Question about Space Trip hedge (STT)


I was modeling the STT trade in TOS and everything looks fine until I introduce IV increase. I would expect IV to increase in a case of a 10+% sell-off. With the IV increase of 10 points, the value of the STT is cut in half. This is for a well aged position, so a new position would be a loser anyway. This does not look like a good hedge.

I have noticed that presentations about STT definitely ignore ( if not refuse) to include the IV increase. I watched a number of them and every time all modeling is done without taking IV into consideration.

Am I missing something in the TOS model?



BTC TSLA Jan 15…750/760/450 #jadelizard @5.24 with stock at 622.75…

Original trade was made on 11/24..STO TSLA Jan 15 750/760/400 #jadelizard @10.27 with no upside risk…On 12/8 rolled 400 Put up to 450 Put for $5.00 credit…….Thanks to @smasty160 for the idea including rolling the put up….

Smasty – looking for input/comment

I established a CC + Put Protection (*.98) strategy for SDC. SDC has moved up from $9.72 to $12.10. I rolled the short calls from $9.50 to $11 to $12. The Put was at $8.50 and it is now worth $0. Would you usually roll the Put up when the stock runs up as the appreciation is no longer protected or just let the stock get called (assuming it stays above $12) away and do a reset.

#protectiveput, #2-i, #coveredcalls

TSLA Iron Condor

TSLA almost a #jadelizard @smasty160 follow:
Sold Jan 300 / 380 – 740 / 750 Iron Condor @ $6.92 credit.
The long $300 put is for bankruptcy protection.

SPX 2dte makes another appearance

STO SPX Mar6 BeCS 2820/2825 @ .30 x4
BTC SPX Mar6 BuPS 2740/2735 @ .05 x4. Sold @ .30. Profit $100
STO SPX Mar6 BeCS 2820/2825 @ .25 x4
STO SPX Mar6 BuPS 2760/2755 @ .25×4
Full position on for this round.

I was planning to pause on the ICs due to low vol. Then the low vol went poof. Also, you could say that @hcgdavis made me do it.:-)

#jadelizards, #lizardpies, #pietrades, #spikedjadelizard, #spycraft

Buh Bye NFLX #CostBasisReduction Winner…

Buh Bye NFLX #CostBasisReduction Winner

My NFLX saga ends today…with a bottle of champagne after the close. After the last earnings report when NFLX soared, I got the “great” idea to buy 100 shares at $358 and sell DITM calls for a guaranteed win. Within days there was a massive crash. I took inspiration from seeing @fuzzballl accomplish significant cost basis reduction with patience and perseverance. I vowed I would stick with this until it was profitable. Every single week I sold calls, and bought put butterflies (BWB debit flies). Most of the time they brought in nice credits, there were a few weeks that were debit rolls (debit rolls would step back cost basis those weeks), but I steadily took Cost Basis from $358 to $272. Today I was able to close out the full position for a net $1547 gain.

Question for @fuzzballl as I…

Question for @fuzzballl as I am debating closing some #fuzzy for tax purposes or keep them rolling.

Have a few that are way ITM now. Wish I had ratioed them in Oct. but too late now. Since you seem to be the only one with enough patience to take these to the end here are my questions

1. About how long does it take you to scratch the trade one ITM?

2. Seems like the best way to get any decent premium is to sell 43-45 DTE and reset at 22 DTE. Have you found that as well?

3. Once the new series of LEAP comes out does it make sense to roll the longs to the new leap for $3-4 or hang on to the one you have until the end?


I am debating taking some tax losses and resetting vs. hanging with the ones I have.

Hey Gang,

For those of you who wish to read this, here’s what’s been going on with me. I had already announced that I planned to retire in April, the volatility mess in Feb hurt, and it sucked big time, but it did not change the calculus on retirement plans. I have never mentioned this, on purpose, but worked for Rockwell Collins ($COL now part of $UTX) for 32 years. I had worked my way into a very unique position where I was the only person in the company doing what I did. I was involved in projects with very senior leaders where I wasn’t even allowed to tell my boss what I was doing. So, my retirement caused them some grief trying to figure out what to do since I could not be directly replaced by anyone in the organization. I spent Feb, Mar and April training a number of different people to take over the things I was working. That took all of my time and effort, so had to just walk away from the market altogether.

