A Trade Review in Whole Foods

I have owned a position in the Long-Term account since 12/17/2013 in $WFM and thought I would share some thoughts on where the position stands now – and what I may do going forward.

Here are the details:

  • I am long stock at $56 since 12/17/2013
  • I own an April 25 weekly 50/52 Collar (short $50 Calls, long $52 Puts)
  • I have an Options Net of $4.13
  • I have a stock-based loss of -$2.39 as of the close Friday (several stock trades along the way around the core position)

Since I had taken a longer term view when I started the position, let’s take a look at the Weekly chart:

WFM_WeeklyHere is what I see in the chart:

  1. Price has fallen down thru this Rising Trend-line
  2. The MACD has made a new low
  3. RSI is probing for a new low
  4. Price has given up the October 2012 Breakout level
  5. Price is fast approaching the #1 Volume at Price (VaP) bar
  6. Price gave up the 50 SMA convincingly in March 2014
  7. Volume has been consistently Bearish for 4 weeks

So now what? Let’s break down the Collar to see how it is helping the long stock piece:

  • The Short $50 Calls are OTM (out of the money) so no chance of being exercised unless price recovers that level
  • The Long $52 Puts are almost $4 ITM (in the money) so the long stock piece is protected

Potential course of action this week (since the Collar is to expire next Friday):

1) close the trade Friday & look for a better opportunity elsewhere

2) adjust the Collar to a future expiration (the common step I have been taking as of late)

3) Too late to switch to a Bearish stance now given the $17 down move since the October 2013 peak?


Position Updates – 04/05/2014

A busy week in the Swing account as I was up to 12 positions at one point. The 4 swing trades that did not survive to the weekend:

  • $INSM I owned an April 17.5/20 CS that hit a Stop on 04/04
  • $KING I was bottom fishing in this new IPO with long stock. The position hit a Stop on 04/02
  • $MNKD I had a trade on from the FDA Panel event
  • $NUS This was a short stock trade from 03/24 that I let get called due to expiring Options that were ITM

Other notable elements to existing positions (including LT & IRA accounts):

  • $ALK CS is not capped anymore and will need to keep an eye on it to ensure I get some good value for it
  • $AMBA The Stop on the stock remains at $25.75 (has a Collar PS with a lower PS strike at $24) and I will likely lower the stock Stop next week
  • $APC The stock saw a huge move up over the $100 level on some legal settlement news. I adjusted the April long Puts way up to the $95 level for a very small debit. Now need to work on the Call side (likely move up to May soon as it is quite capped)
  • $AVGO The stock is still capped by short Calls. I added a PS this week to protect it
  • $CRR I adjusted the top of the CS up to the $135 strike
  • $SQQQ This portfolio hedge remains. I adjusted the long Put piece down to $54 on 04/03: SQQQ
  • $PLUG The April 11 Weekly $6 Bear Collar will need to be dealt with this week (Calls are ITM, protecting the short stock piece well)
  • $EWW This LT position continues to rebound well. I adjusted the short April $60 Strangle to May 02 Weekly $63 on 04/04
  • $AKS This April 7/8/6 Risk Reversal CS is working well as steel gets a bid
  • $SLCA I adjusted the Puts up to the $37 strike for the April Collar on 04/02

Earnings Trades:


There is an Options Net/Cushion of $29.585 on the Earnings Trades Basket. There is one position with a stock hedge and that is $PVH. Exits this week in Earnings trades:

Submarine Basket:

Here is the Summary:


Position Updates (mid-week) – 04/02/2014

Mid-week update on what is newly added:

  • $MNKD I have an Apr 4 weekly/11 weekly 5/3 Strangle Swap (initiated on 3/31 for the FDA panel vote). In addition I have a gain of $1.28 from a stock short on 4/1 in after hours
  • $ALNY I have an April 65/70/60 Risk Reversal Call Spread (submarine basket)
  • $APOL Long April 4 weekly 35/37.5/40 1×2 Split Call Ratio with Short 31 Puts (Earnings)
  • $JBHT I am long stock with an April 75/70/65 Collar PS (submarine basket)
  • $MON I am Long the April 4 weekly/Apr 112/110 Diagonal Put Calendar (Earnings)
  • $APH I am Long stock and Long the April $95 Puts (Fab 5, clients)
  • $CAT I am Long stock and Long the April 11 weekly/25 weekly 102/101 2×1 Diagonal Put Calendar (clients)


Position Updates – 03/29/2014

I came into this week with heavier cash position (mostly driven by March Option trades being closed and being a little more cautious with a more nervous market). Earnings season is winding down but still found ample opportunities (several on a post-Earnings move). I was able to do several regular trades as well.

