Well, I haven’t given any back after yesterdays positive day. I shuffled some positions and received another gift. Yesterday was quite euphoric, today was a bit more business as usual. I am preparing for an Executive Luncheon in Breckenridge focusing on the state of identity theft, and how individuals and business owners can mitigate their risks. Prior to that I wanted to put together a morning update.
If this trading keeps up it should be a nice christmas
MER – sold 1 unit for -1.90. I just wanted to put more profit in the bank and look at which future adjustments I have available to me.
GS- I added 1 more call ratio backspread on. Jan 2/3- 200/220c for a -11.95 credit. I picked this unit up on a spike. After the spike the spread price settled back in my favor. And the underlying is marching in my direction.
ACN – Upon the opening I sold 1 unit for .45. The stock is going down and toward my Breakeven. I decided to take a little profit as my basis for the spread is .27. I am holding on to my other 4 units.
RHT – 1 unit Oct/Nov 20p spread for .30. I am working on more units.
YEAH YEAH YEAH!!!!
UTHR- This is one of my best trades EVER, only behind ACF a few weeks back. I have been buying 65 and 70 calendar spreads for cheap and flipping them quickly 30 minutes or less. Today I picked up 2 units of each, and flipped them for a .30 profit by the time I was out of the shower I had paid the rent and the car payment. Crazy action, the spreads are out of whack. I can’t figure out what is going on, but there is something happening.
This is how I feel right now. However the weather is beautiful today. 47* @ 11am. Not a cloud to be seen. Here is a video I made for another MySnowPro instructor, Brian.
2 thoughts on “9/26 – Quiet and low stress trading”
Jon, I follow your blog entries. Great information. I am new in option with respect to advanced strategies. Can you list all your holding position regularly so I can understand them better. How do you pick the ticker whether it is mu or acn or medx. For calendar spread you prefer puts Is that because you know that the undelying goes down. You look to grab the small spread. I am trying to undestand the reasons as to in the money, out of money and should the buy put be two months and front side be current month and if the strike should be close to teh current price.
Appreciate your guidance.
thanks for the comment. I will review the trades I have on, perhaps I will have put them up on Sunday before the week starts. As you can see, I am not one to hold them after they hit my profit objectives.
I will answer your Calendar questions. It is funny you picked MU, ACN, and MEDX, as I bought them all for different reasons.
MU – pure direction. I bought ITM because the Implied Volatility was in the middle of the range, and it was too cheap to need to do a spread. My plan on this is to turn it into a straddle as the underlying price moves up and volatility drops. I will then work the deltas and make adjustments about every 250 deltas ($250) and the underlying moves.
ACN – Front month calendar ATM. The front month vol was slightly higher than the back month (about 4%) to give me an edge on the trade as front month vol drops (refer to DGX trade on 9/5/2007). I didn’t put more units on because my charting shows a bias for the underlying to drop in value. I could probably hedge this to the downside with an OTM dec put.
MEDX – This is a pure “‘mid month calendar flip”. I am buying this for .05 or less, I need to sell this for .10 or greater to make up the commission. I am taking advantage of a massive volatility skew. I like these because my risk is .05 +commission, and the returns can be 100-500% in a few days or weeks (or 15 minutes with UTHR). Also, the probability is extremely high if you know what to review.
I typically choose put calendars for two reasons: They are usually the cheapest; and there is no dividend risk. All else being equal I want ATM or slightly OTM calendars because there is maximum extrinsic value and minimum assignment risk.