Trading Activity

Existing Positions:

Alibaba $BABA  I have done several things today: 1) added more Long stock (as a hedge) at $114.05 to go along with the Long stock at 112.70 I already have (so now a 2x size stock position). 2) I have adjusted 1x of the Short November 28 weekly $114 Calls up to $115 for a .47 debit. So the Call Ratio is now 110/114/115 for this week. Options Net is now: $.77

SPDR S&P Retail Index $XRT  I have adjusted the Short Calls to the December $93 strike (Fab 5). Options Net now: $.53

New:

Palo Alto Networks $PANW  I was Long stock (post-Earnings trade) but have closed the stock position & switched to a December 05w 115 Risk Reversal

Trading Activity

Updated

I have only made 2 adjustments to existing positions today:

Zillow $Z  I have StO November 28 weekly 121/110 Strangle for a $1.25 credit. I now have a 120/121/110 Risk Reversal CS for this week. Options Net improves to: $3.47

Potash $POT  I have StC the December 05 weekly $35 Calls. This leaves a Short 38/33 Strangle for next week. Options Net now: $1.40 (Submarine Basket)

I have been more active for clients today. Newly added or bidding in the Cabernet portfolio:

  • $IBM  (Call Calendar with Short Puts)
  • $BA (Straddle/Strangle Swap)
  • $SYK (Double Calendar)
  • $WAB (Double Calendar)

November 28 weekly Option expiration plan

For those that trade Options as part of their overall Trading Process it is an important task each weekend to prepare for – and create a plan for – the upcoming week expiration. I do have Options each week that are set to expire so this is always a part of prep work.

Here are the existing positions that I have with November 28 weekly Options as part of the trade:

$JCP
$FB
$XRT
$CELG
$GILD
$FDX
$UNH
$BABA
$Z
$TLT

IBM is at a 52-week low (the markets aren’t)

IBM_52week_Low

Uh, what happened to $IBM in this Bull market?

I have been building several watch-lists for next week and this hit one of my scans that I use for the Submarine Basket. But, is $IBM a quality stock that is simply at a good discount here? Can it get even more discounted?

This may help (or not): A Ratio chart of $NYA & $IBM:


NYA_IBM

When RSI gets elevated in this Ratio chart it has signaled a buy point for $IBM several times in the recent past. Can history rhyme?

When the market speaks, do you listen?

Up until today, I have had a position in GameStop in my long-term account (since 05/22/2014). I wrote earlier this week about an adjustment I made for $GME Earnings but in reviewing the position it seems that I had begun to listen to the market more and more about the long-term prospects well before this week.

I had adjusted the position to a Short CS on 10/02 (I had been Bullish up to that point) and had set a Buy Stop at $44 (for protection, a hedge). You can read more about the details in each of the Position Updates posts that I submit each weekend.

Here is a Weekly chart of $GME showing how the market reacted to Earnings:

GME_weekly

It is possible that it can find some solid Support soon and offer a good entry for a new Long position but I will only consider it for the Submarine Basket now (the primary goal for this basket).

 

Position Updates

There was a LOT of activity this week in existing positions due to November Options expiration so that was my primary focus. I did however add some new positions that survived to the weekend:

Covidien $COV  I am Long the Jan/Dec 97.5 Call Calendar (Swing account)

Skyworks Solutions $SWKS  I own the December 05 weekly 63/65/61 Risk Reversal CS (Swing account)

Zillow $Z  I am Long the November 28 weekly $120 Calls ( Swing account)

Electronic Arts $EA  I am Long stock at $41.40 and Short the December $43 Calls (covered calls, long-term account)

Shire $SHPG  I am Long stock at $207.44 (IRA)

Potash $POT  I own the December 05 weekly 35/38/33 Risk Reversal CS (Submarine Basket)

Here is the Summary:

Positions_11222014

Into the home stretch: November Options expiration

I have spent the majority of my time managing the existing positions that have November Options as part of the trade (or all of it). This is what I have left to tend to/monitor into the final few market hours:

  • $BABA  I am short the $108 Puts (part of a trade)
  • $VDSI  I will be taking stock (from the Long 17.5 Calls). The Short $15 Puts will go poof (part of a trade)
  • $Z  I am Short the $115 Puts (part of a trade)
  • $GME  I have a Call Fly with Short Puts — I expect all the pieces to go poof. This long-term account position will then be closed
  • $INTC  I have a Long 33/29 Put Spread that will go poof (part of a trade in the IRA)
  • $DWA  I am Short the 23/22 Strangle
  • $LULU  I am Short the $45 Puts (for some clients, part of a trade)
  • $XOP  I am Short the $63 Calls (remaining piece of a trade)

I have other trades that have capped pieces (and well ITM) that will auto-exercise.

Prep for a new trade in Keurig Green Mountain

Part of my trading strategy is to always be on the lookout for stocks that are discounted. Sometimes this discount can lead to more downside but there are several ways to enter stocks carefully – to protect against being too early for a bounce trade.

One stock that is on my list is $GMCR and I am considering several different approaches. First though, a look at the Daily chart:

GMCR_G

I’ve drawn a Rising trend-line and a Horizontal Support line for reference. Price did a B/O back-test yesterday and is bouncing mildly today. It is worth noting the Volume footprint yesterday on the pullback.

Here are a few ways I would approach a new trade in $GMCR:

1) Go long a December 12 weekly 140/135 1×2 Put Ratio. You do this trade if you think there is a good probability of more short-term downside – and you want to participate in that

2) Choose a December 145/155/135 Risk Reversal Call Spread for a small debit

3) Choose a December 145/155/165 Call Fly with Short $135 Puts for a nice credit