Even before the Feb mess occurred, I had been wanting to move away from what I was doing and head for futures day trading. I liked the idea of being able to be flat at the end of every day and not have to worry about after hour shenanigans, or what was happening in China, etc…. Had spent quite a bit of time picking @Fibwizard‘s brain and working on a strategy that would work for me. Once I retired, I dove pretty deep into it and figured out a good approach, but eventually had to look elsewhere. I had figured out a strategy that I could implement, and if I had still been working and at my computer all day, would have gone that way. But, with retirement, I didn’t want to spend all day staring at my screen waiting for the right setups. Lots of other things I wanted to do with my time.

Around that time @smasty160 told me about a guy named Tony Rago @ TheoTrade who was trading /NQ futures with other traders, calling out what they were doing real time in a live chat room. I spent some time studying his approach and watching. I then started paper trading it on TOS. The worst possible thing that could have happened, happened, for the next 3 weeks it worked beautifully and I killed it. So I decided to go live. First day, first trade ended up a very small loss, no biggie. Next trade, got long, and seconds later a Washington headline crushed the market and I had to hit eject as it just kept heading south, no rebound at all to give me a better exit. After what happened in Feb, the last thing I wanted was to be starting something new and losing money at it. So had to be back to paper trading. 3 weeks later when I had some confidence back and was consistently making money, first day back trading real money and you guessed it, bang, another headline hit while I was long and got crushed again.

Not much you can do about the headline risk, but the better I get at trading, the fewer trades I have to take to make my goal for the day and thus the less amount of time actually being exposed to the market.

His overall approach makes sense and Tony put a lot of time and effort into developing it, but I wasn’t really happy with it as is:
1) Sometimes it worked right away
2) Sometimes it worked but you had to deal with some heat first (never feels good as you don’t know if it will continue to go against you or not), which is OK with Tony, he accepts it as part of his thesis. Since it is his, and he put the time into developing it, he has that level of confidence in it. Me, not so much.
3) Sometimes it just plain didn’t work

I before I spent any more capital, I wanted try to figure out how to put the odds on my side

I needed a better set of rules to use.

I spent months fine tuning the approach, trading for a few weeks, analyzing failures. Lather, rinse, repeat. I’ve had times I went 3 weeks trading without a single loosing trade only to have it start to fail so spent more time tweaking. I have definitely put my time into it. I now have time frames, EMA’s and patterns identified that put the edge dramatically in my favor when entering a trade. Still working on my execution, having the patience to wait for the high probability setups and identifying them real time as they are developing, they are always obvious later looking at the chart :). I trade for about the first hour of trading, 1.5 hrs max.

On the flip side, retirement definitely doesn’t suck. I’ve been loving it.

MU #fuzzy Rolled 30 DTE…

MU #fuzzy

Rolled 30 DTE 50 call out to 44 DTE for 0.43 credit. Cb now 8.67. Briefly had a break even, need a few more rolls to put it solidly in the profit column.

SSO TQQQ new trades

Now that @smasty160 (Sue) has informally introduced the “lophir” to Options Bistro, I’ll start sharing some of my trades. By way of a quick refresher, the lophir trade consists of selling 30DTE 30/15 delta put credit spread x2 and buying a 40/22 delta put debit spread x 1. All of these trades are net credit. You may notice me tweaking delta and DTE at times. My goal is to make some quiet money on a low maintenance trade.

STO +5 1/-2/-1/2 SSO Sep21 124.5/123/120.5/118 PUT/PUT/PUT/PUT @ .55 credit. GTC order to close at .17
STO +4 1/-2/-1/2 TQQQ 100 Sep28 68/65.5/63/60 PUT/PUT/PUT/PUT @ .60 credit. GTC order to close at .18

Buyer beware. These trades are in the experimental stage. Current plan is to cut the delta in half when price hits the profit peak on the risk graph and cut it in half again when it hits the breakeven price or close the trade if it’s near expiration. Our backtesting indicated that we wouldn’t need to manage often but live trading can make a liar out of backtests.:-)

#putratiospread #lophir

#hedge Still raining here and…


Still raining here and the VIX is down to 11.82. Cheapest time to put on a portfolio hedge. I fully expect these to expire and lose all my $ but 1-2 times a year it may be a lottery ticket! This is based on the recommendation from option income masters (a subset of OIB). They hedge the entire portfolio almost monthly, after a big drop they cash out and put the money back in at the bottom. They finance the hedges by selling other options.

