#ContangoETFs
STO $DUST Feb 25 calls for 1.05
STO $ZSL May 80 call for 3.00
Tag Archives: ContangoETFs
KOLD roll
#ContangoETFs #ReverseRoll
BTC $KOLD Jan 150 put for 21.00. Sold for 4.10 on 12/14
BTC KOLD Jan 140 put for 14.00. Sold for 3.10
STO KOLD Feb 110 call for 35.60 (ITM)
STO KOLD May 275 call for 7.00
Good morning….
Nat Gas futures up again… seems clear we are in a sustained bounce/rally, even as other energy still wavers. Not sure if the bottom is in, but if the upticks continue, and with the magnified effect on 2x ETF’s, $KOLD is set to collapse back below 100 with in a couple weeks. I am #ReverseRoll my way out of short puts, able to still sell calls above 200 and even 300 before they die a slow death. I was trying to get out of my 150 put yesterday but thought maybe we’d get a small pullback in Gas today. No such luck, and now KOLD is opening 12 points lower. No more waiting… closing 150 and 140 puts today. Fortunately, ITM calls, including the 150 CALL I sold for 64.00, are coming in nicely.
$BOIL #ShortCalls – sold all…
$BOIL #ShortCalls – sold all the following
BOIL Feb 19 2016 22.0 Calls @ 0.90
BOIL Mar 18 2016 24.0 Calls @ 1.00
BOIL Jun 17 2016 26.0 Calls @ 1.40
Paired with Short June Puts already on the books
Stopped KOLD
#ContangoETFs #ReverseRoll
BTC $KOLD Jan 170 put for 22.60. Sold for 6.80 on 12/15
STO $KOLD May 320 calls (x3) for 9.40, highest available strike
ZSL calls
#ContangoETFs First ZSL calls I’ve added in awhile, I haven’t been playing as much since the reverse split since so much attention has been on KOLD
STO $ZSL Jan 15th 65 calls for 1.60, adding to 70 and 72.5 calls
Stone KOLD rolling
#ContangoETFs #ReverseRoll
Yesterday BTC $KOLD Jan 170 put for 13.60
Today STO $KOLD Feb 240 call for 14.00
KOLD snap?
#ContangoETFs STO $KOLD Jan 140 put for 3.10. Have several puts, but will #ReverseRoll them into calls if any of them become ATM.
Revenge is a dish best served KOLD
#ContangoETFs Nat Gas chart finally looking constructive with possible bottom in place. Dumping my only ITM put with a #ReverseRoll to higher calls. As long as we get some stabilization in gas prices, KOLD will dump.
BTC $KOLD Jan 210 put for 30.00. Sold for 21.90 on 12/15.
STO $KOLD Feb 270 calls (2) for 16.50
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
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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DUST
GDX just getting killed…could see a 12 handle soon. Taking the other side of NUGT now. Just adding one to a current position. Will add more if GDX bounces around 13.
Sold 1 DUST JAN 15 2016 22.0 Call @ 1.60
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.
KOLD put
#ContangoETFs STO $KOLD Dec 18th 195 puts for 2.00
NUGT short call
#ContangoETFs following the herd, BTC $NUGT Jan 2017 60 call for 6.40. Sold for 25.00 on Oct 15th.
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
$KOLD roll
I just eliminated my last December call position by rolling it up and out to January for 8.64 credit.
Bought $KOLD Dec 18 200 call @ 18.10
Sold $KOLD Jan 15 2016 210 call @ 26.74
KOLD comfort
#ContangoETFs STO $KOLD Dec 18th 185 puts for 3.05
DUST calls
$KOLD
STO May $90 puts @ $2.10
KOLD cocked
#ContangoETFs New $KOLD call strikes up to 230. Probably best to buy them or ignore them!
KOLD turkey
#ContangoETFs Added another margin-free put, STO $KOLD Dec 18th 170 put for 2.50
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
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.
TZA calls
#ContangoETFs STO $TZA Jan 15th 50 calls for 1.40. Every time this pops I sell some 50 calls in the next month, and every time I can cover for 80% of max profit a couple weeks later.
DUST calls
#ShortCalls – Bought to close DUST DEC 18 2015 22.0 Calls @ .25 (sold for 1.65)
Still short 22 puts so looking to lay the calls out there again on any follow through. This was part of a short rolled straddle worth 5.45 total.
KOLDer outside
#ContangoETFs New highs again… STO $KOLD Jan 15th 215 call for 7.10. Highest strike.
$KOLD rolls
Rolled my ITM Dec positions out to January for credits and in the process made some tax moves, keeping the losses in 2015. Utilizing the TastyTrade strategy and rolling to the same strike, pulling in more credit than rolling up.
