Hello Mr. UVXY…Didn’t recognize you. Have you lost weight?

#LongPuts #LEAPS – First of all let me apologize for the length. Feel free to skip it or skim it over the weekend or tell me I’m crazy…LOL

It’s been a crazy month so far but it has given us a great opportunity to observe the “new” UVXY and how it reacts during market turmoil. The timing has been great since it had it’s most recent split just two weeks before the craziness began. I don’t have any data to back this up but just going by feel and how it’s suppose to trade now it does seem that it’s moves haven’t been as violent as they were previously so the adjustment appears to be working. No guarantees of course. It could be trading at 150 before things calm down but it does seem unlikely.

After the spike of the summer of 2015 I have been almost exclusively shorting it by selling call spreads on spikes or splits. It’s worked but they are slow to profit since they are so far out in time and don’t decay quite as fast since they are sold closer to the money. It works but it requires the risk to be on the table for a long time tying up buying power.

With the “new and improved” UVXY I think there’s a better way. I am switching all of my short UVXY positions to the #LongPuts #LEAPS strategy. With UVXY being toned down a little we will still get the inevitable downward trend but possibly not quite as fast as before. This should allow more time to sell weekly positions against the long puts for basis reduction. With less violent spikes and slower decay the sales should be possible on both calls and puts.

With all that said, let’s look at some real world numbers. I’ll use my original position as an example.

When UVXY made it’s initial run into the 50’s I bought Jan 2021 50 strike puts. This was just 9 days ago and I paid 29.60 for them. Let’s round that to 30 for simplicity.

I feel it’s safe to assume that by Jan 2021 UVXY will be somewhere near a split adjusted price of 5 dollars. That’s a 45 dollar drop so with the 30 dollar purchase price of the puts there should be a 15 dollar gain there if nothing more is done but sit and wait.

Now let’s add the possibilities of some weekly sales. In 9 days I’ve already brought in 6 dollars of weekly sales using puts and calls. That will go straight to the bottom line of the 2021 position. Of course that type of premium won’t always be available. Some rolling will be required or sometimes the call sale risk will be too high during low volatility.

Let’s assume very conservatively that over the course of the trade an average of 50 cents per week per side can be brought in. That’s a dollar per week for 116 weeks. 116 dollars plus the 15 dollar gain on the put purchase could turn this into about a 130 dollar gain on each contract.

The beautiful thing about it is the only big chunk of buying power being used is the original cost of the long puts but a good part of that can be made up early in the trade before UVXY drops much. Premium available for weekly sales is pretty nice until UVXY falls into the low teens and it begins drying up.

I tried a strategy similar to this on the split before this most recent one. It turned out to be nicely profitable and I was only selling the put side against the position…and UVXY dropped so quickly I didn’t get too many of those sold. With a toned down product now I’m thinking this will work much better this time around. We’ll see!

So today I closed all of my pre-split call spreads at overall profits. This takes a lot of risk off the table and frees up buying power for the new UVXY strategy. I’m still holding a few post split spreads but looking to get out of those at close to even eventually.

Bought to Close UVXY2 DEC 21 2018 15.0/25.0 Bear Call Spreads @ .99 (sold for .84) loss

Bought to Close UVXY2 DEC 21 2018 20.0/30.0 Bear Call Spreads @ .55 (sold for .86) gain

Bought to Close UVXY2 DEC 21 2018 20.0/30.0 Bear Call Spreads @ .52 (sold for .85) gain

Bought to Close UVXY2 JAN 18 2019 12.0/17.0 Bear Call Spreads @ 1.10 (sold for 1.15) gain

Bought to Close UVXY2 JAN 18 2019 15.0/25.0 Bear Call Spreads @ 1.16 (sold for .99) loss

Bought to Close UVXY2 JAN 18 2019 20.0/30.0 Bear Call Spreads @ .65 (sold for .91) gain

Downside Warning

#VIXIndicator Another Downside Warning fired today with the VIX closing at 25.23. That’s the highest close of this correction (although the intraday high was on Oct 11th), and the highest VIX close since February 12th.

This is the 4th warning of this correction. After the initial Warning, additional warnings can sometimes signal the bottom, but not always.

Whew!

I skipped all earnings trades just to watch the carnage.

In the most benign trade ever:
Closed on GTC order: $GUSH Dec 45 calls for .25. Sold in August as part of a #StrangleRoll. My 21 puts are threatened….. that’s why I never sell puts in these things!

