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

 

Managing a Risk Reversal starring Skyworks Solutions

On November 18 I initiated the following trade for my Long-term account:

December 05 weekly 63/65/61 Risk Reversal Call Spread (RRCS)

On 11/26 I adjusted the short Calls to the December 26 weekly expiration. So, as of this adjustment this is how the trade currently looks:

  • Own the December 05 weekly 63/61 Risk Reversal
  • Short the December 26 weekly $66.5 Calls

As of today, price is probing the $69 level so I need to decide which path to take with the Long $63 Calls for tomorrow expiry:

SWKS_E

Here are a few paths to take:

1) Let the Long Calls get assigned, take stock at $63. The Short $61 Puts go poof nonetheless. I would then have long stock with short December 26 weekly $66.5 Calls (covered calls)

2) StC the Long $63 Calls and use the proceeds to BtO Calls in the December monthly or Dec 26 weekly expiration (maybe at $65 for example)

 

 

StC = Sell to Close

BtO = Buy to Open

 

-DM 10:38 AM CST

Haliburton breaks the 200 SMA on the Weekly

HAL_weekly

You’ve missed

this huge down move since July so what now? There are a few new trade possibilities here to consider depending on your bias. For now, I would still lean Bearish – at least in the short-term. With that in mind, here are a few trade ideas to consider:

1) Bearish Bias

  • Long December 40/37.5 1×2 Put Ratio for less than 3 nickels
  • This trade takes margin (at least until 1x of the Short 37.5 Puts are closed)

2) Bullish Bias

  • If you feel that the $38 level holds (and/or don’t mind owning stock there) then consider the December 42/45/37.5 Risk Reversal Call Spread for a .60 debit
  • In this trade you are Long the 42/45 Call Spread and Short the 37.5 Puts
  • This trade takes margin

3) Bonus Idea

  • Long the December 42/40 1×2 Put Ratio
  • Long the December 12 weekly 40 Puts
  • This trade costs .70 (mainly for the weekly Puts)
  • This trade takes margin

 

 -DM 10:10 AM CST

 

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).

 

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

Managing a Short Strangle in DreamWorks

I took advantage of some Volatility in $DWA yesterday to sell the November 23/22 Strangle (collected $.90 in premium which is 4+%). What is important to highlight however is the next step I took: adding a Buy Stop at $23 and a Sell Short Stop at $22 in order to hedge with stock (if need be).

So far price has behaved well and has stayed within a $22.15 to $22.85 range today. The goal is to have this trade expire Friday and keep all the premium collected.

DWA

The Blue Box above represents the area that price needs to stay within in order for both Option pieces to expire.