Open: JEC Short Straddle Apr 40 w/insurance

I’ve been paper trading straddles for several months now and I feel I’ve learned enough to try one for real.   Jacobs Engineering looks range bound between $30 and $60 but hasn’t seen 30 since the big market selloff in November.

I’m buying an upside $60 call for .75 to protect me from a big rip higher.   I’m not going to buy any downside insurance because I my down BE is 29.50 and don’t see it breaking $30 any time soon.

I’ve got a lot of time to make this trade work and it’s got wide BEPs.  @29 and 50.  Stock is at $40 right now.   Historical IV on JEC is about 45 – it’s 75 right now.  I think IV will drift downward towards 45 again making the straddle more money.

The trade: Credit 10.63

Sell Open: Apr 40 call  5.95

Sell Open: Apr 40 put  5.45

Buy Open: Apr 60 Call .75

Close: HPC BRPS Mar 25/20

I made a mistake today.  Something I sort of knew not to do but never experienced before – I traded in the first 15 minutes after the market opened.  The financials got a boost today with Obama’s Bad Bank/Super TARP/Spend a trillion dollars BS plan.  I’m not going to get into why I don’t think this plan will do anything but make us more broke but the street loved the news and the financials all ran up.

So at 9:35  I looked at my HPC position.  I had a BRCS and a BRPS on.  I figured I might want to cover it for now until the dust settles.  I looked at the mark price on the Puts and it looked like I could buy the spread back for a $1.00 loss but I could sell the call spread for a $1.00 profit giving me a breakeven.  I liked it and entered the the two trades.  What I didn’t notice was the natural for the call spread was a $1.00 more than I thought it was and my Put spread order was filled for the $1.00 loss but the calls remained open.   With in a minute or so the spread jumped $1.15 higher as the MMs began to tighten up the bids/asks.

So right now the BRCS is still open – it never filled so I’m going to hold on to it for a while longer.  There is 3 weeks left I’m pretty sure HPC will move lower again soon.  It’s only about 1.25 ITM so I’m confident it will come back in.  I’ll watch it close and adjust if necessary.

Open: HBC BRPS Mar 09 25/30

The financials have sold off hard hard hard today.  My oopen BRCS I put on yesterday is already up 1.32 so I’m looking out the next month to buy a Put Spread.  With the puts so expensive I’m kind of using the BRCS to finance the Put spread.  I think the Bears will push the stock to the $25 range by March.   I can always sell another BRCS for March to collect even more premium.

We may get a bounce in the next couple of days but I think it will be short lived.  The Bears are pressing hard on the financial stocks and I see nothing to make them stop.  Even so my risk is limited with the spreads should I be wrong.

The Trade:  Debit 1.45

Buy Open: March 30 puts

Sell open March 25 puts

Open: HBC BRCS Feb 09 40/45

Note: I this order was filled yesterday (Monday).

I’ve watching this stocks options activities for a week now and the PUT action is incredible.  The big guys are buying huge volume of March puts ranging from 45 -25 strikes.   I’ve seen this action before in LEH, BSC, MER, STT, MS  and other financial over the last year.  It’s a precusor to a bear raid.

The bear raids in the financial stocks are VISCOUS!   Since I rarely short stock directly I will use a bear call spread.  I sold the spread when the stock was about 49.50.

The Trade:  Credit 2.15

Sell open: Feb 40

Buy open: Feb 45

Expiry: Jan 09 SPY, TBT

Expiration is here and I have 2 open positions that expired today.   I was a pretty good month.  I had a few good trades, one bad, and one so-so.

Expired Trades:

SPY:  BRCS .35 credit : ROI 54%

TBT:  BLPS .45 credit : ROI (-81%)

TBT: Calls  1.45 Debit : Sold for .80 : ROI (-45%)

Close: RIG BRCS Jan 50/55 ROI: 10%

This was a short trade and with the end of the day bounce today and the small bounce in Oil I’m closing this trade 1 day early. I want to come back to RIG and sell it again but I need to wait until Oil has it’s move up and RIG needs to trade up to about $54 OR break it’s middle BB downside. I didn’t get enough credit for the spread this go around anyway so I’m glad to get a little bit out of it.

Basis: Credit 1.48 Sell: 1.12 ROI: 10%

Rolling: MSFT Jan 15/20 BLCS to Feb 15/20 ROI 4%

Ok, I once again have been taught a valuable lesson by this bear market – take profits when there is less than 8 days until expiry.    MSFT had been trading below $20 since Jan 2 and then last week it rallyed Wed and Thursday above $20.  I chose to hang on to the position and wait until later this week to close.  It was a mistake.  The stock promply sank under $20 on Friday.  It then sank yesterday to below $19.  Ugg!!   However a late day rally in the Naz pushed it to about 19.20.

So  I decided time was up and I still believe the stock is ok where it is so I rolled it to Feb to get more time.  I made a tiny profit which all told covered commisions with a little left over.  I’m happy I could roll without a loss so next time I hope I will, in the words of Steve Miller, “take the money and run.”

The trade:  Debit  3.36  BEP 18.36

Closed Jan spread for 3.81 Credit.  Basis: 3.65 Debit  Net:  .16  ROI 4%

Open Feb 15/20

Open: MSFT BLPS Feb 09 18/17

Opening another BnB trade. MSFT is holding up well above 19 so I’m going to the well again. Also my other Jan MSFT trade is expiry this week.

The trade: Credit .31
Buy Open: Feb 17 Puts
Sell Open: Feb 18 Puts

Close: XRT BRCS ROI +35%

With the terrible retail numbers out today XRT fell hard triggering my GTC sell order on my short @ .05.  This closes out the remainder of this position which I had already closed 2/3 of it yesterday.

my average credit was .37  making my total ROI 35%

Not bad.  I learned a little of a new retail ETF I had not traded before.  I am more familliar with the RTH but the RTH is more costly so I think I will look for more trades on the XRT again.

Adjusting: XRT Selling 2/3 of position

The XRT busted a move up last week and stayed up above the short strike. It’s now under the short so I wanted to take some small profits now with only 3 days left.
After adding to the position last week my average credit was .37

Sold 2/3 for .20 giving ROI of 27%  for this part of the trade.
Not too bad on the return but I thought it would have done better considering the very weak retail environment.  On the plus side I seem to be getting better at my position management.  A year ago I would have let the whole position go until expiry day risking a loss to eek out an extra .10 cents or so.  I’m learning.  This is good.

Open: RIG BRCS Jan 09 50/55

RIG is a stock I like but it has a couple of problems.

1) Oil has come way down making deep water drilling less attractive in a cost to benefit

2) The day rates are still dropping for their rigs and that is not reflected in the stock.

This is also somewhat of a pairs trade where you go long a stock and hedge it by going short another stock.   This is not an eact pairs trade but I am using it to hedge my PBR  BLCS I open yesterday.

I have to admit, after I got filled I thought I may have pulled the trigger to soon and maybe should have waited a couple of days to see if the stock drifts up.  I noticed that the stock hovering around the middle BB meaning it has a short term bullish bias.  It did go 1.50 today after I sold the calls so the position is ITM now.

My other concern is if oil spikes up and stays up for a while it will likely drag RIG up with it.  I also should have considered going up one more strike but the credit wasn’t as good.  This may be a new rule for trading spreads.  I will watch it closely and if things get too volitile I may shut the trade down early and re-think the position.

The Trade:

Credit 1.48 : BEP : 51.48

Buy open: Jan 50 Calls

Sell Open: Jan 55 Calls

Open: PBR BLCS Apr 09 22.5/30 Calls

Getting long on an energy name I really like.  The thesis is oil is range bound and should be above $35 in April which should make this stock solid.  It’s likely to be a little volitile as oil is right now so that’s why I’m giving myself plenty of time to be right and using the bull call spread.

Max profit is 3.80 which is a tad more than 100% ROI.  It’s a good R/R  for me and I have 3 1/2 months to be right.

The trade:

Debit 3.70 :  BEP 26.20 : MP 3.80

Buy open: Apr 09 22.5 calls

Sell open: Apr 09 30 calls

Close: ISRG BRCS Jan 09 115/120 ROI +32%

Not a bad return on this trade since I just opened it 3 days ago.  It worked better than I had hoped mostly because the market fell off a cliff today.  I had a GTC close order in place for .15 which triggered at the end of the day.

I opened the trade for 1.30 giving me a 1.15 return or +32%

Not bad for 3 days work.

Adjust: Sell Close TBT Jan 09 Calls (-.65 cents)

I sold the 43 calls today for a loss of .65 cents.  I paid 1.45 originally.

TBT stopped dead in it’s tracks because I think with all the new economic data coming out is so bad.  As a result people are running back to the bond market for safety although I think it will be short lived.  I didn’t close the whole position – I left the BLPS on to see if things turn up next week.  I didn’t want to wait for the calls to turn next week since time is running out.   This was an experiment with the Short Bonds ETF and I think it’s still is a good trade but I’m early and should have given myself more to be right.    I might try this trade again for Feb Calls but I have to wait until after next week expiry since I have too much risk on the table right now.

Open: COH BRCS Feb 09 20/22.50

Gone fishing;  with a gun.

I’m once again shooting fish in a barrel.  Coach missed earnings and the street punished them.  They are in the mid 18’s so this should be a low risk trade.

The Trade:  Credit .70

Sell open: Feb 20

Buy open: Feb 09 22.50

Open: ISRG Jan 09 115/120 BRCS

ISRG missed earnings and the market is punishing it.  The IV is still high so I got a 1.30 credit for the Jan calls.  Hopefully with 8 days left the stock will drift lower.

This one is volatile so if it closes above 118 next week I’m going to close it down to avoid a big loss.

The trade:  Credit 1.30

Sell open: 115

Buy Open: 120

Open: INTC BRCS Feb 09 15/16

Ok Intel had bad, bad earnings release.   Selling Call spreads right after companies report bad earnings is a high probability trade for me.   When a Co. releases bad earnings I wait for the market’s reaction.  If the market hammers the stock, it’s a good bet it will continue to drift lower over several weeks.   So this is an easy trade to make and it works most of the time.  When it doesn’t work I still mostly break even so I consider it a low risk trade.

I usually like to sell the near month calls but with only 8 days until expiry the credit wasn’t that good for the Jan calls.  So I ‘m going out to Feb.

The Trade: Credit .33

Sell open: Feb 09 15 calls

Buy Open Feb 09 16 calls

Adjusting: BRCS XRT Jan 21/22

XRT has continued it’s upwards run the last 2 days.  However the rallies are getting  smaller and I think things are about to run out of steam.  Currently the stock is sitting just @ $21.67 which is .67 in the money on the short 21 calls.

I got .55 for the new sold calls.

This new spread moves my BEP up to 21.37 .

My max loss is now 1.89 up from 1.44

It’s going to take some intestinal fortitude to hang in there but with 10 days to go I think it will reverse course and it could be a violent reversal with all the bad economic data we got today.  We will see.  I originally put this trade on with half my normal position size so I had room to play and now my position size is @ 75% .

Open: TBT Jan 43 Long Calls with BLPS

Ok, this is another experiemnt of sorts.  Here’s the thesis, TBT is the short ETF of the TLT.  The TLT is the iShares Leh 20 year  treasuries  Bond Fund  ETF.

The TLT has been on a tear of late with lot’s of folk fleeing stocks to safety.  Well, at least for now, the TLT looks way over extended @ $122 as people are pulling money out to buy into equities.  It blew right through below it’s 20 day EMA which is really bearish.

So I’m choosing to play this not with TLT Puts because the Puts are more expensive than the TBT Calls.  So I want to buy the calls instead but even those are a little expensive @ 47%.   So I want finance the purchase buy selling a Bull Put Spread.

I’m keeping the contracts small @ 1 contract because I’m not 100% sure I understand how to manage this trade.  My max risk is 1.85 so I’m more than willing to try the trade.  To get out I may book profits on the Long Call leaving the spread to continue to make money.  Stock is at 41.90 with 10 days until expiry.

The Trade: Net Debit 1.00

Buy Open:  1 Jan 43 Call  1.45

Buy Open: 1 Jan 42 Put  1.20

Sell Open: -1 Jan 43 Put 1.65

Open: Spy BRCS Jan 95/96

I put this one on during Friday’s Jan, 2 Santa rally.  SPY ran over 3% on the day and pushed itself right into resistance.  I do think it will manage to push beyond the 93 level resistance point sometime in the next few weeks but I don’t think it can hold it right now.  But just in case  I am wrong, I’m putting on half the normal position size since there is only 2 weeks left until expiry.

Support @ 85

Resistance @93

The Trade: Credit .35 cents

Buy to Open: SPY Jan 96

Sell to open: SPY Jan 95