This is the panic flush

If we don’t bottom here or in the morning, that’ll be all she wrote.

TQQQ

#LongCalls #LEAPS – This is a pretty new position so I’ve been selling aggressively and non-ratio’d so that’s really helped to get off to a decent start. Letting the leash out a little on the next sale.

Bought to Close TQQQ OCT 26 2018 60.0 Calls @ .05 (sold for 1.82)

Sold TQQQ NOV 9 2018 57.5 Calls @ 1.05 (come and get those Mr. Market!)

NVDA TNA

#ShortPuts #IRA – Definitely want TNA for the long term. Not sure it’s going to stay low enough for any put exercises so going shorter term and more aggressively. With NVDA, I’d take a shot at over 50 percent off it’s high.

Sold TNA NOV 16 2018 55.0 Put @ 2.40 (a little early)

Sold NVDA DEC 21 2018 140.0 Put @ 2.56

SOXL

Rolled my 90 puts in December to February 80 puts for a credit of 2.85

#earnings #shortstrangles VLO sold Nov….

#earnings #shortstrangles VLO

sold Nov. 16, 75/100 for 1.19

UVXY

#VXXGame Throwing one more out there…
Sold $UVXY March 112 call for 8.75. Adding to one sold for 5.25.

#shortcallspreads IYR IYR up today,…

#shortcallspreads IYR, SMH

IYR up today, sold Dec. 21, 78/80 for 1.00
SMH sold Dec. 21 90/95 for 2.26

UVXY

#LongPuts #LEAPS – One good thing about UVXY staying strong…getting the long LEAP puts paid down a little. More on that later.

Bought to Close UVXY OCT 26 2018 51.0 Puts @ .10 (sold for 2.10)

AZO DG

Two that I wouldn’t mind selling off a little….jeez 😦 Up strong on a lousy day.

NVDA Jan

Sold $NVDA Jan 18 120 puts @ 1.32.
Stock down 30% this month. Is it going down another 40% between now and January? Delta is 04. Basis would be around the 200 day moving average if assigned. In that unlikely event I’d be loading the boat with NVDA <120.

New low on SPX

But pretty far below the VIX highs. This is somewhat typical… the VIX will often spike to its highest point on the first major downdraft of a correction, the calm a bit even though the index sinks lower. We need a strong flush in the market to get this correction behind us. Although we just went lower on SPX (and NDX, and Dow yesterday) it doesn’t seem like that capitulation panic we usually get at the bottom.

LABU

Rolled my 2020, 115 calls to 2021 115 calls for a debit of 3.90

#shortputs OIH Sold Dec 18,…

#shortputs OIH

Sold Dec 18, 20 put for .79.

TNA

#LongCalls #LEAPS – This is a pretty new position so I’ve been selling aggressively and non-ratio’d so that’s really helped to get off to a decent start. Letting the leash out a little on the next sale.

Bought to Close TNA OCT 26 2018 70.0 Calls @ .05 (sold for 1.97)

Sold TNA NOV 9 2018 67.0 Calls @ 1.10 (come and get those Mr. Market!)

RTN

#LongCalls #LEAPS – Earnings tomorrow so clearing the decks for a fresh sale.

Bought to Close RTN NOV 2 2018 202.5 Calls @ .15 (sold for .70 yesterday)

Going out an extra week:

Sold RTN NOV 2 2018 195.0/205.0 Bear Call Spreads @ .60

#shortstock #closing EWG Oct. 18,…

#shortstock #closing EWG

Oct. 18, sold short 100 shares of EWG at 27.68, bought to cover today for 26.69.

LABU

#LongCalls #LEAPS – Very conservative here…

Bought to Close LABU NOV 9 2018 90.0 Calls @ .08 (sold for 1.73)

Sold LABU NOV 9 2018 70.0/80.0 Bear Call Spreads @ .30

#shortputs T Followed Fuzzball and…

#shortputs T

Followed Fuzzball and Jeff from this morning, sold Jan, 31 put for 1.46 to go with my 104.486 shares and a covered Nov. 16, 35 call.

LABU OLED RTN SMH XBI UVXY

#LongCalls #LEAPS – Another day of LEAPS getting hit but weeklies doing their jobs. On the bright side after sitting down last night and looking at these types of trades with a fine tooth comb, a majority of the 2021 positions only require .05 to .15 per week to cover. It’s a long haul so just trying to avoid whipsaws now. Weekly safe spreads bringing in just 20 cents or so and letting them expire is the plan for the future until a recovery happens.

