Here is the Summary:
- DM 11:45 AM CST
I did a brief Position Updates post on Friday. This is the normal weekend post I do each week.
This is a list of the positions that look to survive to the weekend:
50/50 Basket: no positions
This is the trade that I initiated for $NFLX into Earnings:
The stock went UP.
I was able to go Long the stock at 520.22 in A/H on 4/15 for a hedge. I took off this hedge at $537.90. The stock wavered very little so I started a new Long stock position at $534.40 as a 2nd hedge. I BtC the April $540 Calls for a $6.25 debit on 4/16 & then I set a Stop at $543.40 on the Long stock piece. The Stop did hit on 4/16.
The stock is trading around $558 in P/M today, Friday 4/17, so the Stop hunters got me this time. Although the Put Fly expires worthless, the stock hedging and being prudent to BtC the $540 Calls were the correct steps in my normal process. The market said my trade was wrong – So be it.
Net on the trade:
I have initiated 4 new Earnings Trades so far this week: $FAST $JBHT $NFLX $ADS. The JB Hunt trade has been closed already but I thought I would provide a brief look at each of the remaining 3 trades to see how they are doing.
Fastenal $FAST I am Long the May/Apr $40 Straddle Swap. What this means is I am Short the April Straddle and Long the May Straddle at the $40 strike. This trade was done for a -$.75 debit. Price is currently at $41. My current plan is sell a Strangle in May & use the proceeds to BtC whichever April option piece is ITM on Friday
Netflix $NFLX I am Long the April 470/450/435 Put Fly and Short the $540 Calls. This trade was done for a -$.24 debit. I did trade stock in A/H on 4/15 for a nice $17.68 gain. I am currently Long stock at 534.40 (hedge, 2nd trip long)
Alliance Data $ADS I am Long the 300/310/320 Call Fly and Short the $290 Puts. This trade was done for a -$.55 debit. The initial reaction after market open is up 1.5% to $307. I have StC the Long $300 Calls leaving the rest of the Call Fly and Short Puts alone. Options Net is now: $6.27
For those that don’t trade Options, I’d like you to stick around anyway to read the rest of this. Why? To help illustrate the power in Flexibility that comes from trading Options:
For an adjustment example I will use the current trade in $ISRG. I came into this week owning the April 520/530/495 Risk Reversal Call Spread. Another way to look at this trade:
When you see a trader discuss an “adjustment” it doesn’t always mean a negative event to a trade. In the case of the $ISRG above, I am taking advantage of the continuation up move today to sell Option premium next week and BtC the Short $530 Calls for this week. The 520/530 Call Spread becomes an April/April 24w 520/540 Diagonal Call Calendar (takes margin). I now have flexibility for Friday expiration with several choices:
Just to name a few. Flexibility is what I focus on – the Trade Design to give me this – and that is what I have here.
I send this to client prospects for the DCMA to show how I would create a position for them. This is a recent Trade Setup for $VHT. I cover several key elements like Position Size, Amount to Risk, Stop price, etc:
If you would like to learn more about the Managed Account service at Dragonfly Capital you can email us at [email protected]
This week has two key events happening: 2014 Federal IRS taxes due on 4/15 & Options Expiration for the April monthly’s. lol
Here are my current positions that have April Monthly Options – at least as part of the trade – and the plan for each:
Fleetmatics $FLTX I am Long the 45/50 Call Spread. I will likely adjust to a May Call Fly
Intuitive Surgical $ISRG I own the 520/530/495 Risk Reversal Call Spread. I will likely close this trade
Workday $WDAY I own the 85/90/77.5 Risk Reversal Call Spread. Undecided if I will take proceeds and build a new trade further out
Electronic Arts $EA I am Long the $55 Puts (part of Put Cal). I will let these expire, go poof
Resmed $RMD I am Short the $55 Puts (part of a S Strangle, calls are covered). These go poof
Walgreens $WBA I am Short the $70 Puts. These go poof
Cyber-Ark Software $CYBR I have a 55/65/45 Collar PS. I will adjust to future expiry
Marriott $MAR I am Long the 80/70 PS (protects Long stock). I will adjust to a future expiry (June likely)
Panera Bread $PNRA I have a 165/160 Collar. I will adjust to future expiry
Rentrak $RENT I am Long the 55/60 CS. I will take whatever the market gives me & close the trade
Tiffany $TIF I own the 85/87.5/90 Call Fly with Long stock at $87.5 (hedge). I will likely take proceeds to build a new trade
Limited Brands $LB I am Short the $95 Calls (covered calls, Fab 5). I will adjust to a future expiry (likely May)
McGraw Hill $MHFI I have a $105 Collar. I will adjust to a future expiration. I will take out as an “official” Fab 5 position but leave the trade on
Cooper Companies $COO I am Short the $180 Calls (covered calls). I will let the stock get called away, exit this Earnings trade
RedHat $RHT I am Long the $70 Calls (part of a Diagonal Call Calendar). I will take stock at $70
Signet $SIG I own the 130/135/120 Risk Reversal Call Spread. I will exit this Earnings trade, take the $5 gain
Carmax $KMX I am Short the 72.5/65 Strangle. I will exit this Earnings trade (will cost to BtC the Calls but have a $3.04 Options Net to work with)
I think most traders understand this concept of following the trend. Although there would be a lot of debate among traders on what they use to measure it, we can all agree that the 1st place to start is Price.
What I want to do now is to give you a different twist on Trend Following. This perspective comes from a review I did this weekend of all my current positions and noticing a common element in many:
Dip Buy at Support
Maybe this is a trend in itself, something that many traders are increasingly doing. A market participant “trend” if you will.