Reading posts a lot of us are under water on a lot of tickers. Out on a bike ride I had a thought. Obviously selling below the cost basis a snap back rally you then lock in your losses if assigned.
I have been saying it for a while but have yet to do it, sell ATM call credit spreads. Bring in a little income, if the market rockets upward you are long stock, short an equal # of calls, but then have the same number of calls long or any ratio you choose. No cap to the upside.
Personally I am going to do this on my TQQQ trades with the next roll. Roll down right to ATM and then be long net calls for free.
Probably not the best to do these with weeklies, I would go out 30-90 days to give them some room. Then if you want back in the stock, let your long calls exercise.
As for my losing put #fuzzy, duh on my part, I should be selling CCS spreads all the way down. We reverse and I will back ratio them. The problem is I always do it too late. From now on if I sell a delta 20-30 and it reaches delta 30-50, that is the point I will back ratio and hopefully get a directional kick. If nothing else at least reduce the max loss.
Thoughts? Other ideas?
Hi Everyone! Hope you’ve had a good week! This has been a rest and reset week for me. Ditching #Saf-T trades and back to #AtomicFuzzy for me. The atomics are good for higher vol environments. When vol drops back down below 13-14, then regular fuzzy will work.
Just wanted to pop in and say today will bring 2-of-5 1-standard deviation moves up. Looking for that 3rd. The last signal we got was May 10 and about a 95 pt rally ensued. Mon/Tue/Wed are all candidates for a signal.
MU: I took $4200 profit on a covered LEAP #Fuzzy. One thing I know about MU is it has always provided good re-entry points (pull backs) after rallies.
MSFT: Rolled #AtomicFuzzy covered calls from May 25 to June 8, 100’s, collected $470 on roll
ISRG: Rolled LEAP fuzzy covered call from May 25 480 to June 1 465, collected $380 on roll
SPY x 3: Closed May 23 Jade Lizards for 50%, collected $991
SBUX: Added short backratio yesterday on news that non-paying guests are now free to displace paying guests, at shareholder expense. July 4×2 put backratio (60/57.5). I’d like to add to this or ladder in a longer expiration.
RHT: Added Dec bullish covered backratio: 150 c x8 + 160c -6, short 165 c x2 @1.50
ADBE: Added Oct bullish covered backratio: 230 c x10 + 240 c -5, short June 1 245 call -5 @2.14
March 12 #Fuzzy Land
Very excellent day here. All of the unhedged #Fuzzy that I opened on Friday were closed today for over 50% profit–and I pretty much had a lot of them. Q’s were reset and again closed for a lot of profit. Closed Fuzzies for the quarter now have a 47 handle! I’m still shooting to regain that 50 that I had in January.
Opened some new unhedged Fuzzies today in SPY, but when I saw resistance and rising VIX I atomicized them. Here is an example:
SPY #AtomicFuzzy April Expiration: 280c/-280p/277p @ 2.93 x 21 contracts, 284/288 Call credit spread @ .92 x 36 contracts.
I’m flat on Q’s right now, they are showing signs of trend exhaustion right now, so I’ll be patient for the right entry.
Mar 11 #Fuzzy Land + how to make $700 the easy way
Hi Bistro Buds! Last week was a bit of a roller coaster huh? On Thur, before NFP, some technical health indicators I use looked a bit weak. So I took profits on all the index #AtomicFuzzy hedges and closed 1/2 of the core positions. Little did I know what a smart move that was. Remember the Atomics have a double size hedge, so the double hedge covered all the losses on the 1/2 core, then set up the remainder cores for the big move up on Friday. I got lucky, but I try to only get lucky once, then it goes in the tool box for future intentional moves. I realized what an important trade the Atomics are for high volatility, however because they are more expensive, the profit targets need to be tighter. The double hedge in the Atomics accommodates higher volatility, but when profits appear, they need to be taken quickly since profits will appear in declining volatility–which affects the protective legs of Fuzzies.
Friday I took off almost all of the Atomics, and replaced them with regular unhedged #Fuzzies that are free to fly in a “risk on” environment. The price of April Fuzz’s has come down by over 30%. Indexes are my focus. I also took the opp, in a still-elevated vol environment, to put on some of my favorite 20DTE 25/23 delta SPX bitties.
We received our very first 1-Standard Deviation up move on Friday since the big down moves aged off. I think everything is looking rosy. I’ll be watching carefully for follow through early this week on market activity. The closed Fuzzies for the quarter has a 5-figure 35 handle now.
Oh I almost forgot….”How to Make $700 Easy”…. On Monday after hours when the market tanked on the Cohn announcement, I bought TEN TEENSY shares of AMZN. I thought it was ridiculous….how could 10 tiny shares help me in any way? Well…you know the answer to that now. This is going in the toolkit.
