Market is up and Vol is dropping a little bit. The Portfolio was holding it’s own last week as I was adding in positions that were selling into volatility. I am looking for a few more interesting positions. I am also starting to look for Aug/Oct calendars over the next two weeks. I am looking at <50 days to expiration. By the end of the day the S&P was off almost 19. Awesome selloff. Major league wow.
IACI – I sold this morning on a major gap down. I exited my remaining positions @ 1.85 (underlying 28.93). That is a 250% gainer. Excellent. I could go down a bit further, but the Reward to risk is not worth it because it was such a narrow spread. 32.5-20p and there was still 80 days to expiration = slow theta decay, and too much risk of a relief rebound off of support @ 28.50
RACK – I am looking to exit this very nice trade. As Vol drops today, this spread may continue to widen. At currently profit levels the B/Es are 11.57 and 13.47
DCP – 2 units Dec 20c-25c spread for 2.04 (Underlying 21.34). My target for this trade is 25.17. My stop is 20.85ish (below the gap), it dropped below my stop for a few minutes and then rallied. I sold one of the units into the up move for a slight loss .10. Buying a spread was not a good move in this high Vol environment. I am holding to the other to go along with my bullish scenario. We will see.
CQB – 1 unit @ Even. Jan/Feb 17.5p. I flipped and sold out @ .15. There are earnings on Thursday. I will keep track of this, and pick 'em up cheap again if I am able. I was trying to put on many units, but no luck other than the 1 unit I did get.
ALKS – 2 units @ .05 Jan/Feb 15p. (Underlying 14.61). Earnings play.
I am out of IWM Bull put credit spread for a .03 loss. I sold @ 77.99. The market internals are terrible. I guess that was our dead cat bounce. I prefer not to be long ANYTHING.
Current position watch:
ABI – Aug/Sept 20p @ .35 (31.38, spread- 200MA resistance @ current profit Breakeven. 32.80. Downside B/E @ 27.70.
Reward to Risk at current price is 3:1. Max profit (@30) is 7:1 from these levels. I would consider an addition position on ABI rallies to the resistance.
ACLI – Dec/Jan 20p and 22.5 calendars. Widening slightly. Fully allocated.
AFL – Jan/Feb 50p. I wasn’t able to place and upward hedge before this spread widened. A this point it has doubled in Value. I will exit 1 unit if I can get .05 more on the spread. Very Nice.
DTV – I am looking to exit the remainder of the calendar position for a scratch
RACK – Aug/Sept 12.5p spread. This has been a great trade. I was a little reluctant to take it and only put on 1 unit for .10. Oops. Currently it is trading @ .35. The underlying has been trading within the breakevens the entire time. Current B/E at expiration for current profit levels are 11.66 and 13.47.
I will sit on this, yet keep an order in above the midmark of the spread. If they want to take it from me at a premium, I will sell it.
SPLS – Dec/Jan 25p- Ave purchase .03. Current premium of.70 in the short option. Lots of possibility here, especially with the premium available. Back month vol is 1% higher (not beneficial). The spread can widen considerably. Currently at expiration, the spread price would be about .10. However, at 25 it is .65. Reward to risk of 20:1. Also, the spread price can move above expiration levels with a change in Volatility without a change in the underlying price. The stock has broken the Primary trendline from Feb 03, and the rounded top doesn’t look good for further gain. If there is a little rally back up to the backside of the trendline, it may make for a nice short. Current B/E 22.75 and 28.20. I am currently at 1/2 of my full allocation. In contrast to RACK, I don’t like this for a sideways play. I am holding this as a volatility play.
That is it for now.
Market is up and Vol is dropping a little bit. The Portfolio was holding it’s own last week as I was adding in positions that were selling into volatility.