Position Updates

Newly added this week that survived to the weekend:

  • $IRF  I tagged along in the September 30 Calls on the M&A rumors (deal was eventually announced later in the day). Options Net: -$.72
  • $MNST  A “to fade” setup. I am currently short the Oct/Sep 85 Put Calendar. Options Net: $1.05
  • $VXX  I am long the ETN at $27.90 and short the August 29 weekly 28/27.5 Strangle. Options Net: $2.05
  • $JRJC (50/50)
  • $PBYI (50/50)
  • $HAIN (Earnings)
  • $INTU (Earnings)
  • $RDEN (post-Earnings)
  • $ROST (Earnings)
  • $SMTC (Earnings)

The Long Term position in $GME acted well after Earnings. The remaining $CBI position in the Submarine Basket is the short October $60 Puts (the short stock piece hit a Stop for +$2.50). $KR is no longer an official SB position but the trade still remains with a 3% Trail Stop. The $BIOF position in the 50/50 Basket hit a Stop.

Most of my activity was in Earnings Trades:

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Here is the Summary for Swing, LT, IRA accounts:

Positions_08232014

50/50 Basket update

Reminder: the term “50/50″ has to do with a ticker being “50% above the 50 SMA”.

I will end the week with 5 positions:

  • $GLUU I am short stock at 6.50 (since July 15) with a Stop at $5.5
  • $JRJC I have a Sep 11/10/7.5/6 Bear Risk Reversal PS (bottom 2 strikes are split, 1/2 size each). I am long stock at $8.07 (hedge, since 08/20). I discussed this trade earlier this week on my Blog
  • $TKMR I am short stock at $25.04 (since 08/11) with a Sep 17.5/17.5/30 Bear Collar CS
  • $VJET I am short stock at $26.40 (since 07/01) with a Sep 17/18 Bear Collar
  • $PBYI I am short the Sep/Sep 05 weekly 240 Put Calendar (since 08/21)

The $BIOF position was closed this week (hit the Stop)

One way I manage Risk in an Options trade: using Stock

It is no secret that Options are only available for trading during normal market hours. With that in mind, it is also no secret that you can trade stock outside of normal market hours if available for trading by market makers (most are).

I often construct Option trades that have a bias – like most traders – but I leave in flexibility for when the market has other ideas (which is frequently). To illustrate I will use the current $CRM trade as example of what I mean. Here are the specifics:

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I posted the above worksheet yesterday via Twitter to show the tickers I was reviewing for Earnings, some relevant Option info, and the trades that I did:

CRM_B_2

For $CRM:

  • I am long the August 22 weekly 56/58 1×2 Call Ratio
  • I am short the August 22 weekly 51 Puts

With every trade that I use Options there is one potential step that can become very important to the success of the trade: hedging with stock. With this trade, any move by price beyond $58 would start to eat into the profit of the Call Ratio.

Here are my thoughts on $CRM:

CRM_B

Price right now is: $60.20

 

 

Earnings Trades update

Although the Earnings season is winding down, there were still good opportunities this week. Newly added that will survive to the weekend (all done under the 1st week Rule exception due to the use of September monthly Options):

  • $RDEN I am long stock at $14.92 and short the September $15 Straddle. Options Net: $4.53
  • $HAIN I am long the September 90/95 1×2 Call Ratio with short 80 Puts. I am long stock at $92.37 (a tag along stock buy, will use as a hedge if need be). Options Net: $.35
  • $SMTC I am long the September 25/27 1×2 Call Ratio. Options Net: -$.05
  • $INTU I was long the 85/87.5/90 1×2 Split Call Ratio with short 80 Puts. I was long stock at $83.72 (tag along buy). I have StC the September 85 Calls & sold the stock piece. This leaves the short 87.5 & 90 Calls for now. Options Net/cushion: $4.74
  • $ROST I am long the September 70/72.5 1×2 Call Ratio and 70/67.5 Put Ratio (a LBW trade, Look Both Ways). I am long stock at $72.38 (2nd trip long, a hedge). Options Net: 0.00

The August weekly trades that get closed today are: $YOKU $CRM

 

Note: the “1st week Rule exception” has to with my rule of NOT using monthly Options the 1st week after a Monthly expiration cycle. In this case, August monthly Options expired last week. I have a rule to only do new trades – the 1st week after monthly expiration – that have weekly Options available. I make an exception to this rule when appropriate/desired.

A Basket approach for Earnings

I make an effort each week to do some Strategy comparison work. One area I do this for is Earnings. Here is a look at a Basket for Earnings AMC:

  • Simple approach, just Long Calls
  • 9 names
  • Some August weekly, some September monthly
  • Cost: $11.65 as of the time I collected the data

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It is rare that I don’t like the prospects for this strategy and today is one of them. Notes on the graphic.

China Finance Online

I have a trade in the 50/50 Basket for $JRJC and thought I would give a brief breakdown on the status. Here are the specifics:

September 10/9/7.5/6 Bear Risk Reversal Put Spread. A mouthful lol

I am long stock at $8.07 (hedge for the short Calls)

Here is a breakdown of the September Options pieces:

I am short the $10 Calls
I am long the $9 Puts
I am short the $7.5 Puts (1/2 size)
I am short the $6 Puts (1/2 size)

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Earnings Trade Ideas

I had 3 stocks that I reviewed yesterday for Earnings this morning & here is a look at what I considered:

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Per my “1st week rule” – after monthly Options expiry i don’t do Earnings trades in the 1st week for personal accounts unless the stock has weekly options – I did not do a trade in $DKS or $TJX. I did initiate the trade in $HD.

All 3 trade ideas are performing well with the Bullish side winning in $DKS.