LABU: Added final long LEAP purchase to average down. Way underwater but still doable.

Bought to Open LABU JAN 15 2021 110.0 Call @ 8.00

OLED: Earnings next week so nice to get rid of these to sell again.

Bought to Close OLED OCT 26 2018 117.0 Call @ .05 (sold for 1.20)
Bought to Close OLED OCT 26 2018 120.0 Call @ .05 (sold for 1.20)

RTN: Earnings tomorrow. I’ll be selling something later today.

Bought to Close RTN OCT 26 2018 205.0 Calls @ .05 (sold for 2.05)

SMH: Double dip in this expiry…

Bought to Close SMH NOV 9 2018 106.0 Calls @ .05 (sold for .97)
Sold SMH NOV 9 2018 99.0 Calls @ .35

XBI:

Bought to Close XBI NOV 2 2018 89.0 Calls @ .05 (sold for .76)

UVXY:

Big post coming later on my big change in strateegery for trading this symbol. It changed so I am too. Hoping for more potential profit with less buying power used and less volatility within the position.

It’s raining double calendars

BTO GRUB Oct26/Nov16 112 dubcal @ 3.40
BTO TWTR Oct26/Nov16 29 dubcal @ 1.29 x3
BTO SHOP Oct26/Nov16 127 dubcal @ 7
BTO TSCO Oct26/Nov9 86.5 dubcal @ 1.04 x3

Done with earnings trades for today.:-)
#earnings

#hedge Wish I had kept…

#hedge

Wish I had kept my SPX hedges on. A $3 put that I had on at 2550 is now trading for $21.40-22.

Most months you never need it. Last few weeks it is almost a mega millions or power ball ticket.

Once we settle down I will always keep one of these on. Either long puts, ratio, or risk twist for times like this. Then you have a pile of cash you can deploy when the market tanks.

TQQQ calls

#LongLEAPs #SyntheticCoveredCalls
Closed on GTC order: $TQQQ Oct 26th 60 calls for .15. Sold for 1.40 on Friday. Will wait for at least a small rally before selling more.

UPS closed

#Earnings #DoubleCalendar
STC $UPS Oct 26th 115 double calendars for .64. Bought yesterday for .89, so small loss. Stock dropped too much. Could have gotten a modest profit at the open but waited for a bounce that didn’t come.

BIIB DubCal sold

STC @ 3.9. Bot @ 3.12.
Held on to this too long. It was more profitable ydy. Glad to be out as price is falling.

#earnings

MSFT DubCal

BTO Oct26/Nov16 106 double calendar @ 2.15.
The time range on this calendar is longer than I’ve been doing. Experimenting with this to see how the DubCal performs if the longs are in an expiration where volatility won’t collapse. This position opens with 80%+ vol on the shorts and 40% vol on the longs. A vol collapse on the shorts with stock price staying between 98 and 115 has good profit potential.

#Earnings

BIIB closed

#Earnings BTC $BIIB Oct 26th 285/350 strangle for .735. I had an order in for this all morning at .70. I just switched the order to .75 and it immediately filled for .735.

CAT DubCal sold for loss

Bot CAT DubCal @ 1.22. STC @ .10 for almost full loss. Sat on this one too long hoping for a rally. Smokium hopium.:-)

#earnings

ALXN DubCal sold

Bot ydy @ 1.45. Sold for 2.22.

The DubCal trading gods are being good to me. I hope this string of profits keeps on piling up. lol.
#earnings

VLO earnings analysis

#Earnings $VLO reports tomorrow before the bell. Below are details on earnings 1-day moves over the last 12 quarters.

July 26, 2018 BO 6.85% Biggest UP
April 26, 2018 BO 2.63%
Feb. 1, 2018 BO -1.33%
Oct. 26, 2017 BO -1.78%
July 27, 2017 BO -0.58%
April 25, 2017 BO -1.48%
Jan. 31, 2017 BO -3.62%
Oct. 25, 2016 BO 4.93%
July 26, 2016 BO 4.73%
May 3, 2016 BO -3.66% Biggest DOWN
Jan. 28, 2016 BO -2.19%
Oct. 28, 2015 BO 1.53%

Avg + or – 2.94%
Bias +0.50%, slight upside bias on earnings.

