Oct 30th – tweaking the positions

Halloween and the Fed announcement is tomorrow. I am using these “risky” events to adjust some calendars and collars.


Well, the day before fright day, I mean Fed Day, I mean Halloween. It was a pretty mellow day. I made a few adjustments to positions, sold a few PPL memberships before months end, and let time decay…
A good song for dads of daughters

I am looking forward to the snow falling, but I really do like going on a run in short sleeves. I can’t make up my mind. Of that I have no control. However, I do have control of my trade adjustments.
UNG – Bought 1- Nov 41p for 1.10 (underlying @ 41.81) to move up my put protection and basically turn this position to a short term strangle. +39p +41p / -44c and 100 shares long. The underlying moved up to 41.98 and retested a previous high, then retreated. I made the adjustment on the way up. On the way down the options Vega increased and boosted the value of my puts. I held onto the Nov 39p. I will see what happens at the open, but I think we may have one more down day in Nat Gas. I plan on selling the 39p if we have a gap down at the open. I may also move the short 44 call down to 43, and pull in more higher Vol/closer to ATM premium.
Current UNG Risk Graph. I have locked in profits at this point and benefit from a hard fall in the underlying price and an increase in Volatility.
UNG%20Risk.gif
I will exit one of my puts by then end of the week no matter what. Theta decay is relentless in the last month of the option. And remember, trading Stock without understanding put protection and collars is a suckers game.
EK – picked up 2 units of Dec/Jan 30p calendar for .20. I wanted some protection to the upside in case we get a jump up in the underlying after earnings. This opens up the upside breakeven to 32.75. Basically it will require a 14% jump in EK to move out of profit mode. If it approaches that, I should have the opportunity to bail out of the 27.5p spread without much harm.
I sold 1/2 unit of the 27.5 calendar for .32. I did this to see if the opening of the spread was for real. It was and I made a quick .12 on the spread. I like what can happen with this trade. Currently I have a 3% allocation on this trade. I don’t want to be stupid before earnings.
LOW – Bought 2 more units of 27.5p calendar @ .17. This just feels like a cherry of a trade. Strong support below, with great Risk reward up to 31.50. The Dec vol is 2% higher than the Jan. So I have that edge as well. I currently have built the position to a 4% risk allocation. 5% is my max allocation.

“Building products maker Masco Corp (MAS.N: Quote, Profile, Research) reported a lower but better-than-expected third-quarter profit on Tuesday as price increases and lower costs helped offset weaker sales amid the softer U.S. housing market… Masco derives about 40 percent of its sales from new home construction and is a major supplier to chains such as Home Depot Inc and Lowe’s Companies.” Masco said it expects full-year profit to come in at the high end or modestly above a previous forecast, and its shares gained more than 3 percent.

Here is the adjusted Risk Graph for LOW
LOW%20Risk.gif
PGH – was Ex-div today, and it’s monthly dividend is ($.22), and the stock dropped .44 overnight. I own a small stake of 200 sh of this income trust. I am looking for a continuation of the chart’s gartley pattern we move into a seasonal rise in Nat Gas prices.
Speaking of Nat Gas, I am now the proud owner (limited partner) of 7 Natural Gas wells in Kentucky. 1 has been pumping throughout the summer offering me a few small checks, 1 more came on line in August, and 3 more are starting to producing in October. The General Partner has been very good, and has been working hard to create a nice monthly income stream. If you want to know who I am using drop me an email and I will get the name and number to you.
I just made a few Amazon purchases from my “‘Education Fund”. (10% of all my business earnings go to Education). And with some of that I just purchased two books and a Webcam.

I will learn from others mistakes. Perhaps I don’t have to worry, I am not as smart as the guys from LTCM.

The Game Plan for the Interest Rate (Fed) Cycle is worth the price of this book. And as silly as this guy is, he is pretty much a savant

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