Ramie 8:30 am on Tuesday, December 15, 2015
Tags: ContangoETFs ( 446 )

$KOLD roll

I just eliminated my last December call position by rolling it up and out to January for 8.64 credit.

Bought $KOLD Dec 18 200 call @ 18.10
Sold $KOLD Jan 15 2016 210 call @ 26.74

Jeff 8:35 am on Tuesday, December 15, 2015

I think we need to be rolling these into puts. As @fuzzballl wrote yesterday, this could be above 300 very soon. A bounce will come some day, but I don’t think soon. I have been waiting for a slight retracement today, like yesterday, to start some rolling.
- Ramie 8:54 am on Tuesday, December 15, 2015
  
  I thought about that but my concern with this ETF, as with all of these reverse leveraged products (like $DUST), are the headwinds from tracking error that always kick in and become really pronounced during two way action. Of course right now it’s anything but two way action so being long via short puts has been the right call. But $KOLD has had many sizable pullbacks in 2015 (at least pre-October) and I could easily see a 20-30% pullback at some point soon just as a function of return to mean. And yes it absolutely can go to 300 too. But my thinking is more along the lines of: Would I rather keep rolling these (and getting nice credits for the rolls) until there’s a reversal or do I want to risk being short puts around 200 when KOLD sinks back to 150 or lower? Once that happens, just because of the tracking error, it will be a challenge for it to retake its highs again (barring another epic collapse in natural gas of course). In the meantime, I sold a Dec 185 put yesterday (followed you) to bring in some premium and will continue to look for those opportunities.
  - Jeff 9:05 am on Tuesday, December 15, 2015
    
    Yes, carefully considered. If you look at the monthly chart, you’ll see what happened last time it got this high.
    - fuzzballl 9:38 am on Tuesday, December 15, 2015
      
      Taking one for the team here…best way to get a pullback is to double down long…LOL
      
      Rolled this Friday’s puts from 200 up to 220 for 8.50 credit. Once we see where this ends up Friday I’ll make an adjustment. Current position is now Jan 120 call /Dec 220 put inverted strangle @ 60.50 credit giving the short calls a breakeven of 180.50.
      
      If KOLD is at 220 Friday I may sell the Jan 230 put or whatever the highest strike is by then. Hoping to get close to 100 in total premium while keeping the inversion near 100. Goal is still breakeven so anything better would be a gift.
      - fuzzballl 10:36 am on Tuesday, December 15, 2015
        
        GG from last night up to his old “I told you so” tricks. Probably a bullish sign for nat gas…LOL
        
        ——————————————————-
        
        $UGAZ $SWN $CHK $KOLD
        
        Both $ Oil and Natural Gas $UGAZ have pressed to new multi-year lows this morning, and while Oil has exhibited a two-way trade so far today (unlike Nat Gas, which remains under intense pressure now that it has violated its April 2009 low at 1.90), Natural Gas remains in negative territory.
        
        Both big-picture patterns have developed a falling-wedge “look,” which usually is indicative of the conclusion of the directional trade.
        
        Then again, both price structures are confronting their respective, lower-wedge support lines, which must contain forthcoming weakness to preserve the integrity of the patterns.
        
        Those key prices: $34.50 in Oil, and $1.81 in Natural Gas. Of course $SWN and $CHK ( now 3 handle) continue to get pummeled and yet again set new daily mutli-yesr lows ; those traders who did the winter is coming /big reversal coming in Nat gas didn’t llok the chart of that commodity I suspect ; I’ve read spot Gas could see 1.50 /per MMBTU; longer term I’ve read .85 due to new mega=producer well finds in PA this summer. Those short $KOLD calls which I warned very aggressively not to trade are now in the burn unit as that ETF doubled in past 2 months. Avoid those I’m smarter than market winter is coming trades especially for an oversupplied commodity caught in a multi-year down cycle : I looked and chart and ended up just buying the ETF itself which is very thinly traded.
        
        fuzzballl 10:51 am on Tuesday, December 15, 2015
        
        This may be crazy…tell me if it is…LOL
        
        I bought a Jan 200 strike call to get me slightly less bearish on KOLD (slightly less bullish on nat gas). I’m still about 15 deltas bearish on KOLD but have a little more upside protection. Any profits made from the long call will be used to roll the DITM short calls up if needed. If KOLD rolls over and dies the long calls should still have a little residual value I can sell so only risking about 10 percent of premium received so far.
        
        vxxkelly 10:57 am on Tuesday, December 15, 2015
        
        I actually think that is a prudent thing to do.
        
        vxxkelly 10:58 am on Tuesday, December 15, 2015
        
        If you really want $KOLD to tank, I’m the one that would need to buy the call. That would guarantee a top tick of the index. All down hill after that.
        
        fuzzballl 10:59 am on Tuesday, December 15, 2015
        
        That’s usually me! LOL
        
        fuzzballl 11:11 am on Tuesday, December 15, 2015
        
        After running this long call addition through the analyze tab on TOS it really does do a wonderful job of controlling margin and any increase in losses all the way up to 300ish…so feeling better about the buy even if I lose it all (which would mean KOLD quit going up which is a good thing).
        
        fuzzballl 11:14 am on Tuesday, December 15, 2015
        
        In fact, I’m considering adding another one and then selling less aggressive puts in Jan. Maybe sell the puts at a strike that would help pay for the calls while preserving most of my premium already received…
        
        vxxkelly 10:56 am on Tuesday, December 15, 2015
        
        I saw that he showed up again last week. I just wish he’d say and do constructive things. When he’s wrong, you never hear about it again. When he is right, you never hear the end of it. Reminds me of those people on TV that say 15 things during an interview, and 2 month’s later when one of them turns out to be true, they are back on there talking about the great call they had. He was saying all the same things about $UVXY back in the Aug/Sept melt down. All of his links to Zerohedge, constantly predicting the end of the world. We all saw how short lived that ended up being.
        
        fuzzballl 10:57 am on Tuesday, December 15, 2015
        
        Exactly…calling for UVXY to go up forever and we’d never see 30 again let alone a 20 handle. Think it was about 2 days later it fell off a cliff!

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