I am only hedging my core account, everything else already spreads or cash hedged so BTO 2 SPX 2550 puts 35 DTE. In a 10% correction these should be worth 11-12k which would offset the losses on the account in a 10% correction and then could close for cash to redeploy.

Hope I don’t need it but will see how it works.

Gradually catching up and easing…

Gradually catching up and easing back into trading from vacation.

Only a single roll today. More to follow tomorrow or Friday.
#pietrade MU rolled the 55 call out next week for 0.44 credit. Cost basis is now 55.79.

Tomorrow will have EXPE, WDC or not depending on earnings response.
AMAT, TQQQ, FAS, XBI, and second batch of AMAT.

Hope everyone had a good week.

@smasty160 is right, weather was awesome except for the 104° day but even that did not feel hot compared to east coast.

GOOGL supercharger

Now the post-earnings fun begins. When GOOGL rallies 3% or more after earnings, it’s very likely to continue moving up for the next 2 to 4 weeks. Historical patterns. I love them.
Bot GOOGL Jul27 1240/1250 BuCS @ 7.79. GTC order to sell @ 9.40

Adjustment plan: If GOOGL moves below 1250 on a close, I will roll my short call up to transform this trade into a BeCS or add a call credit spread to create a fly. Thanks @smasty160!

#pietrades These work great but…


These work great but always looking for ways to improve on tactics. Improve returns, success rate, less adjusting because adjusting costs money or delays profit taking. I am not greedy, just trying to figure out what works the best with the least amount of work or adjustments.

So I have been experimenting with this on a limited basis. Instead of starting #pietrades with only 4-8 DTE, go out about 3 weeks. Split the distance between tasty trades recommended 45 DTE and the 1 week for classic PIE trading This does 4 things. Gets you farther OTM, collects higher premiums, but stays on the steepest part of the decay curve, and allows quicker recycling of capital. Also most will be rolled or closed before full expiration. My limited experimenting with them shows most are closed or rolled within 2 weeks of opening.

I don’t think we need a new hashtag, they are still in the PIE realm. Maybe just add a 21 to it if you post it, so 21 #pietrade or #pietrade 21 or however many days until expiration.

So I am looking at 3 possible this morning. EXPE, VLO, AXP. Will post once I see where market opens. Also on vacation week of 7/14-21, be out in @smasty160 country so a perfect time to start a few of these as I will not be trading that week.

As the time value erodes, would then roll each week in same name if you still like the ticker or move to new positions as the market oscillates.

Will keep posted on how they work real time and on a larger scale.

NFLX Supercharger, partial hedge

#SuperCharger Trying my first supercharger. Thanks to MamaCash on the input… Also, thanks to Iceman for his trade yesterday on NFLX, which I’ve added to the supercharger… a bear call spread above all-time highs that expires before earnings. Do we need a new name for a SuperCharger with a partial hedge?

Yesterday, Bought $NFLX July 6th 380/390 call spreads for 7.38, GTC order to close at 9.40.
Today, sold NFLX July 13th 450/500 call spreads for 1.90.

June 15 Trades

Happy Friday Everyone!
I didn’t have a ton going, ‘cept for one big thing. That later.
IWM: #Saf-T 1000 shares called, net profit $1200. Reset 1500 @ 167.66, 14x jul 27 166 puts @ 2.10, Jun 22 168.5 calls x13 @ .70

I was squirming bad this morning with a ton of SPY shares on and no short calls against them. Luckily the market rebounded, I got some short calls for next Wednesday in the book. I can sleep at night when I know my short calls are on. I’m not kidding when I say it felt really uncomfortable not having them. I will change this strategy next quarter so that calls are always on regardless of dividends.

BA…ugly, but I’m not too concerned. Got lots of hedges on, got a put diagonal kicker, so far it’s looking like a retracement. Maybe even the handle of a cup forming.

Ok…beware when @kathycon MamaCash and I open the lab. We can stay up all night online battering trade designs about and running backtests. We are ALWAYS taking established designs, or other people’s ideas, and reworking them for the best success rates, highest profits, lowest risk.

We reworked the dates and ratios on #Undies last night. I think you should let us test these out a bit. But what we discovered by backtesting is that a 30day long with a 14 day short in a .66 ratio (3×2, 6×4, 20×13) yields a much higher return on margin than using the longer dates. Because the 30-day longs are cheaper, there is less risk, which directly affects the return. These trades go on with a slight positive gamma, slight negative theta, positive vega…so kind of nice greeks on these. All of the 1-year returns we are looking at are really high, like 300% to 1200% (return on margin risk).

