BTO $VIX Jan 19th 19 calls for 3.00
Author Archives: Jeff
Feed a KOLD, starve a BOIL
#ContangoETFs #Rolling $KOLD calls while KOLD puts and $BOIL calls expire today.
BTC KOLD Dec 200 calls for 13.20
STO KOLD Jan 255 call for 13.60
STO KOLD Feb 300 call for 16.00
SPX calls closed
#SPXcampaign BTC $SPX Dec 24th 2110/2135 call spreads for .20. Sold for 2.00 last Friday as a #ReverseRoll from stopped put spread. This spread got up above 4.00 on Wednesday after Fed.
FDX earnings butterfly
#Earnings #ironbutterfly
BTC $FDX Dec 18th short 149 puts & calls for 1.45. Sold on Wednesday for 4.15, so 2.70 profit. Thanks for the idea, @mortlightman!
Quadruple Witching could add to Volatility
The exceptionally large Open Interest in options expiring this week could increase volatility on Friday and move stocks lower. It could also move them higher, but given where Futures are before the open, down seems to be the new black. As our VIX Indicator is currently under FOUR warnings (see side bar on the right), the risk is to the Downside.
The massive expiration was explained further on Fast Money last night: http://www.cnbc.com/2015/12/17/a-massive-expiration-has-traders-on-edge.html
SPX calls closed
#SPXcampaign BTC $SPX Dec 31st 2165/2190 call spreads for .20. Sold for 1.25 on Dec 4th.
SPX after hours trading
For those that don’t know, you can trade $SPX options from 3am to 9:15am ET weekday mornings, and also from 4p to 4:15p after the market closes. You may need to contact your broker to set up this ability.
What I wasn’t sure about was Monthly expiration options, which stop trading at Thursday’s close but whose settlement price is set after Friday’s open. I just confirmed you CAN trade these until 4:15pm on Thursdays (I closed a 1-lot 1975/1950 put spread that expires in the morning for .10 at 4:05pm)
SPX put spread
#SPXcampaign Since I had precisely zero put spreads, dipping a toe back in:
STO $SPX Jan 14th 1875/1850 put spreads for 1.25.
The reason DUST won’t go up
I’ve been working on a Webinar for #ContangoETFs and with the discussion below on $DUST, wanted to pass along part of what I’m preparing. When you have a levered ETF, they are designed to track the DAILY move of the underlying, multiplied by 2 or 3. So if $GDX is up 1% on the day, $NUGT will be up 3% and $DUST down 3%. But then it resets next day. This creates a compound tracking error that will NOT track the underlying beyond a one-day period. In fact, it will drag both the positive & negative levered ETFs down. Here’s an example:
Let’s say the underlying and long and short 2x ETFs all start at $100. We then watch price action as the underlying swings back and forth 10%:
Day 1: underlying up 10% = 110.00
Long 2x up 20% = 120.00
Short 2x down 20% = 80.00
Day 2: underlying down 10% = 99.00
Long 2x down 20% = 96.00
Short 2x up 20% = 96.00
Day 3: underlying up 10% = 108.90
Long 2x up 20% = 115.20
Short 2x down 20% = 76.80
Day 4: underlying down 10% = 98.01
Long 2x down 20% = 92.16
Short 2x up 20% = 92.16
As you can see, with equal up and down days repeated, the underlying moves down slowly but the 2x ETFs go more quickly. Repeat this way for 6 months and both ETFs would be worth only $2.54.
So GDX has been bearish since its 2011 highs… NUGT has absolutely collapsed as a result of this compounding, but DUST has stayed relatively flat for the same reason.
Interesting, huh? That’s why these “ContangoETFs” all work… even if you don’t have the actual “contango” from futures roll, you get this compounding tracking error dragging them all down.
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Time to come in from the KOLD?
Ginny was asking me and I was considering yesterday… time to buy an ATM put for the reversal? The May 210 put is going for about 49.00. If we get our reversal by then, it will be at least a double. Thoughts on this?
Also, STO $KOLD Jan 150 call for 64.00 as part of a roll from Dec positions. Actually REDUCED my margin because I have so many puts.
