#AlligatorFuzzy Ok, here’s the latest…

Ok, here’s the latest entry into the #Fuzzy family.
Backing up a bit, there’s something every #Fuzzy has in common: A combo trade of a 2-part synthetic (long or short) coupled with protection for full risk definition. 3 legs, all the same expiration.
A Regular Fuzzy (the original one named after @fuzzballl) then uses short dated short hedges for trade debit recovery and weekly income.
An Atomic Fuzzy eschewed the short dated short hedges for a double size hedge using the same expiration as the core fuzzy–solving the problem of runover hedges.
Regular Fuzzy Pros: Efficient use of capital, risk defined, weekly income
Regular Fuzzy Cons: Protection very expensive in high vol, hedges frequently get runover
Atomic Fuzzy Pros: Efficient use of capital, risk defined, partial-to-full financing of protection (particularly useful in high vol)
Atomic Fuzzy Cons: No weekly income, which increases directional risk

Combining these two trades into a new trade solves the cons on both trades–it is essentially a Fuzzy Diagonal. There are two versions, an #AlligatorTrap is bullish, an #AlligatorSnap is bearish.

This trade uses both a long dated hedge (matching the core expiration and quantity) and short dated weekly hedges. The trade, in essence, has a triple hedge! Hedge #1: Core protection, Hedge #2: A credit spread using the core expiration, Hedge #3 A short dated short hedge. Believe it or not…perfectly legal in a 401K. I will be attaching a slide showing risk graph setups, a proper diagonal setup on the risk graph should significantly reduce the hedge runovers.

Here is the exact trade setup that I did last week for a long on SPY (captured on the attached slide)
SPY May monthly: +263c/-263p/+259p (this is the core fuzzy) @5.62 debit, then add a CCS 269/273, same qty, @1.55 cr. Then enter the weekly income hedge: Apr 6 270c @.63.
Particular setup rules: 1. The 3-leg core debit = “X” 2. Use ATM + X for the anchor short leg of the CCS. Those 5 legs should give you a “ledge” type risk graph where the ledge is solidly above 0. Finally add in the short dated short hedge–the best graphs work up with the calls at the same strike as the CCS anchor on the long dated core, or higher.

Everything can be reversed for a bear trade. Here’s an Alligator Snap (bear)trade I did on QQQ this morning:
Jun -157c/+157p/+160c @ 5.09, 152/147 PCS @ 1.34 cr ($157-$5=$152 for anchor). Then an Apr 6 152 short put @ .77. This puts the starting trade debit at $2.98. Accrued credits on rolling the short dated hedge will attack that trade debit. The bear side of this trade, due to put skew, will allow for more lucrative put rolls in an uptrending market.

So, in conclusion, this trade brings the best parts of the regular fuzzy (weekly income) and atomic fuzzy (protection financing) together. Check out the attached slide for risk graph setups, let me know your questions. I have about 8 of these trades on right now, 6 traps and 2 snaps. I’ve already rolled short hedges from last week.
Thanks to @MamaCash for the creative name…I was just going to call it a Fuzzy Diagonal….but Alligators are way more fun 🙂


2 of 3 of 5: Not yet!

Y’all know I’m keenly watching for 1-standard deviation up moves in SPX. We need 3 1SD up moves in a 5-bar window (for historical rally confirmations). We got one on Thursday. Today’s slipped through the fingers, darnit. We got a .933–the rule is it must cross 1.0. Wed and Thur still fall into the 5-bar window.

#AlligatorFuzzy anyone? I have a new #Fuzzy! I believe this is the best one yet. The love-child of regular fuzzy and atomic fuzzy. I will do a full write up on it maybe later tonight. I really think you will find it very compelling.



#ironcondor AMZN March 28, sold…

#ironcondor AMZN
March 28, sold April 20 IC for 2.00, closed today for .84. IV is still really high but I’m taking the gain.

TQQQ bearish fuzzy

STC January 2019 Bearish Fuzzy. Bought for 27.50 and STC for 29.55

STC 165 puts

BTC 165 calls

STC 170 calls

BTC April 20145 puts

#shortstrangles EWZ TastyTrade idea, sold…

#shortstrangles EWZ
TastyTrade idea, sold May 18, 42/47 strangle for 1.78


#SyntheticStock – Looks like it’s easing below the 200ma so I’m selling just above it…

Bought to Close XBI APR 6 2018 89.0 Calls @ .06 (sold for .83)

Sold XBI APR 13 2018 86.0 Calls @ 1.05


#BullCallSpreads – Letting this week’s expire so selling next week…cost basis reduction in the Jan Bull Call Spread…

Sold AZO APR 13 2018 640.0/670.0 Bear Call Spread @ 2.55