Positions Update

I wrote a mid-week update here - and only a few changes/adjustments since:

  • $IRF I took some $ out of the trade by moving the Long Calls up to the $35 strike for September. Options Net now: $4.11
  • $VXX I adjusted the short Option pieces to September 05 weekly $28 Straddle (Calls are covered)
  • $VIPS was exited from the long-term account on 08/27
  • $PBR I added short September 12 weekly $19 Calls on 8/28 (covered calls, IRA)
  • $SLCA I adjusted the short Calls to March 2015 $65 strike on 08/28
  • $WDAY I added long stock at $86 on 08/29. I later added short September 05 weekly $93 Calls for $.95 credit. Submarine Basket
  • $GRMN a Stop on the long September $55 Calls hit at $1.70 on 08/27. Submarine Basket, leaves a short Strangle
  • $BBY I exited the Earnings trade (personal & the client trade)
  • $GCO post-Earnings trade, exited
  • $AVGO Earnings trade
  • $DGLY 50/50 Basket, exited

Here is the Summary:


A look at Options protection starring Williams Sonoma

This is what the Daily chart of $WSM looks like post-Earnings:



I noted that I had an existing trade for $WSM that I was taking into Earnings and here are the specifics (for some clients):

  • Long stock since 08/25
  • Own a January/October 80/75/67.5 Collar Put Spread: I am short the January 80 Calls and long the October 75/67.5 Put Spread

So now what? Well let’s take a look to see how the Collar PS helped in the price “flush” post-Earnings:

  • October 75 Puts last traded at: $8.25
  • October 67.5 Puts last traded at: $2.53
  • January 80 Calls have no volume today, bid/ask at:  .25/.60

A few potential next steps:

1) Sell to Close the long $75 Puts and leave the short $67.5 Puts for now (expect some recovery)

2) Do nothing

3) Adjust the short $67.5 Puts down a strike (could even consider a different expiration)

4) Adjust the short $80 Calls to a nearer expiration – and down a strike or 2 – to build a credit

Another perspective on the Daily chart:


Position Update (mid-week)

A brief review of newly added, exited, and adjusted positions for this week:

  • $IBN I adjusted the short Calls to the October $50 strike (covered calls)
  • $MS I was long stock at $33.75 and sold at $34.35 on 8/26 (newly added and exit)
  • $QIHU I am short the September 05 weekly 93/90 Strangle (short August 29 weekly 94 Calls remain as well). Newly added, the long stock piece hit a Stop on 08/26
  • $TAN I adjusted the September short Calls up to the $46 strike
  • $ACHN I am long the January 12.5/20 Call Spread (newly added, IRA)
  • $PBR I am long stock at $17.50 (newly added, IRA)
  • $TSCO I adjusted the short Calls to the October $65 strike (Submarine Basket)
  • $BBY (Earnings, position for personal account and some clients)
  • $SAFM (Earnings, position for personal account and some clients)
  • $TSL (Earnings, for some clients)
  • $MOV (Earnings, for some clients)
  • $BMO (Earnings, for some clients)
  • $ARUN (Earnings)
  • $TIF (Earnings)
  • $SWHC (Earnings, newly added and exit)
  • $INTU (Earnings, exit)
  • $DRL (50/50 Basket)
  • $DGLY (50/50 Basket)


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:


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


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:


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:


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:


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


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