Consider these “petri dish” trades right now…we’ll run ’em down and report on effectiveness.

Between the two of us we have a lot of 3×2 tests on now in NVDA, ADBE, BABA, NFLX…and some others. We will report on the effectiveness of this.

Here is an example of one I have on BABA: Jul 13 202.5 call 3x @ 9.20/Jun 29 210 call 2x @ 3.40.

Everyone have a safe weekend!


p.s. premium collection this week was $14,811, 90% of what I sold. Good week!


PYPL team effort

@smasty160 and I teamed up to pick a financial stock to add to our unbalanced diagonal portfolio. Here’s my PYPL trade:
Bot PYPL Aug17 82.5c @ 6.09 x5, Sold Jun22 86.5 @.81 x4 for $2720 total.

#coveredcalls, #syntheticcoveredcalls

WDAY 3×2 #unbalanceddiagonal Want more…

#unbalanceddiagonal WDAY 3×2

Want some exposure to financial services and like WDAY chart. Oops! WDAY is in the software industry/tech sector. Thanks, @smasty160
WDAY 3×2 +Jul27 124/-Jun22 128 call ratio @ 17.20

@smasty160 Sue, what do you…


Sue, what do you think about using your strategy for trading over earnings?
Am I missing something here?

For example:
BTO Aug 17 62.50 Put
BTO Aug 17 60 Call
STO June 22 58 Put
STO June 22 63 Call

Limited risk + possibility to keep selling premium.


@smasty160 Sue, would you hold…


Sue, would you hold any Aug/Sep/Oct #unbalanceddiagonal position over earnings, or close prior to earnings?

VIX plummets again

#VIXIndicator We’ve seen this movie before, but each time it happens at a lower VIX level. Today should be the second close below the PREVIOUS 78.6% Fib line, but we need to close at 11.01 or lower to cancel this current warning. Because we are in the third Downside warning without an Upside one, the normal levels may be out of whack. It certainly looks as if we’re ready to cruise higher but we’ve been fooled many times this year.

#Fuzzy I am in a…

#Fuzzy I am in a few, but as with most strategies, results are mixed. Have a hard time to decide when is the right time to close once you are not profitable. I am clear about the combined risk between premium paid and the spread, so I do know what max exposure is. This is mainly such a long term strategy which makes it so difficult, for example I started with MU on 4/12 with 50/52.5/52.5 exp Jan18’19, paid 7.51. Shortly after MU started to tank, but I have been able to clear already a premium of 1.95 after fees by selling the calls, Delta is still almost 50. I am still considerably down at this time and am certainly not interested to give it all away. So, where would you stop and why?

QQQ Rolled my April 20th…

QQQ Rolled my April 20th 161 short call (Paired with the Jan 2020 161 leap) out and up to April 27th 164 for a 0.50 debit. Unsure if this was the right time. Maybe wait another day or two. Got antsy. Any feed back from you pros is welcomed.

#supercharger this is the ITM…

#supercharger this is the ITM vertical debit spreads.

The adjustment to ERX yesterday is already paying off. With only a 0.24 increase in ERX, the long has gained and the short has decreased in time value so overall profit $750 on 10 contracts. Technically it is now a #fuzzy and that appears to be the way to adjust one that goes against you quickly and easily. Of course it has already moved through my short strike but will be easy to roll next week and have 41 weeks left of selling now to reduce cost basis. In 8 weeks should be a risk free trade.

Of all my positions yesterday, this one was the least underwater even though it was the biggest down percentage wise.

I will keep experimenting with these through all market conditions and see what is the best way to adjust them, what is the ideal time to put them on, and which conditions are ideal for them.

Will keep you posted as to how they work out longer term but think this may be a very viable trading idea. I may even buy the course, only $39 to see what the official recommendations are but with the trading brain power we have here I think we can figure it out! I also don’t think the course goes into adjusting, I think they just take them off at a set loss point.

Hey @fuzzballl what do you…

Hey @fuzzballl what do you think about bi-directional #fuzzies on range bound names?

I was looking at some of my recovery trades and this may work. Buy LEAPs calls and puts, and sell weekly straddles/strangles against them. You can leave the original longs on, then just move the straddles and strangles around depending on how it moves. On most names could take in $2-4 credits per week.

