Wow, my neck hurts from the market whiplash.
Although I didn’t take full advantage of the double bottom on the 61.8% retracement, I did make money. Dow was down to 11,644 it closed at 12,230. That was amazing.
I was delta positive for the last few days and it was beneficial today. Although I did lose on a few down positions DSL and COH. I cut them with only small losses. Overall the portfolio is up 1.5% on the day, 2.5% on the two day week. Love that theta decay.
I don’t think we are done with the down moves, however this maybe a multi day up trend.
The S&P started down35, then backed off to a 7pt lost, then retested the 35 pt low. At that point I made a few small long purchases. It is quite amazing to me that this near term bottom, bounced on the 38.2% fib retracement from the 2003 lows, and a previous consolidation. Also, the 50% retracement would take us to the S&P 1373 level (the point of the initial break). I’d look for a short around those points.
S&P 500 – This was an incredible bounce today, and very welcome. I want to see a bounce develop and offer some more short opportunities.
GOOG – Feb/Mar 550c calendar for 9.75 (Underlying @ 529), then sold it for 10.85 (underlying @ 547). I saw support @ 520 and made the play. There is so much premium is those options it is amazing.
MA- I wanted to get involved in the financials long with little risk, my preferred way to play is via calendar spread to take advantage of the elevated volatility. I bought the Feb/Mar 190c for 3.20 on the strong down move (underlying 172.28). I am still holding onto this trade. The 20pt rally was amazing. My Breakevens for this 3 week trade is 168 and 220. I was also looking at butterflies, but I liked the non-directional Theta decay nature of this trade.
COH – bought March 25p-17.5p for 1.50 (Underlying 26.81) and 1.05 (underlying 28.45). This is just a small two contract position to take advantage of downside
SDS – bought 69.50, sold 69.69, It ended up running up to daily lows, but I had enough downward exposure for my liking.
XLE – Bought 1 unit Feb/Mar 68c for .91 (underlying 63.58). Theta is 2.4 per contract. Breakevens are 62.4 and 75. It was amazing rally that brought this to the middle of the to 67.57.
DSL – bought 1 Mar 25/17.5p (underlying 29.05), sold it prior to the close for 1.40. Not good. Then sold 1 Feb 25/17.5p for 1.00 to take a .60 loss.
USB- Sold 2-35c for .50, and 2-35c for .60. Now I just have 2 Mar 30p. I kind of messed up this morning, I should have been out of my 30p on the open. The lack of action, cost me.
THIS is Important! I subscribe to Real Money.com, great commentary. This is an article written by James “Rev Shark” DePorre. I think he is right on.
Classic Bear Market Spike Not an All-Clear By Rev Shark
This is a very typical bear market spike. It is big and fast and is stunning in its intensity. It may well continue for another day or two, but the market is still busted.
Make sure you keep things in context. There will be some excited folks saying the worst is over, and even worse, the folks who were bullish a week ago will be congratulating themselves publicly, even though they are still far underwater.
Remain very cautious about this market, not withstanding the very impressive intraday reversal. We were due for that sort of spike, but it doesn’t change the big picture.
I was watching Fast Money and they had Suzie Orman on. Is it just me, or is that the most obnoxious lady on TV. Dollar Cost averaging stocks, without being aware of technicals is one of the surest ways to go broke. Learn how to Dynamically hedge with puts and collars if you must own uptrending stocks. Her method is financial suicide. I know because I added to my 401k consistently from 1999 to 2003. I think I am still trying to dig out of that hole. Brilliant Suzie, Brilliant. Buy the above book if you really want to invest. We as individual investors have advantages that the Whales of Wall Street don’t.
I just put on a few and took off a few before I left for the hill.
MA – Took off the Feb/Mar 190c for 4.70. That was a nice over night trade with a 45% gain.
XLE – Sold Feb/Mar 68c for 1.25. 33% gain
MA – Bought 4 units of MA 190p for 3.70, 3.25, 3.10, and 3.0. The spread closed @ 3.55. This offers 13 theta points per spread. But more importantly it is an ATM time spread with a large 13% volatility skew.
DIA – Double/Double Iron Condor 111/109p and 131/133c for .51.
C- sold 2 units of feb/jan 32.5c for .20. This is a loss. Fortunately my adjustments should allow me to do a little better than breakeven.
Overall it was a very nice day with a 1% portfolio gain and I sit in 82% cash. My Greeks are:
Delta -8.22, Gamma, -288, Theta 169, Vega 291. I happy to be where I am at this moment. I will be happy with a 5% compound gain on the week, considering the volatility. However, honestly it should be much greater.
Although I wasn’t around much on Friday, I did make a few trades. Also, increased my portfolio by 1.5% today. Not bad with the S&P down 21.
C – Sold my final unit of feb/Jan 32.5c on this morning’s opening rally for .27. Sold 2 units of Feb/Mar 25p for .48 and .50
AMT – Bought 2 units of feb/mar 35p for .17 and .16. (underlying 36.85 and 36.15)
DTV – 2 units of Feb/Mar 20p for .52 and .50 (underlying 22.06). This has been a nice 100% gainer. I still have 4 units of 20p and a 22.5p calendar.
WEN – Sold 2 units of 22.5p p 2 .45. This was a nice 120% gainer in a week. I still have 2 units on.
It was an excellent day of trade, as most of the trades went off when I was on the hill. Excellent.