Rolled $KOLD Dec 18 115 call out to Jan 115 call for 2.08 credit
Rolled $KOLD Dec 18 118 call out to Jan 118 call for 2.41 credit
Rolled $KOLD Dec 18 136 call out to Jan 136 call for 5.12 credit
Silver and Gold
#contangoetfs
STO $NUGT June 72 call for 4.10 (adding to my position, thanks @Ramie)
STO $ZSL May 40 puts for 1.30.
STO $ZSL Feb 45.5 puts for .90
Silver spiking today as well as gold, dropping ZSL to its lowest level since early November. These are now my only puts against a sizable short call position.
TZA call spread
#ContangoETFs – Adding to some winners…was almost completely out of this ticker.
Sold TZA JAN 15 2016 45/55 Bear call spreads @ .92
KOLD puts
#ContangoETFs I’m a bit stretched margin-wise to sell more calls, but puts still going for great rates, and I get margin credit for selling them.
STO $KOLD Dec 18th 128 puts for 1.90, adding to my position.
Will it ever get KOLD again?
Sold Dec 18 200 (highest strike) for 2.00, with $KOLD at 162.
NUGT calls
Sold $NUGT Jun 17 2016 72 calls @ 3.00. Highest strike.
Short options, Margin, and retirement accounts
I got this question over the weekend:
Question:
What type of account are you trading in when you short naked? Regular margin/Portfolio margin account? Trying to find out what the more experienced folks setup when the run the types of strategies you use and not get killed on the tax side, but have all the strategies open to me unlike an IRA style acct.
Answer:
I use two different account types. My main account is an LLC account with portfolio margin… it is set up as a business partnership with family members. There are no restrictions on the types of trades. I also trade with 401K accounts… these are retirement accounts sponsored by the LLC for the members of the LLC (who are technically employees). Each member, including myself, rolled over portions of IRA accounts into these 401K’s. At Interactive Brokers, 401K accounts do not have restrictions against naked options. They are Reg-T accounts, so margin requirements for shorts are higher than portfolio margin. I typically sell naked options in my LLC account and stick to spreads in the 401K accounts (almost exclusively the #SPXcampaign, which is tailor made for retirement accounts).
For the short strategies such as #Earnings and #ContangoETFs, you will need to use spreads if you want to trade in an IRA. I usually don’t use spreads, but some other contributors on OptionsBistro do, such as @fuzzballl, who uses a mix of naked and spreads.
Let me know if I can help further!
$BOIL – Taking one for the (long nat gas) team
#ContangoETFs – Nothing would make me happier than a nat gas rally so here’s something for Mr. Market to shoot at…
Sold BOIL DEC 18 2015 20/25 Bear call spreads @ .80
NUGT – It just keeps working (going down)
Trying to keep a fairly full position on any little bounce. Replacing a few higher strikes that should be closing soon. Another of our #ContangoETFs These are filling above the mid so I probably could’ve done better.
Sold NUGT MAR 18 2016 45.0 Call @ 2.70
Sold NUGT JUN 17 2016 60.0 Call @ 3.30
Sold NUGT JUN 17 2016 65.0 Call @ 2.40
KOLD puts
#ContangoETFs Adding puts at any opportunity (margin free due to short calls).
STO $KOLD Dec 18th 125 put for 3.00
STO $KOLD Dec 18th 128 put for 3.70
AGQ ZSL – C’mon silver…you can do it!!
Adding to a hedge against my short ZSL position. Short ZSL is a long silver position so hedging with a short silver position. Great thing is they are both #ContangoETFs
Sold AGQ DEC 18 2015 30.0 Calls @ .75
TZA short call spreads
#ContangoETFs – Bought to Close TZA DEC 11 2015 45/50 Bear call spreads @ .06 (sold for .90)
Just a little scalp from a couple weeks ago. Still short Jan 50/60…
BOIL up
#ContangoETFs STO $BOIL Jan 25 calls for 1.10.
STO $BOIL Jan 30 calls for .50
Any rally in Nat Gas is worth selling
TZA close
#ContangoETFs BTC $TZA Dec 18th 50 calls for .30. Sold for 1.55 on Nov 12th
NUGT calls
Adding a few at the higher levels…will add more on any strength. Also short at much higher strikes and better premium.
Sold NUGT JAN 15 2016 35.0 Call @ 2.50
Sold NUGT MAR 18 2016 50.0 Call @ 2.80
Sold NUGT MAR 18 2016 55.0 Call @ 2.40
Sold NUGT JUN 17 2016 70.0 Call @ 3.30
KOLD again
It’s 39 degrees in Portland, but KOLD calls heating up again. The new higher strikes give us (hopefully) safe opportunities.
