sell AAPL Feb 113 c 28

Sell IWM Feb 83 p 29

Sell SPY Mar 160 p 122

Wed Cover BA Feb 125 p 545 about a 900% loss. Ouch. The strike price of the sold option is the stop.

Sell SPY Backratio:

Buy SPY May 170 p 559 gross 173 credit

Sell 2x SPY May 160 p 366

Sell SPY Feb 198 c 38

Sell NFLX Feb 135 c 51

Sell COST Feb 160 c 28

Cover USO Feb 8 p 63 about a 200% loss (missing)

Sell IWM Mar 80 p 54

Sell WFC Mar 38 p 29

Cover SPY Apr 182 p 857 about a 250% loss

Sell SPY Apr 187 p 905 about a 9% gain

(Yes, I mangled this one)

Thu Sell NFLX Feb 80 p 65 (another poor entry)

Sell BA Feb 95 p 28

Sell SPY Feb 160 p 51

Fri Sell SPY Feb 170 p 67 add to longs

Sell AAPL Feb 83 p 33 rebalance

Sell UA Feb 57.5 p 60

Sell COST Feb 140 p 70

Sell GPRO Feb 8.5 p 39

Sell NFLX Feb 130 c 49

Sell SPY Feb 180 p 140

Monthly: Still in Kansas? 41-13-2 Grade D

I count 41 winners, 13 losers, 2 break even trades for the January option cycle. Unfortunately, for naked premium sellers, losses can be enormous and gains are capped at 100%. I took a lot of big whopper losses.

Are we in a bear market? In the movie, The Wizard of Oz, Dorothy says to Toto, "we are not in Kansas anymore," after being lifted away by a tornado. It certainly feels like a bear. The indexes are closer to -10%, but many (75%?) stocks have already declined more than 20% from their highs.

I am down close to 5% for the two weeks. SPY about -8%, IWM (Russell) about -11%, GLD (gold) up 2.6%, TLT (bonds) up 4.5%. So grading on the curve, I give myself a D. For the absolute result, the grade is F. If a person loses 5% of starting capital every two weeks, the account will before October. Starting with a big loss means that it might be a very long road back for a cautious premium seller. I might make 1% in a good month.

What is done is done. I will regroup. If this is still a bull market, and we are still in Kansas, bull market strategies will eventually start to work. Buying dips, selling puts, are things that work in bull markets. In a bear market those strategies are the road to the poor house. There were a couple of sharp rallies, so shorting willy-nilly can get a person in trouble as well.

Bonds are up pretty good, but some of that is flight to safety. The sharp stock market decline is deflationary. Walmart, Macys and some other retailers have reported poor results.

I do sometimes put on a fundamentalist hat and look at PE ratios, price-to-book, total market cap to GDP, Shiller PE10. The market isn't cheap by traditional measures, even after the 10% drop from the highs. In any case, there tends to be overshoot, where the market gets quite cheap, so scaling in, rather than going all in would be the strategy if we get to that bridge.

Anecdotally, the mood at recent in-person stock market meetings has been a bit too upbeat given the market action. One young relative recently asked about opening up a brokerage account. No one I know is talking about selling all their stocks. So there is a lot of room on the sentiment side before it feels like a bottom. In 2008/2009, virtually no one was opening brokerage accounts. Plenty of folks I knew either did sell everything or strongly considered it.

Calendar-wise, January is not usually time when the market goes straight down. So this year has been exceptional. Going forward, if I can only find the yellow brick road, a lion, a scare crow and a tin man :)

Weekly: swept away

What comes to mind is a story from my youth. I would go to the beach, wade out into the water to swim. Some days the waves were big and powerful. With gentle swells a person can easily wade out. On the days with big waves, not so much. Sometimes the waves were so big that it knocked a person over. One or two times, the life guard had to come out and push me back to shore. 

 

That was this week in the stock market. I think I have the wave gauged, that I can make it. Then boom, the wave hits and it is more powerful than I anticipated and I go tumbling. I took some big losses. For the most part I followed my mental stops. With the trending move lower, losses were substantial. In round numbers, I am down about 5% in my trading account for 2016.

