12/11 Trades

Looks like it was a quiet day for a lot of people here.
1. May I please call these “Fuzzy” trades? I love them and I’m doing a lot of them (#SyntheticStock Diagonals w/ protection and hedge income—From now on known as #Fuzzies. To me, the Fuzzies have two stages, stage one is recovering the net debit of the trade; Stage 2 is recovery of the spread risk. I spent time this weekend looking at and scoring candidates. The “score” is basically the number of weeks of hedge income that it takes to accomplish Stage 1. The fewer the number of weeks, the lower the score. I’m looking for Fuzzies with a score of less than 5, less than 4 even better. I have a picture in my head of having a portfolio of 10 Fuzzies, each with $10 spread risk, bringing in 10-15K a week in income. So I’m testing these aggressively.

I have a TOS scan for finding high-return covered calls and puts, and it turns out it’s a good scan for finding Fuzzy candidates with low scores. Here’s the scan http://tos.mx/vKzR27

So back to Trade #1: CELG. I happened to catch a big bullish fund order for a Jan risk reversal, so a CELG #Fuzzy was my first trade of the day: Mar 110c/-110p/+100p, Dec 15 110 c. Net debit: 1.38 with a “Score” of approx 2.38 (2.38 weeks to cover the core debit)
2. Oh…here’s a nod to @hcgdavis for the Alpha Shark indicator. Got it. Love it. So scalped a bunch of /NQ today while taking it for a test run. Ended up +$305 on small-lot scalps. Enough to pay for the indicator 🙂
3. NTES. Now this was a franken-trade. It started as one 10-lot #butterfly. As it dropped added another 10-lot butterfly. Last week added a 3rd 10-lot butterfly. Was finally able to close it all out today for a $157 loss. Believe me, I’m happy with that!
4. #Bitties Closed! SPX x 20 lot, NDX x 10 lot. Got 50% target on all of them. The SPX bitties were 7DTE, so was happy to close them asap given the gamma risk. Net profit $1150.
5. Reset 17DTE SPX #Bitties. The Dec 27 2630/2625 for .85 cr x 20
6. NTNX I’ve been holding 703 shares, took 603 off for about $950 profit. Some day they’ll be acquired so I’ll always keep a hundred on. Great stock for swing trading, so will load back up on any dip. My max size position is 3000 shares, but I never seem to get the opp to add that many on.
7. QQQ #JadeLizard closed for 50% profit, this week’s expiration
8. SPY 266/267 #BuCS closed for 90% profit. This was bought based on #UOA (unusual option activity). SPY trades massive volume in fund flow, obviously—but it’s almost all put hedges. Every once in awhile a big bullish trade hits the tape, and those are ones for my attention.
9. NUE Closed a BuCS for 50% profit, this is another one that was bought on #UOA
10. NUE Opened a #Fuzzy Apr 60/60/50 for 1.87 core debit, Dec 15 62 call short for .56, Score is 3.3. There was a lot of bullish option flow on this today….all the way up to the 70 call line.
11 NUE spec trade based on #UOA bought 100 Jan 70 calls for .16, just looking for .21 as my target
12 MU #EarningsRunUp added two more calls to the trade from last week. Looking for 30% profit on these and must close before earnings announcement.
13 AMC #UOA There was unusual activity on AMC right before the other cinema merger happened last week. Turns out AMC confirms they’ve been approached too, regarding investment options. I’m glad I sold a few puts when I saw the fund flow. Netted 50%, $370.00 on a 10-lot
14. MSFT I like to layer on a lot of different MSFT trades. I love what they’re doing with Azure. However I saw a lot of January put buying today on MSFT, so I cut a trade short (#BuCS) for 28% profit vs. the 50% I was looking for. I still have on a MSFT #Butterfly that I’m watching closely. 80/85/90 for Feb.
15. ALGN This is the last of my trades from the tech crash. I defended it resulting in half what the max loss would have been. All closed now for $1150 loss. Classic case of thinking it would come back. Could have been handled better, but could have been handled much worse. I wouldn’t mind resetting with a #bitty or #PutRatioSpread the problem is that it’s just really thin. The Market Makers are not the worst I’ve dealt with (ISRG, KORS, ULTA are worse) but it’s still a struggle.
16. TWTR Opened a #Fuzzy in a 401K. I again saw some large bullish fund flow on TWTR and it had a good score. Mar 22/22/18 core for .78, sold Dec 22.5 call for .46, score is roughly 2. Not sure how this one will work out, but I’m still developing the perfect candidate profile for the Fuzzies.