Would not really need a hedge because you are long the put as well as the call but there may be a margin requirement if your strikes don’t line up after a while. Looking at 1 year leaps it would probably work. 2 years would take a few weeks just to break even. Here is a WDC example using Jan 19 leaps. I used to do this with multi -strike calendars and it was hugely successful until it just stopped working (once the VIX stayed below 15). However, it benefits from increasing VIX.


Just a quick note, I…

Just a quick note, I had some expirations but managed to roll all of them for more cash so they are all next week now. The last move like this in Aug. 2015 crushed (and I mean wiped out) a major trading account. Today my main trading account only down about $500, the hedges worked well.

See you can teach old dogs new tricks and thanks to everyone here for showing me some additional tactics that help on days like today.

Everyone have a good weekend, looking forward to Sunday night opening. Either way have some trades lined up and kept some cash on the side lines so I can take advantage of the blood in the street 🙂

Technically what only a 2-3% drop? Technically 2.31% on SPX/ES.

Cue the chicken, I am glad I closed the /ES strangle this morning. Not ITM but the margin would have used up my cash cushion for next week.

#earnings, #fuzzy, #pietrades, #syntheticstock

Downside Warning triggered

#VIXIndicator Looks like the official $VIX close is 13.84 (also high of the day), which is over 50% higher than the Dec 20th low of 8.90. This activates a Downside Warning, leading to a likelihood of lower prices in the coming days or weeks. Downside Warnings can sometimes be false flags, but most often the are followed by subsequent dips or corrections, either immediately or in the coming days. It also means any bounce this week is more likely to be followed by a drop next week.

Since I recently revised this trigger to be based on closing VIX prices rather than intraday, I am still compiling data for the last 18 years. I may be able to post some more details today, but feel free to ask any questions if you have them.

Bunch o trades, good thing…

Bunch o trades, good thing I had the day out of the office.

I believe everyone here has heard John Carter talk about the “plane trade”. Whenever he is on a plane and cannot trade the market goes haywire. I have the ski and kiteboard trade that is similar but magically did not happen yesterday. The Theta crush was nice, decay was $1400 yesterday and crushed to $40 this morning. So anyway I took it and went flat and used the $ to set up some #pietrades for next week.

First a few observations now that I am into my taxes.
1. It seems my best trades were #pietrades and anything I had basically sold naked or converted to a CC after assignment.
2. #fuzzy trades work well for recovery. Exhibit SWKS dropped 17 points on me after earnings. I rolled as much as I could then converted to a put based #fuzzy when it kept dropping. Managed to close out for $1635 profit today, it could have been really ugly and took about 13 weeks for it to pay off.
3. Getting out of #fuzzy trades is not as profitable as a CC or being assigned the put. The bid-ask on the longer dated options cuts into the profit. When the put assigns or the CC assigns you have basically sucked every penny of time value out of that option. However on a percentage basis synthetics are much better ROC.
4. Finding anything not way extended at the moment is really hard but I found a few for #pietrades
5. Laddering #pietrades usually does not work because you end up getting assigned on all of them at the same time. Better to keep them weekly. There is always something out there with decent premiums and a not too bad looking chart.

SVXY rolled Feb 2 105 puts to feb 110 for 2.92 credits. Sold for 3.42 so if assigned the cost basis will be 104
Did the same for Feb 16 105 to 110 for 2.05 credit. sold for 3.42.

SWKS closed out the final put #fuzzy at 100/102 for 13.10 credit. Made $1635 on the trade after rolling for 13 weeks. Good to be out with earnings next week.

WDC Closed out the put/call #fuzzy 82.5 strikes for 13.32 and 13.15 credits. Total profit $2600 but not great, I was up over 15k on that trade at one point. From now on will take the money early if the profit is there!!!!!!!!!

1. AAPL new CC for next week 165 strike for 163.43 runs through earnings but hope it will close on Friday 2/2 max profit $471 on 3 contracts if it closes.

2. GM 2/2 42.5 put for 0.53, 3 contracts for $156 after commisions

3. GILD open for 28 DTE 72 call is way ITM so will let it expire in a few weeks.

So basically made $627 for this week in income on 2 new trades using a 50k account with some margin. Goal is 900 a week so fairly close. Once the GILD trade closes I think it is possible.

Hope everyone had a good week. Only trade I have until next Friday is the #spycraft /ES puts once they decay a little more.