I traded too much, was too aggressive. Big losses in BA, DIS, IWM, TSO, VLO. Some other positions are deep-deep in the red, but haven't been closed yet. There were a few small potato winners, but overall it was a sea of red ink for me.

Mon Another wide ranging day. I get washed out near the lows on Boeing and the Russell 2000 etf. I initiate a new position in Under Armor as it moves lower on a downgrade.

Cover two legs of BA Jan 130 puts 200

one for about a 300% loss, the other at about 700%. Ouch. Boeing closed on Friday below 130 which is my mental stop level.

Sell BA Feb 145 c 53 Rebalance, I am still short Feb 125 puts.

Cover IWM Jan 103 p 167 about a 800% loss :(

Cover AMZN Jan 800 c 01 97% profit :)

Sell TSO Jan 80 c 30

Sell VLO Jan 72 c 15

Sell DIS Feb 110 c 43

Sell UA Feb 55 p 70

Sell UA Feb 90 c 15

Sell UA Jan 62.5 p 15

Sell VLO Jan 64.0 p 30

Tue I close out all my SPY puts (sell-to-close).

Close SPY Feb 182 p 170 about a 15% profit, long anticipated rally is happening.

Close SPY Mar 172 p 161 about a 17% profit.

Close SPY Apr 190 p 626 about a 16% profit

Cover (buy-to-close) DIS Jan 107 c 04 70% profit

Sell VLO Jan 65 p 18 rebalance

Sell VLO Feb 60 p 71 rebalance

Sell TSO Jan 97.5 p 27 rebalance

Wed Rally looks tepid, so I rebalance back towards neutral on the index etfs by selling calls

Sell SPY Feb 208 c 20

Sell SPY Mar 207 c 79

Sell SPY Apr 205 c 191

As the market drops, I cover some sold puts for big losses

Cover IWM Feb 101 p 211 about a 500% loss

Cover TSO Jan 97.5 p 226 about a 900% loss

Cover VLO Jan 65 p 74 about a 400% loss

Sell VLO Feb 75 c 61

Sell TSO Feb 120 c 47

As the market continues to tumble, I sell more calls, and buy some puts

Sell SPY Mar 207 c 62

Sell SPY Feb 204 c 51

Buy-to-open SPY Apr 188 p 677

Buy-to-open SPY Jan 191 p 191

sell-to-close late in the day 242 about 25% day trade gain

Cover TSO Feb 95 p 234 about a 500% loss

Cover IWM Feb 97 p 171 about a 500% loss

Cover VLO Jan 64 p 150 about a 600% loss

Cover VLO Feb 60 p 300 about a 800% loss

Cover SPY Jan 186 p 80 about a 90% loss

Thu Cover (sell-to-close) SPY Apr 188 p 776 about a 14% gain

Sell strangles: GPRO Feb 8 p 21

Sell GPRO Feb 20 c 16

Sell CMG Feb 325 p 175

Sell VLO Feb 55 p 66

Cover CMG Jan 480 c 30 about a 50% gain

Cover SPY Mar 207 c 66 about breakeven

Cover SPY Feb 204 c 52 about 10% loss

Cover SPY Apr 205 c 166 about a 15% gain

Fri Huge gap down on the open

Buy SPY Apr 187 p 827

Cover DIS Jan 97.5 170 for about a 700% loss

Sell SPY Feb 205 c 19

Sell SPY Mar 206 c 47

Sell SPY Mar 204 c 70

Sell CMG Feb 365 p 330

Weekly: Stormy weather

Wow what a week. The sky seemed to fall. Stock markets all around the world, mostly moved lower. I took it on the chin, taking some big whopper losses. I was a bit too aggressive, opening up new long positions and that added to the damage. For the week my trading account is down about 3% in round numbers. Any way you slice it, that's a log of damage.

