Position Updates – full report

I did a brief Position Updates post on Friday. This is the normal weekend post I do each week.

Exits this week:

Submarine Basket:

04182015

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

Positions_04182015

- DM 11:15 AM CST

 

Position Updates

This is a list of the positions that look to survive to the weekend:

Earnings:  $CNC $TWTR $CE (new)

Swing Acct:  $FLTX $ISRG $QCOM $SWKS $UNP $WDC $Z (new)

Long-Term Acct:  $AVGO $EA $IWC $QLYS $RMD $WBA

IRA Acct:  $CYBR $EWZ $ESRX $JCI (new) $MAR

Submarine Basket:  $AXP (new) $BWA $CAT $EXPE $MON $PNRA $RL $SNDK $WYNN

Fab 5:  $ENDP $LB $WYN (so 2 empty seats to fill)

50/50 Basket:  no positions

 

- DM 1:00 PM CST

 

Trade review in Netflix

This is the trade that I initiated for $NFLX into Earnings:

  • Long the April 470/450/435 Put Fly with Short $540 Calls
  • I set a mental Buy Stop at $520 as the level where I would hedge with Long stock if need be
  • This trade was done for a -$.24 debit
  • This trade took margin

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:

Options:  -$6.49
Stock:     $26.68

BtC = Buy to close

 

- DM 8:15 AM CST

 

Earnings Trades review for this week

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

 

- DM 8:40 AM CST

 

Trade Adjustments – the power in Flexibility

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:

The adjustment

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:

  • Long the 520/530 Call Spread
  • Short the $495 Puts
  • This takes margin until the short Puts are closed
  • I did this trade on 4/9 for a .39 credit

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:

  • Take the stock at $520
  • StC the $520 Calls & BtO Calls in a future expiry
  • Build a Call Fly for next week
  • Do a new Risk Reversal

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.

 

- DM 9:30 AM CST

 

Stop vs. Options

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:

VHT_Trade_setup
If you would like to learn more about the Managed Account service at Dragonfly Capital you can email us at [email protected]

- DM 11:00 AM CST

Options Expiration – April Monthly

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)

 

- DM 10:00 AM CST

 

 

Trend Following

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.

 

- DM 9:55 AM CST

 

The Fab 5 update

Quite busy in the basket this week as I had 2 positions that were going to fail on the Stage 1 Time Rule (I have closed them already) thus opening up 3 slots to fill. This is what I added:

  • $ENDP  I am Long at $93.25
  • $LB  I am Long at $94 with Short April $95 Calls (covered calls)
  • $WYN  I am Long the May 90/95/100 Call Fly with Short $87.50 Puts

Here is the Summary:

04112015

- DM 10:40 AM CST