Cheers 🙂

Options Expiration


$GS 345/255 BUCS
$SPX 2575/2600 BUPS Thank you @jeffcp66
$AA 59 call
$BAX 65 put
$SVXY 30 put Thank you @jsd501
$SVXY 37.5 put Thank you @jsd501
$SVXY 42.5 put Thank you @fuzzballl
$77.5 put
$XOP 34 put
$T 36 put
$TAP 75 put Thank you @ice and @fuzzballl
$TAP 77.5 put Thank you @ice and @fuzzballl
$KBH 27 put
$TWTR 20 put
$WUBA 75 put
$EGBN 55 put Thank you @honkhonk81
$NTNX 35 put
$BABA 155/165 BUPS
$AAPL 155/165 BUPS
$AGN 160/170 BUPS
$GS 230/240 BUPS
$RCL 120/123 BUPS Thank you @smasty160
$NFLX 165/180 BUPS
$AMZN 1030/1080 BUPS Thank you @jsd501
$AMZN 110/1130 BUPS
$SPXW 2715/2740 BUPS Thank you @jeffcp66
$NFLX 210/215 BUPS

Got crished on a $BA 310/300 BECS Just cannot get out of some trades
$MTN and $TRN Long calls expired worthless. My account is now worth less. 😉

Thanks to everyone. Enjoy the weekend. NY metro area a little warmer this weekend. Wash the car.


#Fuzzy – BTC XBI Jan19’18 90 calls for 0.05, sold last week for 0.54. Waiting to sell for next week, the stock is bouncing after running down this morning. I’m liking this ticker (at the moment)!

Also closed a short term #Fuzzy in CRM that I hadn’t admitted to, stole the idea from @smasty160, made 0.78 on that one. Thanks Sue!


Rainy day here, had planned…

Rainy day here, had planned to go skiing as I have the day off but no fun when 65 degrees and raining, so stayed home and traded.

#vxxgame SVXY closes, rolls and take a few for the team. By going directional now the market should reverse which will help some of my other trades 🙂

SVXY BTC Jan 19 50 put for 0.04 and 55 put for 0.05. Sold at 1.27, 1.37, 1.14
BTC Jan 19 80 put for 0.11 sold for 1.14
STO SVXY Feb 9 125 puts for 3.90. I have feeling these will get tagged, that’s may hope anyway, a reverse hedge for some of my other positions. If this one does not do well will still make $ on the others then.

TQQQ rolled Jan 26 120 put to Feb 16 140 puts for 1.90 credit. Sold for 1.25

BX Closed out #fuzzy Jan 2019 25 Jan 18 33 diagonal and made a whopping 108 profit, it was 318 but the bid-ask on the options on this one do not trade well. BX is not a good trading name-just FYI. However, had I done a CC it would have closed next week at full profit, see @smasty160 fuzzy discussion below. There are a few names where a CC makes more sense than a synthetic, this was one of them.

USO, sold 2 Jan 19 puts at 11 for 0.54. This is a tiny account and that is all I could figure out to do with the BP left and still make a decent premium.

Hope everyone finishes out the week strong!




BTC MU Jan12’18 45c for 0.06, STO was 0.37. Thanks to @smasty160 and Jim Cramer lol

Short post, promise but a…

Short post, promise but a few graphs that will take up some space. JPM as example. First graph is a synthetic long selling a 1 week 110 call without the downside protection. Looks like a regular covered call and it should, it is a synthetic covered call (this is what motley fool does a lot of). Second graph uncapped, looks like buying stock but there is no downside protection so would have to have the cash or margin to buy at the put strike. Third graph is a #fuzzy with 5 point disaster protection put. Looks more like a long calendar spread because of the extra cost of the put protection. That is why you would want to sell weekly or monthly calls against it, to lower the cost basis on the debit of the leap spread and the put protection. I personally would probably go 10 points wide but this shows you could do it in a recently funded IRA for 5000 max risk if JPM is not too big to fail.

I am not recommending this trade but I think @smasty160 has a similar trade running.

Hope that helps for people trying to wrap their head around #fuzzies and learn visually, I know I learn better with a visual.




Unhedged #Fuzzy (this is really…

Unhedged #Fuzzy (this is really long!!)
My good friend @MamaCash calls these “Unhinged Fuzzies” and that always makes me smile. Over the past couple of weeks, the power of these revealed itself to me. So that’s why I called Mr @fuzzballl an onion last night 🙂 These fuzzies are revealing very important layers of opportunity to apply in different circumstances.

