Position Updates

A mild trading week for me as I focused mainly on just a few select Earnings trades. Newly added this week (didn’t survive to the weekend though): $HLF $KRFT $GIII $PVH. The $SWKS position survived the short-term semi correction fine primarily due to the Option protection that I have in place – I just let the position ride.

Qualys $QLYS  I added an April 45/40 1×2 Put Ratio on 3/23 (to provide some protection for Long stock). Long-term account

50/50 Basket:  there are no open positions at this time

Here is the Summary:


- DM 9:30 AM CST


Position Updates

My primary focus this week was in tending to existing positions that had March Options as part of the trade (Monthly OpEx this week). No new positions in the Swing, Long-term, or IRA accounts. No new positions in the Submarine Basket or 50/50 Basket.

Several Earnings trades were closed, I am left with: $NFLX $GOOGL $CNC $TWTR $COO

Submarine Basket:  $AXP $BBBY $BWA $EXPE $PNRA $RENT $WYNN $KR (not an official position since 8/18/2014 but trade is still on, still trending)

Here is the Summary:


- DM 8:35 AM CST


Options versus using a Stop

I have been in an email exchange this week with a client prospect where a very important question came up in our discussions:  what is my Risk Reward approach for those that are very focused on keeping positions “safe”.

This once again brings up the debate on Options versus using a Stop so I decided to provide an example to the prospect on what I would do with a particular trade. Here are the details:

One of the Tools that I use is Options. This tool provides several important benefits in trading stocks including protecting a position fully (beyond what a traditional Stop can do). As an example for the prospect, I enclosed this Trade setup to show how I would do a trade to meet their goal of safe – within a 6-month time-frame:

Ticker:   VHT  (Vanguard Healthcare ETF)

Current price:  $135.5
Account Size:   $250,000
Position Size:   $50,000
# of shares:   369
Amount to Risk:   $2,500
50 SMA:   $130.77

Stop:  $128.73

Long Puts expiration:    September 2015
Long Put strike:   $135
Long Put cost:   $6.00   (600 per contract x 4 contracts = $2,400). You would be fully protected under the $135 level until September with a similar “Amount to Risk” as the Stop info above

Scenario:  Price moves above the $140 level between now and September I would  then sell Calls against the Long stock to recoup the cost of the Puts. I would expect to have several opportunities before September to sell Call premium – say at the $140 or $145 level – to slowly recoup the cost

Daily chart on $VHT:


- DM 12:25 PM CST


March Monthly Options Expiration – the plan

Swing Account:

Fleetmatics $FLTX  Short the $45 Calls (part of a trade with April Options)

Skyworks Solutions $SWKS  I am Long the 80/75 Put Spread (protects Long stock)

United Rentals $URI  I own the 95/90/82.5 Collar Put Spread. The Long $90 Puts are ITM so I will likely let them exercise, unwind the Long stock piece. The remaining Option pieces would go poof

ProShares Ultra VIX Short-Term Futures $UVXY  I am Short the $24 Calls (covered). I will adjust to a future expiration

Long-Term Account:

Precision Castparts $PCP  I am Long the 190/180 PS (left-over pieces). This likely goes poof

Qualys $QLYS  I am Long the 45/40/35 1×2 Put Ratio (part of a Collar Put Ratio, this protects Long stock). I will likely adjust to April

Resmed $RMD  I am Long the $65 Calls


Achillion Pharma $ACHN  Long the 14/18 Call Spread

Submarine Basket:

BorgWarner $BWA  I am Short the $57.5 Calls (covered calls)

Panera Bread $PNRA  I own a 165/160 Collar

Rentrak $RENT  I own a 60/55/50 Collar PS

Fab 5:  see Fab 5 update post for details


Centene $CNC  I am Short the $60 Calls (covered calls)

Buffalo Wild Wings $BWLD  I am Long the 190/200/210 Call Fly

Boston Beer $SAM  I am Long the 260/270/280/290 Lopsided Call Fly

MercadoLibre  I am Short the 135/140 CS and 130/125 PS

Air Methods $AIRM  I am Short the $50 & $55 Calls with a Buy Stop set at $49

Cooper Companies $COO  I am Long the 170/175/180 Call Fly with Short $155 Puts. I am Long stock at $175 (hedge)

Verifone $PAY  I am Long the 33/35/37 Call Fly with Short $31 Puts

Ulta Salon $ULTA  I am Short the 150/130 Strangle with a Buy Stop set at $153 (hedge)


- DM 11:00 AM CST


Trade update for Wynn Resorts

With the Put Ratio expiring today it was time to consider my adjustment choices. Here was the trade coming into this morning:

  • Remain Short stock at 134.60 (hedge)
  • Long the March 13 weekly 137/135 1×2 Put Ratio
  • There is a Stop on the stock piece set at $127
  • Options Net was: $1.80

I elected to take the following steps:

I adjusted the Short $135 Puts to the Apr 10 weekly expiration for a .02 debit. I did 1x size thus leaving me with a normal Long 137/135 Put Spread that will auto-exercise today for +2.00 — this will increase the Options Net to: $3.78

I will leave the Short stock piece and have raised the Stop to $130



- DM 10:00 AM CST