And, STO $KOLD Dec 195 call for 3.10… expires tomorrow. Threading the needle for this to end at 200 on the nose tomorrow.
TRIN-X just popped over 3.00
TRIN-X just popped over 3.00
KOLD away
#ContangoETFs Overnight, two Dec calls took away my stock, which was bought at an average price of 203.00
Assigned: Dec 18th 115 call, sold for 19.70 on 11/19.
Assigned: Dec 18th 125 call, sold for 14.60 on 11/19.
Have we reached a bottom? Still have a couple 200 calls from Dec, and 5 more in Jan/Feb. Will look to sell some ITM calls to make up for losses on the assignments above. Should be a rip roaring ride back down, even if NatGas doesn’t rally hard… just needs to stop going down and this ETF will die.
Site updates and expansion
On the right hand column of this page I have enhanced the VIX indicator Status to make current condition more clear. I will update this each day.
I am working on more changes, and I welcome any feedback on something I can include to he more helpful for everyone’s daily trading. Also, if there are any features you would like to contribute, let me know.
Also, I am always looking for additional followers and contributors. Feel free to invite anyone you know, and offer me any suggestions on ways to promote the site.
Thanks all for being here!
UVXY call closed
#VXXGame Reducing exposure, although my overall VXX position is light anyway:
BTC $UVXY Jan 2017 85 call for 9.60. Sold for 23.00 (avg price) over the summer.
KOLD put
#ContangoETFs STO $KOLD Dec 18th 195 puts for 2.00
Dud
How boring was that? Scalping $SXVY and $UVXY back and forth… buy 1,000 shares at a time, looking for .10 and .20 moves, sell, then switch to the other.
NUGT short call
#ContangoETFs following the herd, BTC $NUGT Jan 2017 60 call for 6.40. Sold for 25.00 on Oct 15th.
Straddles
Since ATM options are actually pretty cheap, I’m looking to buy straddles in $TLT and $HYG, looking for big moves in either direction (or maybe both directions) on today’s announcement. Small positions, so not risking much. If they don’t pay off today they could tomorrow or Friday.
Looking at this week’s expiration, HYG 80 straddle and TLT 121-122.
Good morning…
Fed day… if they act today, it will be the first day in history that we have a rate raise AFTER quantitative easing. In other words, no one knows what the reaction will be. I’ll be looking for possible day trades with $SVXY and $UVXY, and maybe $SPY or $TLT. I will consider short term #SPXcampaign spreads, but more likely hold off until the market settles into its direction in the coming days.
KOLD you so…
Spike spikey.. this one may never go down again. IMHO traders think they are smarter than market… global warming means no one will ever need Nat Gas again; easy to see 500 in the cards. See my previous posts going back to the 80’s on how to avoid this. Newbies may have face ripped off!
(For those who were not members of OptionMarketMentor, that was a reference you won’t get, but just know that it is funny)
And now in all seriousness, as Iceman indicates, these things can have violent moves. Look at Monthly chart of $KOLD and see what happened last time we got this high. If you aren’t trading this, don’t start now! I am rolling out of my December short calls in various ways, including rolls to new calls, reverse rolling to puts, buying stock, and selling new puts. I have also closed some puts for .10 & .15, which releases about 5K in margin per option!
BTO 100 shares for 217.55 (adding to some bought at 187)
BTC Dec 18th 149 puts for .15. Sold for 1.80 on 12/10
BTC Dec 18th 155 puts for .15. Sold for 2.60 on 12/8
BTC Dec 18th 135 put for .10. Sold for 2.90 on 12/3
BTC Dec 18th 118 call for 99.60. Sold for 20.00 on 11/11
STO Dec 18th 200 puts for 2.80
STO Jan 15th 210 put for 21.90
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SPY calls
#LongCalls Yes, people, I am buying something. Small position, just playing for bullish move into expiration this week, and a pop after Fed announcement.
STO $SPY Dec 18th 204 calls for 2.50, avg price.
Otherwise keeping cash on reserve for post-Fed trading.
Good morning…
All hinges on the Fed… many traders are sticking to short term as know one knows how that market will react to tomorrow’s announcement on rates. We have just been through a 5.2% decline (from 12/2 high to yesterday’s low)… is that the extent of the “correction” the $VIX has been signaling? A rally this week into monthly expiration seems feasible, but then what? I am avoiding new index trades until we see how things shake out, and looking for shorter term or ETF opportunities.
KOLD comfort
#ContangoETFs STO $KOLD Dec 18th 185 puts for 3.05
FDS earnings
#Earnings STO $FDS Dec 18th 155 puts for 1.00. Biggest UP move: 9.7% Biggest DOWN move: -6.4%. Average move: 3.6%. This trade is 7.5% OTM.
SPX all put spreads closed
#SPXcampaign. I have now been stopped on all put spreads. I Reverse rolled one into calls on Friday, but otherwise have made no other rolls.The strategy is not viable in this environment, with 4 Downside Warnings in effect. Selling calls spreads when down so much is also not viable. Fed decision could cause a massive rally.
DUST calls
$ZSL hitting a four-month high
$ZSL hitting a four-month high
SPX put STOP
$SPXcampaign BTC $SPX Jan 8th 1890/1865 put spreads for 3.45. Sold for 1.40 on Dec 4th as a roll. 3.50 was my stop.
I am currently not entering any new positions on SPXcampaign… waiting for volatility to either kick really high, or head back toward lows. Currently to volatile for this strategy.
I am day trading SVXY…
I am day trading SVXY stock in this madness. May use UVXY too. In and out in minutes with these swings.
SPX calls closed
BTC $SPX Dec 17th 2125/2150 for .20. Sold for 1.20 on Thursday. Keeping out of the way of a possible bear market rally on monthly expiration with Friday AM settlement.
$VIX Indicator
Once initial warnings fire, secondary signals are less significant, but still signal likelihood of a correction. Friday saw a signal and we just touched above 25.60, which is 100% higher than the Oct 28 $VIX low. So that’s the fourth warning since Nov 13th.
KOLD cocked
#ContangoETFs New $KOLD call strikes up to 230. Probably best to buy them or ignore them!
Good morning…
I will be picking any entries sparingly and carefully before the FOMC decision. The downside risk is evident, but whichever decision they announce on Wednesday could send markets screaming higher, at least briefly. As for the #SPXcampaign, I was stopped out of put spreads and closed several call spreads Friday, and for now will be easing off on the normal weekly entries in the face of unpredictable volatility.
SPX calls closed
#SPXcampaign, in the last hour of the session, BTC $SPX Dec 24th 2155/2180 call spreads for .20. Sold for 1.30 last Friday as a roll.
Options Expiration 12/11/15
These expired worthless, full credit:
$DUST 30 call
$UVXY 23 puts
$VLO 74 call
$SPX 2085/2110 call spreads
$SPX 2130/2155 call spreads
Assignment:
$VLO 69 put, partial short stock position covered
Have a great weekend everyone! I’ll be checking in on the blog all weekend.
Consider some low cost hedges…
Consider some low cost hedges in case the market pulls another August 24th on Monday. Buy OTM options that will do well with a 2 SD move. They will be low cost enough that you won’t care about losing if market rebounds, or they will profit nicely at Monday’s open. If you’re certain Monday will be ugly, go bigger
SPX same week puts
Waiting till the end rarely works… had to pay up, 14.00, to exit my Dec 11th 2025/2000 spread. Will make it up some day when the market finishes its correction and heads to new highs. Could be awhile.
SPX stop
#SPXcampaign Had to take another one ahead of the weekend… can’t get stuck with these monthly spreads that could easily be in the money should next week crash.
BTC $SPX Dec 17th 1925/1900 put spreads for 2.60. Sold for 1.30 on Nov 19th.
SPX, fresh LOD
SPX, fresh LOD
SPX stop
#SPXcampaign BTC $SPX Dec 17th 1945/1920 put spreads for 2.90. Sold for 1.35 on Nov 23rd. Hopefully the last spread I will have to stop, although I will look at what is left and consider closing early before a possible Monday crash.