Here are the newly added positions that survived into the weekend:

  • $CRR I own an April 125/130/120 Risk Reversal Call Spread. The CS is currently capped
  • $INSM I am Long the April 17.5/20 Call Spread (initially did a stock trade after the Phase II data release for a gain of $3.22)
  • $NUS I am Short stock at 95.62 with an April 4 weekly $85 Bear Collar. The Short position is currently capped by the short Puts in the BC
  • $SQQQ I am Long the April 55/60 Call Spread (portfolio hedge). There is a $.87 gain on the ETF already booked (used the proceeds to help pay for the CS)
  • $STKL I am Long the April $10 Calls
  • $BOFI I am Long the April 85/90 Call Spread. There is a gain on the initial stock trade of $8.80 (submarine basket)
  • $PBR I am Long at 11.75 with an April 4 weekly $13 Collar (submarine basket)
  • $GIII I am Short the April 75/70 Strangle with a short stock piece (hedge). There is an additional cushion of $1.52 from the 1st stock hedge. Options Net: $4.75
  • $PVH I am Short the April 120/125 Strangle with a Long stock piece (hedge). I have done several hedges for an additional cushion of $4.72 & have an Options Net of $5.55
  • $RH I am Long the April 65/70 1×2 Call Ratio with a Long stock piece (hedge). This is currently 1.5x size & this is the 3rd trip with a long stock hedge (I have an additional cushion of $2.265) . Options Net: $.14

Exits this week (including newly added positions that were closed):

Current Submarine Basket:


Here is the Summary:




Position Updates – 03/26/2014

Mid-week update

Brief post on newly added trades this week that are still on:

  • $CRR I am Long the April 125/130/120 Risk Reversal Call Spread for a $.35 debit (a B/O trade setup)
  • $INSM I am Long the April 17.5/20 Call Spread. I have stock gains of $3.22 already booked
  • $NUS I am Short stock at 95.62 (from 03/24) and Short the March 28 weekly $85 Puts
  • $STKL I am Long the April $10 Calls (IRA)
  • $AGU (new in the Fab 5)
  • $WDC (new in the Fab 5)
  • $SQQQ I am Long at 54.15 (this is a portfolio hedge )

Earnings trades, newly added you can see a mid-week update here.


A look at Yum! Brands

part of the Changing the Lens series of posts

One task for a stock chartists when reviewing charts is to ensure that your process includes looking a variety of perspectives for each chart. This variety should include different time-frames and types in my opinion.

With that in mind, let’s take a look at $YUM from several different view points:

YUM_E YUM_D YUM_CNow let’s change the time-frame to Weekly:

YUM_WeeklyNow let’s change the type to Point ‘n Figure:

YUM_PnFFor anyone considering a new trade, you could use the $74 level as a potential Stop. If you want a little more room you could use the 50 SMA below at $72.86

How Options can help in protecting a position

For those that follow my trading you are well aware of how frequently I involve Options in my trades. One of the key uses for Options is in providing protection and you don’t have to look any further than $XONE to see just how critical Options can be in protecting a trade.

I have had a position in $XONE in the Long-Term account since 09/06/2013 and coming into this week I was long at $55 (since 12/24) with short March $50 Calls and long the April 50/35 Put Spread. These Option pieces are called a Collar PS (put spread). With the weakness in the 3-D printing space I wanted to be extra careful this week not to be complacent with the position (just because it has protection).

I ultimately set a Trail Stop on the stock and it did hit on 03/21 leaving me with the 3 Options pieces. The Collar PS became a Bear Risk Reversal (at least for the day as the short Calls were for March – and they are expired now).

I am left with a Long April 50/35 Put Spread and it appears that it may be close to being capped very soon given the very weak finish for that group of stocks for the week. $XONE closed at $36.22 for the week.

Although I show a loss on the stock of ($12.90) overall (several stock trades) there are several things to consider:

1) The Option Net is substantial and becomes part of the overall plan for the trade

2) The Put Spread has $15 in value to achieve


Position Updates – 03/22/2014

This week was March Options expiration so most of my focus was in the managing of existing positions (most have Options as a component of the trade). As usual I had a variety of trades that I needed to tend to including:

  1. trades that I planned on letting get called away
  2. trades I needed to adjust to a future expiration
  3. trades that were near ITM so needed close monitoring to see if they would expire or not

I wrote about my Plan last weekend here.

I adjusted most of the trades throughout the week but still had a dozen or so that I needed to work on Friday. Of course there is always at least one surprise and this week it was $BIS (popped on Friday & hit a Buy Stop).

Here are the position exits this week (including new trades that were closed):

Newly added regular positions this week that survived into the weekend:

Earnings Trades (thin list remaining):

  • $NES (Long Apr 20/22.5 Call Spread remains)
  • $KBH (now have Stock, let Calls get exercised). New this week
  • $NKE (Long stock, partial so far). New this week

Submarine Basket:

Here is the Summary:


A trade review in Intercept Pharma

I received several questions this morning regarding my shift from long stock into Options on $ICPT so I thought I would provide a break down of the trade here. I had entered a long stock position in pre-market and exited the trade at $471.83. Here is the new Option trade:


  • Long the April $460 Calls
  • Short the March $460 Calls
  • Long the March $450 Puts
  • Short the March 28 weekly $450 Puts
  • This was done for a $10.72 debit
  • This trade takes margin

The options are very expensive so I wanted to kill 2 birds with one stone: 1) lower cost of owning April Calls and 2) capture any short-term weakness this week by owning Puts. So far I am getting the short-term weakness as price is hovering near the $410 level as I write this post.