@fuzzballl I hope you are ok being the namesake on these trades. It’s cute!

12/8 Happy Friday

1. NVDA: Fully closed the #JadeLizard sold for 3.62, partial cover at 1.62 yesterday, rest covered today at 1.35
2. BA: Closed the contrarian BePS, closed for .66 shy of full loss. Prob of touch is still high enough I should have held, but it’s just continuing to be a train.
3. LRCX: Closed the #PutRatioSpread for over 50% gain, 1.45, $1555.00. Recovery mission on big loss last week.
4. MSFT: #Bitty closed for 50%, this was Jan 80/75 BuPS for .82 cr, covered .41
5. SPX : I’m kind of thinking we see a strong market into next week’s expiration, so rolled the short puts on the #RocketManHedge from 2605 to 2625. Realized $2820 in the roll.
6. SPY: Opened #SpikedLizard for January. Part 1: 264/265/267 for 3.74 cr Part 2 (spike) 260/253 ratio put spread for .05. No upside risk, downside BE is 253 due to the spike. Need SPY price above $260 for meaningful profit. 50% target. I’d like to ladder these every 2 weeks.
7. SPX: Opened 7DTE #Bitty I said I didn’t want to do 7DTE Bitties any more, but betting we see an upside into next week’s expiration. Of course I could be all wrong. Got more credit than usual on these. Dec 15 2630/2625 BuPS for average price of .875 credit, 50% target
8. TXN: Opened BuPS for January 97.5/95 for .72, 50% target
9. TJX: Continued defense. Sold Dec 15 calls to adjust deltas
10. MU: Opened #EarningsRunUp trade based on historical backtesting. Partial position. Dec 22 47.5 call for 1.04.
11. PIR: Closed #EarningsRunUp trade for 28% profit, bought at .35, sold at .45
12. ABBV: Opened #BuPS for January 92.5/90 for .56, target 50%
13. FLIR: Opened #SyntheticCoveredCall for January 47 puts for 1.40, very high historical win rate on short puts for this company
14. BBY: Closed the contrarian BePS for loss, salvaging .60 from max loss
15. AAPL: I already have a BuPS on for next week, used this little upswing today to sell calls converting it to an #IronButterfly.

Imagine This

@fuzzballl —- Imagine a room full of 10 talented beautiful women option traders debating the merits of your #syntheticstock diagonals. Some of the women like the LEAP setups, some don’t (me). My thought is if there’s a melt up move on bullish setups, I’d rather close everything (for profit) than roll short-dated positions for significant debits. If I expect a full close in 3-4 months, why do LEAPs . All of these women say “thank you” by the way for your ideas and posts.


Opening trades:

SPX: #rocketmanhedge thank you @fuzzballl Feb +2635 put, -2635c, +2640c for 40.15 net, -Dec 2605p for $5.40, Basis = 34.62.
COT: Last month there was a day with 4 large block trades totaling over 4 million in shares. It sparked a lot of call activity. I’ve been waiting for closer to 13f releases for Dec to see if call activity picks up again, it sure did today, so I have a little spec play on for COT for next week. 17.5 calls for .34
MAR: #JadeLizard for next week Dec -126p/-130c/+132 c for 1.21 net cr, 50% target
TJX: Added #BECS to #BUPS to convert to iron fly for defense

Closing Trades:
BA #Bitty Closed at 50% target, sold at .50, bought at .25
TTWO #BUCS Bought 2.65 sold 3.10 net .45/contract
FB #shortputs covered for 50% Sold at 1.10, covered at .55
NVDA #JadeLizard from last week is beginning to cover for 50% Sold 185/205/207.5 for 3.62, cover order is partially filled at 1.62

Dec 6th Trades

Pretty quiet trading day for me, thanks again for everyone’s good ideas:

1. Took the HD BePS profit I was expecting this morning (Bought 1.09, sold 1.59)
2. Bought PIR long calls for Earnings run up (closes 1 day before earnings), target 40%
3. SHAK BePS for retracement from extreme up move, .84 debit, target 50%, trade is green
4. BA BePS for retracement from extreme up move, 1.21 debit, 50% target, trade is red
5. ADSK #ShortPuts for Mar, thank you for the idea @jsd501
6. I’m keeping 2 short /ES contracts hedged with short puts, rolled short puts to next week for additional credit. This “Z” contract will run out pretty soon.
7. CVX closed BuCS for 50% loss (I’m testing using “probability of touch” as a stop on debit trades)
8. RCII There was an almost 10,000 contract opening call sale today for Jan 13 calls, so I bought a BePS Jan 13/11 for 1.14 (paid less than intrinsic). Following the “smart money” fund flow on this (I realize this may be Trader setting a hedge vs a spec trade, but it’s limited risk)
9. New NDX #Bitty Dec 29 6125/6120 for .85 cr, 50% target

Active Reds: AAPL, ALGN, DLTR, JPM, LMT, NUE, PIR, QQQ, SPY, ULTA, /ES, BA (net green)

3% return on capital today

#hedge, #rocketmanhedge, #syntheticshort

Trade Idea

Here’s an actionable trade idea for today (that I alluded to last night). I’ve been testing this for a little while now and it’s working exceptionally well with the market conditions we’ve got. Tasty Trade did a segment on Nov 29 regarding buying debit spreads for less than the intrinsic value. When applied to parabolic rises with the objective of a tiny pullback, it can be effective. Plus as a bear play it works quickly, I’m out of these trades in just a couple days. Buying a spread for less than intrinsic covers all types of volatility, and almost eliminates theta burn considerations.

Contrarian Candidates (Don Kaufman’s criteria): Stocks within 2% of all time highs, traded up 3% in last 10 days, + a blowout of a recent expected move, over 2x.

Trade: #PutDebitSpread where long strike is ITM, short strike is OTM, 1:1, pay less than intrinsic value, 50% target, around 30DTE, look for liquidity.

I’ve got a couple of these on where it looks like I’ll get more closes today: HD (3 days old), ETFC (1 day), BBY (1 day), DLTR (1 day)
I’ll report on any more additions today. It’s an easy simple trade with limited risk, little management.

p.s. Last night I called these reversion trades, but they really aren’t. A reversion trade would require a very significant pullback for these stocks. This is really just a rest/consolidation/flag trade on a stock that has been a rocket.
Here’s the TT video: https://www.tastytrade.com/tt/daily_recaps/2017-11-29/episodes/buying-spreads-for-less-than-intrinsic-value-11-29-2017

Busy couple days

Been a busy few days with market shenanigans for me. I was feeling a little overwhelmed keeping up with all the really great posts here, plus being an active participant at Simpler. Something needed cut…so I decided to take a little sabbatical from Simpler so I can have a tighter focus on things. Trading is not a hobby for me, it’s big responsibility, and I was getting a little too sidetracked with chat room stuff. I track unusual options activity (fund flow) via Trade Alert, and that was getting neglected too. Just putting focus back on that a little more today has already paid off.
Re trades, I usually have over 20 a day, so that’s too much to recap here, I need to find a way to give broader brush strokes with rare episodes of brilliance huh?
Good trades: The RH earnings run up was great, tested out with a very high win rate and the win rate continues (snagged 40% on long calls). Tomorrow is a PIR earnings run up trade with high historical success. The FAS #SyntheticStock diagonal was closed out for over $1400 profit.
Losers: I finally scratched off LRCX for a reset, saw a $14K loss on it, even after many adjustments. It’s my tax loss sale 🙂 I reset LRCX with a #PutRatioSpread, one of my fav setups on a stock that’s been hit hard. I have a new break even of $165. Losses on NDX/SPX #Bitties, but saved thousands in defense.
Active Trades: Got a lot of defense going on an LMT failed squeeze play. Lots of adjustments and layers added to extend range. It will be really satisfying if I can pull some green out! I’m pretty sure I can.
JPM: Opened a @fuzzballl trade on it this morning. Mar 105/105 #Synthetic with Mar 95 protective puts and a Dec 108 short call for very nice premium. The first round of short term premium covers the protective put cost. Other than that doing some #ReversionToTheMean trades on some parabolic stocks that seem to be working out well, quick profits on BePS on little retracements.
Hope everyone is doing great will catch up on posts tonight. Thanks always for the great ideas.