Yesterday morning I woke up remembering one of John Carter’s classes from a few years ago where he talked about “HPTM” High Probability Moments in Time. Couple that with Jeff’s upside VIX warning and Eureka! HPTM is here. My immediate thought was “put down all the toys.” No more 2-lot 3-lot 5-lots on various tickers. Time for BIG laser focus on SPY/SPX RIGHT NOW. However long this window lasts this is when fortunes are made.

Before I talk more about yesterday though, let me give a couple-paragraph primer on unhedged fuzzies, because I know some people are following this carefully. And when the check-out girl at the grocery store this weekend asks you “why not just buy calls instead of a fuzzy,” here’s your answer:

100 shares of stock = 100 Delta (P/L moves 1:1 with stock, it is stock)
1 At-the-Money call = 100 shares of stock = 50 Delta (only moves 1/2 with stock)
(1 ATM Call) + (- 1 ATM Put) = 100 Delta—this is a synthetic long stock position with 100 delta
A synthetic stock position is a very cheap way to approximate ownership of stock, but there’s not a huge advantage in it. In a 401K you still are required to hold the full buying power risk of the naked puts, in margin accounts there is some buying power reduction on the naked puts. But note that you have a large naked put position with synthetic stock.

SPY 1000 Shares: $273,000
SPY 10-lot synthetic naked put risk: $273,000 (indulge me in being less than precise)
Buying Power required: $273,000

Enter the 3rd leg of the Unhedged Fuzzy: The Protective Put
This is done in the same expiration cycle as the synthetic, in fact on the same order (hold your control key to add the leg). Currently I’m using $4.00 spread-risk on SPY. Here’s what my orders look like:
BTO 273 Call
STO 273 Put
BTO 269 Put
What just happened? All of this is on a 10-lot:
Risk: $4,000 (+ trade cost) vs $273,000
Income: UNLIMITED 700 delta ($700 for every $1.00 move in SPY (vs $500 for ATM calls))
Buying Power: FREE for portfolio margin, $4,000 for IRA vs $273,000

Let me give you a real example of how I recently used this trade that I’ve not yet reported. I really like the Gorilla Trades service. I’ve been a subscriber for probably 10 years. If I’d been a faithful follower I’d probably have $25 Million by now, but I’ve not been a faithful follower. Last weekend they came out with their top 3 picks for 2018, all 3 biotechs, all 3 are take out candidates for 2018: EXAS, EXEL, GWPH. All 3 look awesome to me! Do I want to buy 1000 shares of each and just sit on them for 6 months waiting for a buyout that may or may not come? Some of these have very high vol, meaning the market thinks they are either zoom or doom stocks. Do I want to risk 1000 shares on doom? Enter the unhedged fuzzy. Here were my Tue trades:

EXAS July 55/55/45 for 3.56 x 10 (this position is up $2,740)
EXEL May 31/31/27 for 2.55 x10 (this position is up $150.00)
GWPH May 135/135/125 for 9.65 x 5 (this position is down $1175.00 but only because of weekend b/a spread, it’s been up and down )

Point is….I have nice positions tucked away on 3 biotechs using very small risk and buying power….any one of these 3 could bring in a $40K windfall (or more), but if it doesn’t, what is my risk? I’m not sitting on thousands of shares of speculative stock. EXAS I’m most comfortable with, their product is amazing, so I took bigger risk there with a $10 wide protective put (they present at the big health conf this next week). EXEL I’m less familiar with, less risk. GWPH, less risk with less size.

Alright, back to yesterday morning. Woke up, big opportunity still in the markets. But its Friday, we’ve breached key expected move targets (not just for 1 week but 2 weeks). Still I removed hedges from 40 SPY fuzzies that I had, I added 30 Feb SPY Fuzzies for about 2.30. That gave me 70 SPY Fuzzies. 70x $272 x 100 = $1,904,000. Buying power used, next to nothing. Risk: $28,000 + trade cost. I still have a hard time believing the power of this myself. I rode this to the sign of resistance around 2 hours before the close, it was pretty quiet for most of the day. Grabbed about .50 of SPY move = $3500. Then I closed the extra 30 fuzzies and put fresh hedges on the other 40. When resistance broke and we had strength into the close I added another 10 unhedged fuzzies on for Monday morning. So I’m currently sitting on 40 hedged, 10 unhedged. My intent was to keep these trades open longer, but I tend to be a nervous nelly on Fridays. However, this is a tool I plan to use over and over; shorter duration expiries on limited trend trades, longer duration (hedged) on income trades.

