Legged into a Jan14 SPX IC using 5-min Tide indy with MACD to improve entries.
Sold SPX Jan14 2630/2635 ccs @.30 x4.
Sold SPX Jan14 2530/2525 pcs @ .25 x4 to complete IC.
Total credit $220
MNST: STC tight debit spread, cutting it early. BTO @ .50 STC @ .65 for $150
MSFT: I’m always trying to build a stock portfolio w/ MSFT by selling #ShortPuts but I never get assignment. I saw a chance yesterday to sell 1DTE puts for .49, closed this morning for .02 for $470
AFL: Closed a January directional butterfly. When I opened the fly I thought “this is dumb, you’ll never get more than $100” Closed today for $170 profit
COT: Remember this spec trade? Based on upcoming 13f filings, it will go out at full loss -378.00. No more spec trades for me…time to remember my powerhouse trades and renew discipline for what works.
SPX Campaign: I happen to have an account with zero positions this morning, so starting a test of the #SPXCampaign process, I followed Jeff’s trade, but with a onesie. Jan 12 2730/2755 1.50 cr
#Bitties: Had 3 SPX bitties close for 30 contracts, total $1200 profit. One of them (already accounted for in the #FuzzyBear post) was only on for a day, I used the AS-BB indicator for timing placement. I’m currently out of index bitties, would like to see a new oscillator low before placing new ones.
Green open positions: ABBV, ADS, CELG, FLIR, IWM, JPM, LMT, MSFT, NTNX, SPY, TWTR, TXN
Red open positions: AOBC, DHI, DWDP, LKQ, MU, NUE, QQQ, SHAK, ULTA
I have very high cash balances right now, only small % is at work.
I’m probably done trading today, got to do the dreaded post office run. Our post office here is like a 3rd world country. 200 people in line and one person working. I hope everyone has a restful safe weekend. Me? I love a good whiskey in front of the fire on Friday afternoons.
STO Jan 5 $72 puts @ $0.34
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!
@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.
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.
Hey everyone, I’ve enjoyed reading everyone’s posts, and wanted to thank Jeff for inviting me to be a contributor. I’m Sue (AxeCap-Sue at Simpler Trading), live in Colorado, been trading for 38 years. I’ve been a full time options trader for 20 years. You can count on me to be completely transparent with my trades; totally honest on fills, wins, losses. My core skills are income trading, complex setups, defense, earnings events, and CMLViz (backtesting). Here’s my contribution for you: #Bitties. Anyone whose been hanging out at ST has heard over and over again about Bitties. Here’s the bitty story that I wrote recently for the ST Forum:
In May 2017 CMLViz was delivered to many of us in Simpler Options. Everyone started racing to find the high-return plays, 600%, 800% 1000%. A few of us though took the opposite route and began searching for the high win-rates. Trades that win over 90% of the time, with lather-rinse-repeat characteristics. EVERYONE (including me) was skeptical about these trades because the risk/reward is upside down. A LOT of risk for little reward.
It turns out that 25 Delta, either naked put or as the short anchor of a put spread, is a real sweet spot for these high win-rate trades. I call the 25-delta my “Jeep Wrangler” of deltas, because it can get very smacked around, up hills, down hills, stuck in ruts, and usually can always land on its tires.
I started doing the trades (all naked puts or put credit spreads) on SPY, LMT, MSFT, FB, QQQ, IWM, SPX, NDX in May—not sure at all how this little experiment would work out (because like most of you, risk:reward has been pounded into my head). I always size trades for risk and assignment assumptions, so the trades (with high risk) remained small. After a few days the close orders started hitting, for $150.00, $170.00, $300.00 profit, over and over and over. That’s how they got the name “Bitties”…because the profits are “Bitty”….but it’s like picking up money off the sidewalk. Within just a few weeks the profits (in multiple accounts) were adding up into the thousands, with close orders hitting every couple days.
Flash forward to November 2017, I’d like to say I have not had a single loser or assignment since starting this in May, that is almost true. 2 weeks ago I closed an LMT put spread early for a $170 loss (that is the only loss I’ve taken on Bitties since starting). Profits in just the above-mentioned tickers will hit $100K this year Not quite all of that is Bitties, but Bitties are definitely the majority.
Bitty strategy is fluid and always evolving. Those of us doing Bitties are always looking for ways to limit risk, gain more profit, foresee vulnerabilities, dial in time frames and profit targets.
I’ve found the sweet spot for Bitty expirations are 20DTE. Short timeframes provide more events/year with accompanying payoff. Although even tighter timeframes (19-7 DTE) test out well historically, they really don’t provide enough range to absorb normal market volatility.
In the past my favorite bitty was naked SPY puts, 20DTE, 25 Delta, with a mutli-year 98% win rate (at an 80% cover). With the end of the year here though, a great trading year in my book, I’m definitely focusing more on spreads for risk protection. The SPX $5-wide spreads give a really nice risk reward setup for a #Bitty, much better than SPY (roughly double the premium for the half the risk in SPY (25/5 spread), with no assignment/div risk).
As of right now the SPX 25/23 delta put spread, 20DTE, 50% cover, no stop, is backtesting at a 97.1% win rate over 3 years. A 25/23 is such to capture a $5-wide spread in the backtester.
One last thing everyone always asks….what about when the market rolls over. For me, that’s easy, the bitties flip to #Jade Lizards (or skewed iron condors) with additional premium collected on both sides of the trade: higher premium on the put side and the call credit spread kicker extend the downside range. The Jade Lizards are modified for risk using a 25/5 delta put spread coupled with a 35/30 delta call spread.
The Bitty trades I have on right now:
NDX Dec 8 (only way to get a $5-wide), 6330/6325 .80 cr placed today 11/27/17
SPX Dec 8 2570/2565 .70 cr, getting close to target, trade is in multiple accounts
SPX Dec 11 2565/2560 .70 cr, getting close to target, trade is in multiple accounts
Listen I totally get it if you don’t understand the rationale behind these risk:reward setups. I was there too. But I will just point to the win rate and say….it’s been an awesome year. I’ll keep reporting on Bitty trades here, but wanted to give some thorough background about them in the first post.