Position Updates – 09/27/2014

Since Earnings season has wound down to a trickle I have increased my focus on Swing trading into month-end. I also added a 1/2 size long position in $UGA to the Long-term account. I added 4 new Swing positions this week that survived to the weekend:

  • $CRR I am short at 70.08 and short the October/November 75/60 Strangle (2x on the Puts). I have an Options Net of: $4.58
  • $INVN I am short the October/October 03 weekly 20/21 Diagonal Put Calendar. I have an Options Net of: $.32
  • $JNS I am long stock at 13.44 with a March 2015/October 16/16/13 Collar PS. I have an Options Net of: -$.14
  • $LE I am short stock at 46 with an October 40 Bear Collar. I have an Options Net of: -$1.80

Newly added in the Submarine Basket this week:

  • $GNRC I have an October 42.5/45/40 Risk Reversal Call Spread
  • $TSCO I have a November 60/65/60 Risk Reversal Call Spread

No material changes in the 50/50 Basket this week

Earnings (newly added that survived to the weekend):

  • $AZO I own the October 510/520/530 Call Fly

The Summary:




Option Chain review

It is my opinion that reviewing Option chain data is important whether you actually trade Options or not. The information available in each chain has value that can – and should be – used in your overall Trading Process.

One area I like to research is the Unusually high volume list to see what stands out to me (there will always be something there). I did a quick video on this:

Disclosure: I have positions in $AMAT $CTXS for some clients

Position Updates – newly added this week

Newly added this week that is still on:

$GTAT L Sep/Sep 12w 18/17 Strangle Swap with extra Short September 22/14 Strangle. I am short stock (from 16.12) as a hedge. If price stays under $14 then I will let the stock piece get unwound for me. The short weekly $18 Calls will go poof. This would leave me Long the September 18/22 CS & 17/14 PS. Options Net: $.21

$VNET I am long stock at 14.92 with a September 22.5/21 Collar

$MBLY I have a December 55/50 Risk Reversal in the IRA (replaced $KNDI this week)

$CONN I am long stock at 29.15 and short the September 30 Straddle (Submarine Basket). Options Net: $1.80

$KKD LBW was the original trade. What is left: I am long the September 18/19 1×2 Call Ratio & short the 16 Puts (2x). Options Net: $.70 (Earnings)

$PANW I am long the September 12 weekly 90/95 1×2 Call Ratio with long stock at $95 (hedge). The plan is to let the CS auto-exercise and the long stock will get called away via the extra short $95 Calls – as long as price stays above $95. The short $85 Puts should go poof. Options Net: $.35 (Earnings)

The LBW (Look Both Ways) trade – a review of a Restoration Hardware earnings trade idea

I had offered a trade idea for $RH into Earnings and thought I would list a few potential exit paths to take if you executed this trade. Here was the trade idea:

  • LBW
  • Long the September 85/90 1×2 Call Ratio
  • Long the September 80/75 1×2 Put Ratio
  • At the time I posted the message this trade cost $.60
  • This trade would take margin (at least until the “extra” short Option pieces were closed)

Now that Earnings is done, price has settled around the $78.50 level so the Put Ratio side of the trade is winning. So now what?

For most traders, taking off the Put Ratio is the step they would take. However, it is often the case that price never probes the bottom of the Ratio so leaving the premium to expire is worthwhile.

To help with a visualization of this trade, consider looking at the Put Ratio in a different way:

  • Long the September 80/75 Put Spread
  • Short the September $75 Puts
  • Treat these as 2 separate trades

If you think price holds in this area until expiration then you would sell the Put Spread when you feel it has found a solid floor. You would then place a Stop on the remaining $75 Puts that you are short with the goal of them expiring worthless. You may even be ok with being Put stock at $75. If price does hold in this area, the Call Ratio obviously expires worthless at expiration too.

Your trade, your process.


Disclosure: I did not execute this trade before Earnings. I did trade the stock in after hours though – after the report.

Weekly Options for 09/05/2014

I have just a few existing positions left that have weekly Options that I need to tend to today:

  • $AMAT (client position)
  • $BBBY (Submarine Basket). Long 62/64/61 Risk Reversal Call Spread. I will let the CS auto-exercise and let the short Puts go poof
  • $TGT (Submarine Basket). Short 59/57 Strangle. I will likely exit the trade
  • $WDAY (Submarine Basket). Long stock with Short $93 Calls. I will adjust the short Calls to next week expiry (for a credit)
  • $WYNN (Swing). I am long stock with a September 12 weekly 190/187.5/180 Collar PS. I am also short the $190 Calls for this week (I expect them to go poof)
  • $AIG (Long-term). I am short the $53 Calls. I will adjust the short Calls to a future expiry

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:


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: