7/25 – Boing, Kaplunk

Well I guess we were viewed as oversold? Strong buyback this morning, with a mid-morning crush


Well I guess we were viewed as oversold? Strong buyback this morning. My spidy senses say it won’t sustain. Well see.
I started putting my bullish strategy on DTV from the trendline. This is a “Texas Hedge” Aug 22.5c-25c spread for 1.35. This is to go along with a 25p Sept/Aug calendar. I like this little spread because I was able to sell the OTM call which covered all the premium (and then some) of the long ITM call. I bought this for spread for 1.35 when the underlying was printing 23.91. Slightly theta positive. I believe this to be a very good little trade. I chose a spread because the volatility was pumped on these Aug options. I also chose the Aug over Sept because theta decay is in my favor.
DTV%20Daily.gif
CLF – crossed a 50% retracement @ 79.87, although, It is a falling knife. I want to pick something up below this level. but dang, the rounded top looks dangerous. The 61.8% retracement comes at 78.13. I put on a Aug 80/85/90 butterfly for .75 (@ 77.75), and then on the retracement back up I put another on for .80 (78.03). I used the VIX spike (19.50), and the drop in price. I didn’t want to put anymore than 2 units on and get in front of a bus. 5:1 reward to Risk.
I will look to exit one position @ 80.86 (38.2% retracement).
IACI – continues to fall. very nice, OCT 32.5-30p. The spread is up a little over 100%. Below31.25 this trade has turned theta positive.
Sustained weakness or sideways (drop in Vol) is EXCELLENT for my portfolio at this time.
ABI (30 Calendar) and WWY (55p calendarr) do great if the market slips or holds. Lots of theta decay room.
AMT is an absolute Dog. I’m getting out and taking the loss @ 43.04
BUD – out for .10. 55p calendar. Overall this was a 50% among my positions.
SPF – has been hammered. The housing/mortgage news is insanely bad. I wanted to hedge my risks, so I picked up a 15p Jan/Feb Calendar. For .10. The R/R is 8:1 and the Breakevens are 12.60 and 18.50. I am good with this. It hedges my stagnation risk for the dynamic Hedge on the SPF. The spread widened by the end of the day.
New Entries:
SPLS- 2 units Jan/Dec 25p for .05. I may look at surrounding strikes for further protection.
ACLI – 1 unit Jan/Dec 22.5 for .05 and 3 units of Jan/Dec 20p for .05. I am looking for news on this one. And other hedging options. The Bid/Ask spread are very wide at this time.
ONXX – 1 unit Jan/Dec Feb 25p .02. looking good
DF – 1 unit Jan/Dec 30p for even
There are 3 other LT B2B calendars which I am after.
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Update
HPQ, DTV held up very well during the second selloff of the morning. Wow.
I am still sitting on 75% cash to move if I see a good opportunity. Right now I am not throwing any big cash around, rather I am setting up opportunistic hedges and valuations.

One thought on “7/25 – Boing, Kaplunk”

  1. “I started putting my bullish strategy on DTV from the trendline. This is a “Texas Hedge” Aug 22.5c-25c spread for 1.35″
    hi jonathan –
    using prices on optionsxpress, this aug bull call spread still has a price of 1.80 – 0.40 = 1.40
    i do not quite follow “I like this little spread because I was able to sell the OTM call which covered all the premium (and then some) of the long ITM call.”
    still reading your posts every day – quite informative…

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