An update on the Russia Bear 3x ETF RUSS

I have actively traded $RUSS since Friday. Here is the current trade that I have on:

  • June/Jan 56/40 Bear Risk Reversal (this was initially a Collar as I was Long the ETF)
  • This trade takes margin due to the Short Calls (expensive)

So far the fade in $RUSS has taken the Long Puts portion of the trade ITM (in the money) so I am getting what I want in the trade. I have a Buy Stop set at $50 (this would be a hedge for the Short Calls).

 

-DM 11 AM CST

 

Carmax revving up into Earnings

One of the strategies for Option traders it to own lower IV Options and sell into an event that cause the IV to rise greatly (like Earnings). Sometimes it is ok to close an Option trade right before the event (take the $ and run so to speak).

As an example I have done just that with $KMX. Here was my initial trade:

  • December 57.5/62.5/55 Risk Reversal Call Spread
  • This means I was Long the 57.5/62.5 Call Spread and Short the $55 Puts
  • I had done this trade on 12/03 for an $.18 credit (takes margin)

Today I exited the Long $57.5 Calls thus leaving me with 2 Short Option pieces: the December 62.5/55 Strangle. As long as price stays within this range I will keep all the premium collected to this point: $3.28

If price gets above $60.78 then the exit was premature. If not, genius. LOL

 

Trading Activity

Activity for today in the Swing account and the Submarine Basket:

$KMX  With the IV continuing to elevate I elected to StC the December $57.5 Calls. This leaves a Short 62.5/55 Strangle for Earnings. Options Net improves to: $3.28

$MCD  I unwound the December 92.5/91 Put Spread. The short stock piece hit the Stop today. This leaves me with Short December $91 Puts (remainder of the Put Ratio). Options Net now: $1.54 & stock gains remain $2.97

$RUSS  I adjusted the Diagonal Collar to the 56/40 strikes. The Long ETF piece hit a Stop at $56 today so the Diagonal Collar became a Bear Risk Reversal. I set a Buy Stop at $43.50 (it did hit already) so back to a Diagonal Collar

$UVXY  I adjusted the Short December $27 Calls to a December 26w 30/24 Strangle (leaving the Short December $23 Puts as well for now). Options Net improves to: $4.70 & the gains on the Long ETF portion sit at $9.904

$DXJ  The Stop hit on the Long December $55 Calls. This leaves a Short January 58/51 Strangle. Options Net: $1.64

$AGCO  I added a Long January 45/40 Put Spread (protect Long stock) and Short December $45 Puts. Options Net now: -$.17

$F  I BtC December 26w $15.5 Calls (Submarine Basket) so this position is now closed

 

December Monthly Options expiration – the plan

Swing Account:

$KMX  57.5/62.5/55 Risk Reversal CS (has Earnings on 12/09)

$MCD  Long 92.5/91 1×2 Put Ratio

$UVXY  Short 27/23 Strangle (own the ETF at $28)

Long-Term account:

$AVGO  92.5/97.5/100/105 Split Call Fly

IRA:

$CYBR  40/45/50 Call Fly

$INTC  Short $33 Calls (covered calls)

$MAR  Short $80 Calls (part of a Long January Call Calendar)

Submarine Basket:

$SKX  Short $60 Calls (covered calls)

$TEN  Short $55 Calls

$TSCO  Short $75 Calls (covered calls)

Earnings:

$GIII  85/90/80 Risk Reversal Call Spread

$AZO  Long 580/590 1×2 Call Ratio and Long stock at $596

$KKD  20/19 1×2 Put Ratio and Short stock at $19 (hedge)

$RH  90/95 Call Spread

Fab 5:

$BMRN  Short $90 Calls (covered calls)

$HD  Short $95 Calls (part of a Long Jan/Dec 90/95 Diagonal Call Calendar)

$XRT  Short $93 Calls (covered calls)

 

Position Updates

Most of my trading activity was in new Earnings trades and $UVXY (Swing account). Newly added positions that survive to the weekend:

  • McDonalds $MCD
  • PNC Financial $PNC
  • Direxion Russia Bear 3x $RUSS
  • ProShares Ultra VIX Short Term Futures $UVXY
  • Walgreen $WAG (long-term account)

Exits:

50/50 Basket: no positions (no change from last week)

Earnings: see this post

Here is the Summary:

Positions_12132014

-DM 10:45 AM CST

Trading Activity

I have been mainly focused on Earnings trades today so far:

Krispy Kreme $KKD  I had noted that I would short the stock if it lost the $19 level and did so this morning. The Dec 20/19 1×2 Put Ratio remains

Francessca’s $FRAN  I am currently Short the December $15 Puts (post-Earnings)

Lands End $LE  I am Long the stock at $43.72 (post-Earnings)

 

Pinch Hitting using Options

There are situation where I prefer to close a stock trade and switch into using Options. By doing this I can accomplish several things:

1) Reduce capital exposure

2) Still participate in any additional price movement with a LOT less Risk

In the case of $FRAN today I did just that. I had a Long stock position from the pre-market bounce and wanted to book those gains (likely will fade at some point). With that in mind I closed the long stock piece and switched to a December $15 Risk Reversal (cost me $.57 at the time of the trade). This means I went Short the $15 Puts and Long the $15 Calls.

Once the fade did occur, I elected to StC the Long December $15 Calls for a $1.05 credit thus leaving the Short $15 Puts. I have a Sell Short Stop set at $15.25

 

StC = Sell to Close

 

-DM 10:50 AM CST

 

Position Updates

I have a solid list of positions in my personal accounts so I did not make any material changes except for 1 new Bullish position in $KMX. I added 2 new Earnings trades: $GIII $AMBA & the $PANW position was closed.

The $AVGO position saw a very positive reaction to Earnings so that was a nice boost in the Long-term account. $EA continues to perform very well (I adjusted the Short Covered Calls there this week). I finally found a spot to sell Calls against the Long Stock piece in $SHPG as it got near the 50 SMA.

50/50 Basket saw no new trades this week

I did an update on the Submarine Basket update earlier this week here. I only adjusted the $F position since (had a Collar expiring this week).

Exits:

Here is the Summary:

Positions_12062014

 

-DM 10:30 AM CST