SPX call spread roll
#SPXcampaign STO $SPX Dec 24th 2110/2135 call spreads for 2.00. This is a #ReverseRoll from the Dec 24th put spread stopped out today. This is the only call-roll I will use today, as I do not want to throw all my risk up there only to have a huge bear-market rally next week. Waiting for Monday to look at further rolls.
More call spreads closed
#SPXcampaign Clearing decks so I can roll some of these spreads down so I can #ReverseRoll from the put spreads
BTC $SPX Dec 24th 2180/2205 call spreads for .15. Sold for 1.30 on Nov 18th (part of a roll)
BTC $SPX Dec 24th 2165/2190 call spreads for .20. Sold for 1.30 on Nov 27th
VIX signal fired
#VIXIndicator We are already under a triple $VIX Warning, but another signal just fired, as 24.18 is 25% above yesterday’s close. The Downside risk is increasing (duh).
KOLD cocked
#Contango ETFs Bought 100 shares of $KOLD for 187.90. Need to cover my short calls for next week, so buying a bit now in case price continues higher next week.
$SPX low of day
$SPX low of day
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KOLD turkey
#ContangoETFs Added another margin-free put, STO $KOLD Dec 18th 170 put for 2.50
SPX calls closed
#SPXcampaign BTC $SPX Dec 24th 2170/2195 call spreads for .15. Sold for 1.30 on Nov 24th. Want to clear the call side so I can sell more… it is the safer play in this environment.
SPX stop
#SPXcampaign BTC $SPX Dec 24th 1935/1910 put spread for 2.90. Sold of 1.35 for Nov 23rd
RH earnings closed
#Earnings BTC $RH Dec 18th 75 puts for .10, sold for .95 yesterday.
BTC RH Dec 18th 100 call for .10, sold for .66 yesterday.
SPX Stop
#SPXcampaign BTC $SPX Jan 8th 1910/1885 put spreads for 2.95. Sold for 1.30 on Monday.
RH earnings
#Earnings Looks like the $RH earnings report resulted in some after hours volatility but only a slight move down so far. Will be closing my 75 short puts today, and also will close a 100 short call that filled near the close for .66.
Good morning…
Futures dumped overnight, but a pretty decent retail sales report was just released. Wage growth and consumer spending on the rise. It all may not matter, however, as we have multiple VIX warnings piling up, and everyone is hanging on the Fed decision next week.
I have been studying the VIX indicator, and since 1999 there have never been three Warnings before a full correction occurs. I believe the only reason we are not much lower in the indices is because of the impending Fed decision. I am on the lookout for declines… when they start is harder to call.
SPX call spread roll for profit
#SPXcampaign BTC $SPX Dec 17th 2165/2190 call spreads for .10. Sold for 1.25 on Nov 17th.
STO $SPX Dec 17th 2125/2150 call spreads for 1.20.
This is basically taking profit on one spread then selling another spread as a bonus, but it can also be looked at as rolling for profit. I know the FOMC minutes next week could send markets soaring, but I will be okay with having to deal with the call side, since the put side has been the troubled side lately.
KOLD sore
#ContangoETFs Adding more puts to offset the pain-in-my-side short calls:
STO $KOLD Dec 18th 149 puts for 1.90
STO $KOLD Feb 19th 110 puts for 3.15
RH earnings
#Earnings STO $RH Dec 18th 75 puts for .95. Biggest UP move: 16.1% , Biggest DOWN move: -11.9% , Average move: 8.7% . This trade is 13.8% OTM. Keeping position small as I don’t trust the market. May add 105 calls on some strength.
SPX same week call spread
#SPXcampaign STO $SPX Dec 11th 2085/2110 call spreads for .75. After missing the chance yesterday, I still wanted to get some credit on the non-threatened side of this week’s condor. Still perilously holding the 2025/2000 puts.
SPX rolling
#SPXcampaign #Rolling STO $SPX Dec 31st 1900/1875 put spreads for 1.65. This is a roll from spreads stopped out last week. Despite the downside warning, I still feel we will continue consolidation into FOMC and monthly expiration next week. If I am wrong, that’s what stops are for.