Good trading this week for everyone!
First positive week since the SVXY melt down Feb 5-6, 2018, so that is a good thing. I think the bleeding finally stopped, only 1 more contract I can be assigned on at any time.
If I can keep making the same amount each week (unlikely) only 33.3 weeks to get back to all time highs but about half that to get to even (cost basis). What I lost was mostly house money but it was enough to buy a real house 😦 ouch!!
LNG rolled this week 54 CC to 2 week 55 for 0.45 credit. Cost basis now 54.2 after being assigned the 55.5 put last week. Next roll down should result in a profit anywhere around 54.
Unless a major move tomorrow I expect to be called out on (hopefully there are no stupid tweets!)
FAS 66, 67, 68 CC
MAR at 138
NSC at 140
GM 42.5 put. Taking stock, can’t roll it anymore for a credit so will take it and sell CC. Missed the dividend, I think it is today.
Have finally finished taxes and full year review. Based on what won and what lost going forward my trading plan is contracting dramatically to only 4-5 trading tactics.
2. #spycraft and credit spreads with the new adjustment technique
3. #fuzzy and maybe try a few #atomicfuzzy
4. put ladders with fuzzy adjustments if they go the wrong way
5. VXX put debit spreads after volatility spikes
Everything else worked until it didn’t and either was flat but required lots of trades or worked really well until it blew up. Goal is to recover what I lost, then keep weekly income coming in, and most importantly do not lose any money again!
Hope everyone has a good close to the week, too busy tomorrow to check in.
March 2 #Fuzzy Land: Self Assignment
Hi Bistro Friends! I did a #SelfAssignment on MSFT today, converting naked puts into an #AtomicFuzzy. I really like selling 3-4DTE naked puts on MSFT on dips. Been doing it for 18 months it seems, with assignment always assumed but never realized. Today finally was the first chance for assignment. So I chose to do self-assignment into an #atomicfuzzy.
Original trade: STO MSFT Mar 2 94 puts for .72 closed for 1.90, loss: $1118
Atomic Fuzzy: BTO MSFT Apr 92.5/92.5/90 x10 w/ 95/97.5 Call spread for -.80 x24
A move to 94 can get me back to even with a fraction of the risk vs. taking stock assignment. There’s a hockey-stick graph above that for gains.
Atomics have become a big focus for me. I partitioned funds last week for a “hedge fund” type approach to them. Timing may be off a bit…but serious testing is in progress. I haven’t said much about this, but I think there is a ton of edge in these trades….just working on proving it out now. Even though they have nice risk control, they still need a rising market for performance. So, just laying in wait now for that to happen. I was able to take a lot of profits on previous Atomics last week. The CLOSED fuzzy profit for the quarter is now $32,994. But, I’m under water on my newest fuzzies. I was able to use #FuzzyBear trades this week to gain a few k’s.
I had a bit of an epiphany this week regarding a previous post I did that showed we need 3-of-5 one standard deviation up moves before a rally can be trusted. I’ve been watching every single day for even a 1 standard deviation up move and we haven’t had it. I realized that the huge SD down moves tamp down any further SD’s until they age off the averaging. So there’s a coincidental relationship between what I thought was 3 1-SD up moves and the big SD down moves aging off. What I thought was a wait for 3 1SD up moves was probably actually a wait for the big SD to age off, which gives it time to retest lows while waiting. Anyway….if any of this makes sense to you, welcome to my brain. The big SD down moves age off my system in the next 2 trading days. Then there should be more realistic SD data to evaluate.
Have a great weekend everyone!
BTO Apr 271/271/269 Long #Fuzzy 5.57
STO Apr 280/282 .54 2x #atomicfuzzy
STO UPS Mar 29 111/113 Calls .32 2x #atomicfuzzy #Hedge
Feb 21 #Fuzzy Land
Hi there everyone! It’s been a couple days since I’ve posted, but I didn’t want to bore you with the same trades. As it turns out, I’m really liking the #AtomicFuzzy! The built in hedge is working really great this week. I was having problems sleeping over the weekend, when I can’t sleep I plan out trades in my head. The first trade I mapped out was a series of laddered SPY fuzzies in Apr/May/Jun, unhedged, totaling 250 contracts (across multiple accounts) when fully built. This would equal 25,000 shares of SPY, total risk approx $175,000, with about $87,500 profit on every $5.00 up move in SPY (assuming .7 delta). That was a fun dream. The next night I designed the same trade but as an Atomic Fuzzy. 250 contracts, risk is now aprox $87,500, and a $5 move in spy = $43,750 (assuming .35 delta).