With stock at 90.00, the data suggests these ranges.
Based on current IV (expected move per TOS): 85.60 to 94.40
Based on AVERAGE move over last 12 quarters: 87.35 to 92.65
Based on MAXIMUM move over last 12 Q’s (6.9%): 83.84 to 96.17

Open for requests on other symbols.

ILMN DubCal sold

Bot ydy @ 2.77. Sold today @ 5.16.

Still holding ALXN and BIIB because they’re holding right in the peak of the profit zone.
#earnings

ILMN

#Earnings #IronFlies – With this market and a max loss of 325 possible I’m taking what I can get and moving on. Didn’t get as much as I was hoping out of this and BIIB but still decent winners for quickies.

Bought to Close ILMN OCT 26 2018 300.0/315.0/330.0 Iron Fly @ 10.00 (sold for 11.75)

#earnings #shortstrangles MSFT Sold Nov….

#earnings #shortstrangles MSFT
Sold Nov. 16, 95/115 for 1.81

Panic?

Could today be the day we get the panic low?

MSFT earnings analysis

#Earnings $MSFT reports today after the bell. Below are details on earnings 1-day moves over the last 12 quarters.

July 19, 2018 AC 1.79%
April 26, 2018 AC 1.65%
Jan. 31, 2018 AC -0.78%
Oct. 26, 2017 AC 6.41%
July 20, 2017 AC -0.57%
April 27, 2017 AC 0.27%
Jan. 26, 2017 AC 2.34%
Oct. 20, 2016 AC 4.20%
July 19, 2016 AC 5.31%
April 21, 2016 AC -7.17% Biggest DOWN
Jan. 28, 2016 AC 5.82%
Oct. 22, 2015 AC 10.07% Biggest UP

Avg + or – 3.87%
Bias +2.45%, fairly strong upside bias on earnings.

With stock at 107.00, the data suggests these ranges.
Based on current IV (expected move per TOS): 100.91 to 113.09
Based on AVERAGE move over last 12 quarters: 102.38 to 110.62
Based on MAXIMUM move over last 12 Q’s (16.2%): 95.78 to 117.22

Open for requests on other symbols.

Puts and Calls

#ShortPuts #ContangoETFs Sold $SOXL Feb 75 put for 7.00. This one is getting a little nerve wracking, breaking 100 today. I have 3 shorts; won’t be selling new ones, and rolling any that get breached.

#longleaps, #syntheticcoveredcalls

So many earnings trades, so little time

I’m looking at a lot of symbols today. I’m only going to post this one without being asked. Please let me know of any symbols you would like to see this analysis for and I’ll be happy to post.

#Earnings $TSLA reports today after the bell. Below are details on earnings 1-day moves over the last 12 quarters.

Aug. 1, 2018 AC 16.18% Biggest UP
May 2, 2018 AC -5.54%
Feb. 7, 2018 AC -8.62% Biggest DOWN
Nov. 1, 2017 AC -6.79%
Aug. 2, 2017 AC 6.50%
May 3, 2017 AC -5.00%
Feb. 22, 2017 AC -6.40%
Oct. 26, 2016 AC 0.87%
Aug. 3, 2016 AC 2.13%
May 4, 2016 AC -4.95%
Feb. 10, 2016 AC 4.73%
Nov. 3, 2015 AC 11.17%

Avg + or – 6.57%
Bias +0.36%, no significant directional bias on earnings.

With stock at 290.00, the data suggests these ranges.
Based on current IV (expected move per TOS): 255.48 to 324.52
Based on AVERAGE move over last 12 quarters: 270.94 to 309.06
Based on MAXIMUM move over last 12 Q’s (16.2%): 243.08 to 336.92

UPS

STC Dbl Cal 113 BTO yesterday .85 STC .96 very small win, tried for too much early.

Need to grab what you can early!!

T

#ShortPuts #IRA – It is giving a chance to get back in. Good divvy down here so selling at the money.

Sold T JAN 18 2019 31.0 Puts @ 1.30

#yieldhogs

EW Dbl Cal closed

#Earnings #DoubleCalendar
Sold to close $EW Oct26/Nov2 150 call/put calendars for 2.475 (avg price). Bought yesterday for 1.40.

ILMN closed

#Earnings BTC $ILMN Oct 26th 275/350 strangles for .40. Sold yesterday for 2.65.