SPX call spread closed
#SPXcampaign BTC $SPX Dec 31st 2175/2200 call spreads for .20. Sold for 1.50 on Nov 30th.
AZO calls closed
#Earnings BTC $AZO Dec 18th 800 calls for 3.85. Sold on Monday as part of 700/800 strangle for 5.25. Order in to close puts for .20.
SPX put spread
#SPXcampaign At 9:20 PT, STO $SPX Jan 8th 1870/1845 put spreads for 1.25.
$VIX Downside Warning fired again
#VIXIndicator Third time since 11/13.
AZO down…
Glad I didn’t get a fill on selling an ITM put yesterday. 800 calls looking better.
VLO covered put
STO $VLO Dec 31st 66 put for 1.00, against short stock.
VIX signal fired
$VIX just hit 19.20, which is 50% above the October 28th low of 12.80. If we hit 19.80, that will be 25% above Tuesday’s close, which will be a second signal and yet another Downside Warning.
SPX fail, VIX Indicator
Wow, had to step out briefly…. not only did I miss call spread fill, I missed my stop on the put spread. What a bad morning to have to step away!
Next $VIX Indicator signals are 19.20, then 19.80.
SPX condor
Pulled of the 2105 spread orders, now trying for 2110/2135
SPX same week condor
#SPXcampaign Since I bollocksed up the first one by selling only the put side too early on Monday (stopped out yesterday), trying this again with much less time for things to go wrong.
STO $SPX Dec 11th 2025/2000 puts spreads for 1.50.
Selling SPX Dec 11th 2105/2130 call spreads, working on a fill for .70 or higher. If I can’t get that I will drop down to 2100/2125.
I think we will continue these volatile swings into next week’s FOMC, but this week’s wildness shouldn’t threaten these strikes. Nonetheless, stop will be set at 2.50 for each side.
SPX call spread
#SPXcampaign STO $SPX Jan 8th 2160/2185 call spreads for 1.25, with SPX at 2060. This is the first of two call spreads I will sell for this expiry.
Inverted Strangles video
This is a great video @fuzzballl posted below, thought I’d repost here as the adjustment possibilities are endless for naked sellers.
Watch the 5th video down titled “Inverted Strangle Recap”
https://www.tastytrade.com/tt/learn/strangle?locale=en-US
AZO on fire
#Earnings My plan with the 800 calls will be to roll into January should we breach 800. As it looks more than likely, I may close today if price settles down from here.
KOLD calls hurting
#ContangoETFs The continuing decline of Nat Gas has driven $KOLD up astronomically, straining my account and margin. I currently have way more puts than calls, but the calls are all dramatically underwater. Fortunately, it is not difficult to #ReverseRoll. On November expiration, I had 5 short calls way ITM that I closed out. Within one week I had sold enough puts to make up for the losses, and all of those puts are now approaching zero.
December expiration is a bit heavier, but today I started closing out some early and sold some more puts.
BTC $KOLD Dec 118 call for 62.00. Sold for 20.00 on 11/11 (part of a roll)
BTC $KOLD Dec 120 call for 56.40. Sold for 19.00 on 11/19
BTC $KOLD Dec 100 puts for .20. Sold for 3.00 on 11/19
STO $KOLD Dec 155 puts for 2.85. Starting the rolls for the above positions.
SPX spread STOPPED
#SPXcampaign BTC $SPX Dec 11th 2035/2015 put spreads for 2.60. I had a conditional stop-limit order on this that somehow executed when condition was not met. I am on phone with broker now trying to sort out. Condition was SPX below 2063, placed at 10:50am ET. As you can see, it has been above that level since then (as of this writing at 11:32 ET). Trade closed at 10:59, filled for 2.60 on a 2.85 limit order. Not a happy camper. (although I’ll be okay with it if we drop back below 2063!)
SPX same week spread
#SPXcampaign, regarding my $SPX Dec 11th 2035/2015 spread sold yesterday, went into the hole with it this morning but decided not to panic on a morning flush. Bounce now has it back below 3.00, so I will reinstate the stop now and get out if this rally is short-lived. Still looking to sell the call side for a condor.
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