I attended the local Canslim/IBD sponsored meetup on Thursday. The mood seemed a bit too upbeat, so more downside action might be on its way. A couple of nuggets are that corrections typical last 2 to 3 months. Say we started it on 12/28 or so that would mean March 15th as a time frame for the correction to end. If this is a bear market, 9 months is average.

However, the caveat is that we had an extraordinarily long bull market, so both the correction or bear may also be prolonged. I am following my trading rules, and taking losses as they come.

I made a lot of trades this week, a lot of bad ones, maybe two or three that were okay. Here they are: (c = calls, p = puts, sell means sell-to-open, cover means buy-to-close, all are third week expiration.

Mon 1/4/2016: My response to the steep sell off is rebalancing. All of the calls I sold this morning are balanced off by previously sold puts. I plan to hit eject if my stop loss levels are breached, up or down. The stop is usually the strike price of the sold option.

Sell DIS Feb 115 c 64

Sell IWM Feb 119 c 33

Sell BA Feb 155 c 43

Sell FB Feb 120 c 45

Sell MCD Jan 122 c 18

Sell SPY backratio: buy SPY Feb 182 p 141

sell 2x SPY Feb 177 p 97 gross credit 53 per unit

This put backratio is a net bullish position with an explosive profit if the underlying is near the lower strike at expiration. In this case another 180 is about another 10% down for SPY and would give a very high profit. An up move or sideways means I keep the credit. In a full on crash the position losses a ton of money.

Sell AMZN Jan 710 c 51

Tue Sell DIS Feb 115 c 44

Sell DIS Jan 108 c 19 rebalance as Disney continues to drift lower. I sold Jan 100 puts and it is getting close to bail out time on that leg. On a close below 100, I hit eject.

Sell TSO Feb 82.5 p 66

Wed Sell BA Feb 150 c 73

Sell DIS Jan 108 c 17

Cover DIS Jan 100 p 175 for about a 350% loss on this leg. I cover a bit early with DIS still above 100, but it looks like a dying quail at this point. I also am short some Jan 97.5 puts and a bunch of other options.

Sell CMG Jan 480 c 65 Chipotle down hard again. I rebalance my position by selling another leg of calls.

Cover CMG Jan 600 c 05 I cover this leg for no commission at 95% profit

Sell CMG Feb 550 c 179 I go naked on this leg. The news seems more serious, so buying the dips like I have been doing, seems like a really bad idea right now.

Later in the day:

Sell CMG Feb 300 p 210 strong bid on this strike, and stock seems to have found some support, at least for the day.

Sell AAPL strangles slight bearish bias:

Sell AAPL Feb 75 p 26

Sell AAPL Feb 120 c 30

I do another SPY backratio. This one brackets a 13% to 18% SPY decline into March.

Sell SPY backratio:

Buy SPY 172 c 132 gross credit 32 per unit

Sell 2x SPY 165 p 85

Buy SPY vertical put spread, a tiny bit of protection though it has a cost.

Buy SPY Apr 190 p 535 gross 183

Sell SPY Apr 182 p 352

Sell IWM Feb 117 c 27 Rebalance

Thu Sell COST Feb 170 c 29

Sell BA Jan 144 c 20

Cover BA Jan 135 p 315 for a 1300% loss

Sell DIS Feb 80 p 24

Sell AAPL Jan 105 c 22

Sell TSO Feb 130 c 51

Sell ALK Feb 85 c 50

Cover AMZN 555 p 194 for a 30% profit

Another day in the woodshed, with more red ink. My consolation prize is that my losses are not as big as some other investors.

Fri New strangle position in Valero Energy, perhaps the worst entry of a very bad week. Yikes.

Sell VLO Mar 57.5 p 92

Sell VLO Mar 85 c 43

Sell AMZN Jan 537.5 p 42

I got scared on Thursday and covered the AMZN 555's. I am getting a crumb by selling these lower priced options further out.

Cover ALK Jan 72.5 p 215 for about a 1500% loss. A big whopper loss to close out a terrible week. Monday may bring more covering for whopper losses. I will continue to follow my mechanical rules. As painful as it is to take a big loss, much more painful is letting losses go exponential and perhaps threaten the entire account.