I’ve got Atomics now on SPY, QQQ, TBT, JPM (based on #UOA today–Mar 120 calls). 45 SPY contracts, 40 in QQQ. I won’t be adding anymore unless I can get some good strike diversification.
Q’s: May 166/166/164 @ 5.86 170/175 Call Credit Spread @ 2.00 double size.
SPY: Apr 272/272/270@ 5.91 278/283 Call Credit Spread @ 1.69 double size.
There’s a chance we’re entering a range bound market here for awhile, meaning I will need to be opportunistic on taking profits, vs if we are in a trending market (that’s another reason why I went heavy on Atomics vs Unhedged). But I am trying to set up longer term trades that require little management. I do realize that SPY and Q are heavily correlated. Until more profits start getting booked, it’s still an experiment! BTW, Atomics won’t work on Fuzzy Bears due to the put skew, you can’t get enough selling put spreads to even come close to covering the cost of the protective calls.
p.s. My 45 SPY contracts have about $18,000 total risk, for virtual control of $1,215,000 of SPY shares. The beauty of fuzzies! I probably won’t post a lot unless some of these start coming off, or need some kind of management.
Feb 15 #Fuzzy Land
Whew! Sea sick anyone?
1. Closed yesterday’s SPY #AtomicFuzzy for 41% profit on the core trade, total of $580. During the brief market swoon today I thought I’d take the profit. I didn’t anticipate the huge up move that followed.
My future Atomics will be set with April expiration unless I specifically want a quick flip.
2. Opened a new AAPL Atomic Fuzzy: Apr 170/170/165 @ 6.39 x 2, 180/185 Call Credit Spread @ 1.35 x 4. AAPL had a nice MACD cross today on the daily.
3. Closed the 15 DIA Fuzzies that I opened yesterday for a $1700 profit.
4. Rolled hedges on the AAPL and FB fuzzy bears that are taking heat.
My CLOSED fuzzy total for the quarter now is $26,454. I sure would like to reclaim that 50-handle…but I’m still being cautious. This string of powerful up moves….not a single one of them is a 1-standard deviation move. How can that be, you ask? The down move on Feb 5 was 5.4 standard deviations….as long as that bar stays in the SD average for compilations, it will affect all other bars printing. So, even though I’m looking for 3 1-SD up bars to confirm the rally, I have to keep in mind that the bars are being tamped down by that massive Feb 5 bar. Any indicators that you use that are tied to standard deviations will be seeing the same skew.
Feb 14 #Fuzzy Land
Hi Everyone! I’m starting to take some new Fuzzy nibbles. I’m still not seeing the indicator that I want for a full blown rally, so I’m being very cautious with size. I’m still making the bulk of my daily money with NQ scalping right now.
AAPL Fuzzy bear (apr 165/165/170) only a teensy 2-lot. Closed hedge today
DIA regular fuzzy: Mar 274/274/245 @ 3.87 w/ 251 hedge, 15 contracts in 2 accounts
FB Fuzzy bear (apr 175/175/180 @ 6.16, removed hedge today, 5 contracts
IWM Regular Fuzzy (Mar 151/151/149) hedged w/ 151 (ITM)
MU Regular Fuzzy (Apr 42/42/40) w/ 43.5 hedge (close to ITM)
SPY #AtomicFuzzy (Mar 269/269/267 x10, 271/275 x20) did you catch this?
TBT Regular Fuzzy (Apr 39/39/37) unhedged
Who caught the Atomic Fuzzy? Don Kaufman at Theo Trade has an “Atomic Hedge” trade, where OTM puts are bought at a certain expiration, and using the same expiration a 2x OTM call spread is sold to cover the cost of the puts, all against a long underlying position. The trade hedges pretty well, while still offering long delta for continued move up. Of course after reading about it, my first thought was “Fuzzify it!” So by doing the same thing with a Fuzzy, the max loss is cut in half or more. I put my first one on today and I liked the movement it saw in the rally. What it does is build in the hedge up front, so you can set it and forget managing hedges.
Here’s my specfic trade on SPY:
1. Synthetic: Mar 269/269 for .51 cr x 10
2. Protective puts: Mar 267 for 4.33 x10
3. Atomic element: Mar 271/275 call credit spread 1.63 cr x 20
Regular Fuzzy max loss: $5451
Atomic Fuzzy max loss: $2560
It does suck away about 100 delta so it moves more slowly than a regular unhedged fuzzy. Also it needs to be managed early to avoid the upside “sea of death”. But it moved well in today’s rally and is designed for holding just a week or two with this DTE, or can be designed with a much longer DTE.
I’m a tester/tweaker on everything, this is the first test….so I’m happy to keep reporting on these as a few more test cases are created. Hey…it sure is nice to see the cost of fuzzies coming DOWN!! 🙂