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:
I was not as active in the markets this week with new trades as I focused on managing existing positions. However, I do have some Newly added that survive to the weekend:
Here is the Summary:
For those familiar with Option trading you will find the following graphic of no surprise:
Bid/Ask spreads. Ugh.
I am currently short the $230 Calls (2x, left over from a Call Ratio) and short the $205 Puts. One of the challenges on expiration day is to have the patience to let the bid/ask spread tighten so that you can close an Option in a reasonable way.
At the moment price is above $206 so the short Puts are OTM (out of the money). I obviously would prefer to not pay to buy them back (BtC – Buy to Close) and instead have them expire worthless. It seems the short Calls above will have no problem doing that
Newly added this week that still remain (or the remaining pieces):
- $ELLI I am long stock. Swing
- $REGN I am long the August 08 weekly 315/335 Call Spread. Swing
- $WYNN I have an August 08 weekly 202.5/205/197.5 Risk Reversal Call Spread. I am short stock as a hedge on the Puts. Swing
- $TGT I am long stock at $58 (1/4 size) and short the August 59/58 Strangle & August 08 weekly 57.5 Puts (1/4 size of each). Submarine Basket
- $PXD I am short the $230 Calls (2x) and $205 Puts. I am short stock as a hedge on the Puts. Earnings
- $FSLR I am long the August 64 Calls and short the August 08 weekly 52.5 Puts. Earnings
- $ATVI I am short the August 08 weekly $24 Calls (2x) and long the 22/21 1×2 Put Ratio. Earnings
- $Z I am long stock at 134.72 with an August 145/140/130 Collar Put Spread. Earnings
- $CF I am short the $260 & $265 Calls as well as short the $242.5 Puts. Earnings
We ended July with a big RED day and have started out August with a lot of continued indecision along with more distribution. I focused mainly on Earnings trades this week but did find a few opportunities for the normal accounts. Newly added that survive to the weekend:
- $PCYC (a new trade this week in the Swing account)
- $GRMN (Submarine Basket)
Exits this week (including newly added that did not survive):
Here is the Summary for Swing, Long-term, IRA accounts:
I often like to discuss a trade topic using a real live trade and thought I would highlight the current $SODA trade I have on. Here are the specifics:
- I am short stock at $36 from 07/24 in the Swing account
- I own an August 01 weekly $31.5 Bear Collar
- Options Net: -$.83
Now that the Earnings event is over let’s take a look at the Daily to see where price is:
So far a nice bounce with the 50 SMA just above to offer some resistance. So how is the Bear Collar helping my position? Let’s see how the Options are priced right now:
- The short $31.5 Puts are OTM now, last trade was $.30
- The long $31.5 Calls are several strikes ITM now, last trade was $1.43
So the short stock piece is protected on any gain in price above $32.33 (31.5 Call strike + .83 the current Options Net). This locks in a gain of $3.67 (36 – 32.33).
We are now well into Earnings season and so there will be more info from me on trades for Earnings reports. I review each trade the same – whether it is deemed a success or a fizzle – to ensure that I am complying with my overall trading process.
There are not many traders that discuss trades that are deemed a failure so I thought I would do a blog post on how the $SBUX trade has played out. Here is the trade specifics:
- I am Long the July 25 weekly 80/82/83 1×2 Split Call Ratio. Another way to look at this is: I am Long the 80/82 Call Spread and short the $83 Calls as well = a 1:2 Long/Short Ratio
- I am Short the July 25 weekly $77 Puts
- This was done for a $.14 credit
- This trade takes margin
Now on to the Daily chart to see how $SBUX reacted:
A nice Doji for today (indecision) as traders negotiate for a new price for the stock after the Earnings report. For my trade, I can get very little value for the Long $80 Calls right here. The other 3 pieces are trading at a penny or two.
So the result is: I don’t get much more in additional value out of the trade beyond the initial credit – and I expect all 4 pieces to expire today. Was this trade a success? Not in terms of providing additional profit no. Did it allow me to participate for the potential reward? Yes.
I would also add one more thought here: keeping the cost down to a minimum (or even being paid to put the trade on, a credit) is a key element to my trading design. I accomplished that here so maybe it was a success after all … feel free to chime in with comments below.
This was a very typical Options expiration week with a few surprises along the way to my Plan posted last weekend. Aside from the focus on existing positions with July options, I did manage to add new positions that survive to the weekend: $CHL $INTC $KNDI $JPM $SWKS $CBI $GNRC.
Exits (primarily due to July Options expiration plan):
Here is the Summary:
part of the Simple Approach series of blog posts
For traders that like to trade with simple triggers you may find this of interest. I use RSI and Volume Bars as Buy/Sell triggers and so I like to offer examples to show what I mean.
For an example using Volume Bars as a Buy signal I bring you $CAB:
As you can see above, I highlight several Buy points (blue vertical line). Here are the details:
1) Buy the next green Volume Bar – after at least 3 Red bars in a row
2) There have been 6 triggers so far with #7 in the works now
3) Use your own Stop and/or Risk parameters for exiting each trade that you would take
4) Trigger #4 is likely a loser
I did an update earlier this week summarizing the trading activity this week here and all the newly added positions survived to the weekend (exception is $LL but I already noted that it was exited).
50/50 Basket update was done on the blog Thursday. No material changes on Friday.
Here is the Summary: