fuzzballl 11:19 am on Monday, December 14, 2015

KOLD inverted strangle update

Rolled Dec 175 puts up to Dec 200 for a credit. Also short the 120 calls in Jan for an inverted strangle. Assuming the 200 puts expire I’ll be left with short DITM Jan 120 calls with the whole position bringing in a total credit of 52 dollars giving me a breakeven on the Jan 120 calls of 172.

At that point I’ll have to decide where to sell the new puts…basically the more bullish I am on KOLD (bearish on nat gas) the higher the strike I’ll sell the puts at with hopefully being no further inverted than the toal premium received. Ideally early next week nat gas rallies and KOLD tanks and I never even have to sell them…LOL

fuzzballl 11:59 am on Monday, December 14, 2015

I know I shouldn’t but was listening to CNBC…LOL A couple “experts” said they see possibly 1.40 to 1.50 on nat gas with no relief in sight. In that scenario you could easily see KOLD pushing 300 so here’s what I might do just to minimize possible loss.

Let’s say I end up with the likely scenario of short Jan 120 calls with 52 dollars in premium in my pocket for adjustments.

I could:

1. Spend all the premium and roll the 120 calls up to 190.
2. Then, buy the stock around 2o0. This would cover the calls at a 10 dollar loss max (assuming KOLD doesn’t tank)
3. sell a few puts over the next few months to make up some of the loss, or:
4. Let the stock get called away and take the loss and move on. I like this scenario the best since I’m dealing with such a margin hog…
- Jeff 12:29 pm on Monday, December 14, 2015
  
  I’ll just sell heck out of puts.
  - fuzzballl 12:30 pm on Monday, December 14, 2015
    
    Wish I could but TDA requires about 20k per strangle…ouch!
    - mikesspamlessemail 12:57 pm on Monday, December 14, 2015
      
      Not only that, but TD had no shares to short of UVXY today. Tried at 43, 42, 41, 40, 39, 38, 37, 36, 35, and 34. Argh. Should’ve bought puts I guess. Fed is going to stay under 0.5% for the next decade +++
    - Jeff 4:48 pm on Monday, December 14, 2015
      
      20K is excessive.
- vxxkelly 12:43 pm on Monday, December 14, 2015
  
  Who knows where the bottom is at in Nat Gas. Luckily I’m not short any $KOLD calls. Was short a Dec 185 Call when $KOLD was about $150. I held it for a couple of days and over a weekend, while watching the 10 day weather forecast, and it looked more like April, I decided to close it out for a tiny loss (about $80 if I remember right). What finally struck me was this “this is the time of year where we should be making good sized draw downs in the storage levels, with the weather this warm, that isn’t happening, so what is going to happen in the spring. We’ll be starting our build from an already high inventory level”.
  I had no reason to believe we would go down this far already, but didn’t see any reason for Nat Gas to rise anytime soon and potentially get crushed next spring. Wish there were better ways to play it. $KOLD and $BOIL are both pretty illiquid so I really don’t like trading them. Hard to put on way OOM short $KOLD puts or $BOIL calls.