This is really long, I know, thank you if you’ve made it this far. These trades, with their limited risk and effective use of buying power, are showing great versatility for trending/contraction/income/momo/long/short/hedge/speculation opportunities. Hope this was helpful for those of you still getting the #fuzzy concepts.




I just closed an unhedged #Fuzzy in DWDP that I followed @smasty160 on on 12/27/17, made $1.69! Thanks Sue!  Thought about just selling half and letting the rest ride, but since we have the jobs number tomorrow and also because the market has been having a love affair with the sky this week I decided to close it all down.

12/27 #Fuzzies With just a…

12/27 #Fuzzies
With just a couple trading days left in the year, my focus today was getting fuzzy rolls completed on anything in-the-money that might be exposed to early assignment due to end-of-year activity.
1. CELG BTC Dec 29 106 c for 1.60, STO Jan 12 107 c for 2.70. Yep….big fake out on this. What was firmly ITM this morning quickly became OTM right after my roll. But that’s why NOT legging the roll benefited me. Crappy price on closing out the 106, but fantastic price on the 107. Roll out and up.
2. DWDP There was some really unique bullish UOA on this yesterday, so I took the risky move of removing my hedge so this can run unfettered. BTC Dec 29 71.5 c for .45, currently unhedged.
3. CSX BTC Dec 29 54 c for 1.26, STO Jan 12 55 c for 1.21, roll out and up.
4. New Fuzzy CVX Jun 125/125/115 for 2.33, Jan 12 127 calls for -.94
5. FAS hedge was down to about .04 so I wanted to get a straight-across roll for .80 to Jan 12, the executed roll-spread numbers were all over the place, but they netted out to my .80 credit for the roll.
6. IWM: Dec 29 153 BTC for .96, Jan 5 154 STO for .96….got $1.00 for nuttin’. Roll out and up.

Fuzzies that still need managed this week:
JPM (in the money)

#fuzzy, #longcalldiagonals, #longputdiagonals

Merry Christmas!

I hope everyone is enjoying opening presents and eating great food! Not running scans for fuzzies like I am 🙂 My trading is very diverse, and probably seems a bit all over the place to some folks. So, since I’m so very interested in #Fuzzies, I thought I’d scale back my reports to be fuzzy-centric for now.
Here’s is a list of all my current fuzzies, what I’ve collected, and where I stand in the trade debit reduction:
1. JPM: Initial Trade Debit: $2.51 Total Collected: $2,120 Revised Trade Basis: $.39
2. DWDP: Initial Trade Debit: $1.44 Total Collected: $390 Revised Trade Basis $1.05
3. CELG: Initial Trade Debit: 2.38 Total Collected: $2,640 Revised Trade Basis: $(.26)
4. RCL: Initial Trade Debit: 3.59 Total Collected: $1,390 Revised Trade Basis: $2.20
5. FAS-1: Initial Trade Debit: 2.08 Total Collected: $780 Revised Trade Basis: $1.30
6. FAS-2 Initial Trade Debit: 2.12 Total Collected: $770 Revised Trade Basis: $1.35
7. *LMT-1: Initial Trade Debit: 6.20 Total Collected: $1500 Revised Trade Basis: $4.70
8. LMT-2: Initial Trade Debit: 6.20 Total Collected: $1600 Revised Trade Basis: $4.60
9. MU: Initial Trade Debit: 2.80 Total Collected: $1,220 Revised Trade Basis: $1.58
10. CSX: Initial Trade Debit: 2.24 Total Collected: $600 Revised Trade Basis: $1.64
11. QQQ: Initial Trade Debit: 2.73 Total Collected: $360 Revised Trade Basis: $2.37
12 NUE Initial Trade Debit: 1.87 Total Collected: ($150.00) Revised Trade Basis: $2.02
13. IWM: Initial Trade Debit: 2.25 Total Collected: $640 Revised Trade Basis: $1.61
14. MCD: Initial Trade Debit: 3.12 Total Collected $1070 Revised Trade Basis: $2.05

***Closed Fuzzies on LMT and TWTR total 1213 in profit
A couple of these have required debit rolls: NUE, IWM, QQQ, DWDP

#longcalldiagonals, #longputdiagonals, #syntheticstock