STO $KOLD Dec 200 calls for 3.10
BOIL oh BOIL
#ContangoETFs STO $BOIL Dec 18th 25 calls for .70. Flip side of $KOLD, so margin free.
KOLD puts
#ContangoETFs Sold these as part of a #ReverseRoll from Friday’s calls, with intent to add more on any down days in the name. These reduce my margin to sell these, since I am heavier in calls than puts.
STO $KOLD Dec 110 puts for 2.40
STO $KOLD Dec 115 put for 3.70
New strikes for KOLD
Strikes now up to 200. Sold Jan 200 call @ 6.00.
Cover up it’s KOLD
#ContangoETFs #ShortCalls Bought $KOLD stock at 144.91 to cover my short calls at 109, 135, and 136. Will look to handle the rolls next week… want to keep margin exposure down over weekend. Thanks @optioniceman for the idea!
Also, BTC $ZSL Nov 20th 60 calls for 2.75. These were sold for effective price of 1.22. Also will look to replace with rolls next week.
$KOLD – the art of…
$KOLD – the art of exiting an illiquid option position that just went in the money –
So I’m trying to exit my short call position @ 136 on KOLD but the bid / ask is 3 points apart. Rather than let the market maker take his pound of flesh, I’m going to buy the stock, either on a dip, or at the close and let them call it away.
I’ll still make money due to the large initial premium I got when I sold this.
$KOLD…second thoughts
Sure looks like nat gas is breaking down again…futures falling below the 20ma today. My KOLD position is extremely high margin so I’m trying a trick that the tastytrade boys use sometimes involving inverted strangles. Hoping to get out of this position sooner but still with a nice profit.
Current position was Dec 105 calls/100 puts strangles worth 26.75 total premium.
I rolled the 100 puts up to 130 for another 10.25 credit. I’ve now got 105 calls/130 puts inverted strangles that have brought in 38 dollars in total premium. The goal is to have the price between the strikes at expiration just like a normal strangle. Both sides will still offset each other but since my total premium brought in is greater than the width of the strangle I’ll still book that 13 dollar difference per strangle. If it continues on up I’ll have plenty of premium to use for further adjustments…
KOLD roll
#ContangoETFs On Friday I closed some ITM $KOLD calls to reduce margin in case of another manic Monday. I replaced those with these today:
STO KOLD Dec 18th 120 call for 17.00
STO KOLD Dec 18th 125 call for 14.60
STO KOLD Dec 18th 100 puts for 3.00
STO KOLD Feb 135 call for 18.10
STO KOLD Feb 70 puts for 2.10
$NUGT – Trash yesterday, Treasure today
Closed a bunch yesterday and one more today…and re-loading. It really is the gift that keeps on giving. LOL
Bought to Close NUGT JAN 15 2016 60.0 Calls @ .85 (sold for 7.45)
Sold NUGT JAN 15 2016 45.0 Calls @ 1.85
Sold NUGT JAN 15 2016 50.0 Calls @ 1.35
NUGT roll
#ContangoETFs #ReverseRoll Continuing to back out my small but ill-advised put positions.
BTC $NUGT Dec 18th 22 put for 2.50. Sold for 1.00 on Oct 16th
STO $NUGT Jan 15th 34 call for 2.70.
ContangoETFs
I’m prepping a webinar for #ContangoETFs and just built this chart. Thought I’d share it with you since it’s an example of the kind of predictable behavior you can see in ETFs like $DUST, $NUGT, $UVXY, $ZSL, $TZA, $BOIL, $KOLD. Kind of like finding money on the sidewalk…
ZSL calls
#ContangoETFs STO $ZSL Nov 20th 63 call for 1.15
STO ZSL Dec 18th 67.5 call for 2.35
Need to keep an eye if its behavior will be any different after the split. If there’s no change, this one will always top out and fail in the 60-65 area.
KOLD puts
#ContangoETFs Hard to believe I still get someone to buy these, expiring in 3 days…
STO $KOLD Nov 20th 110 puts for 1.25.
DUST in the wind
#ContangoETFs STO $DUST Jan 45 calls for 1.15. Will add more if premium rises.
$NUGT and $KOLD ETFs
#ContangoETFs Managing some ITM positions in these…
BTC KOLD Nov 20th 100 call for 22.50. Sold for 4.00 on Aug 17th
STO KOLD Nov 20th 110 puts (x2) for 2.55. Will also add a Dec call for 17.50 or more on next KOLD up day.
BTC NUGT Nov 20th 30 put for 5.50. Sold for 2.50 on Oct. 12th.
STO NUGT June 45 call for 5.60
$ZSL forward split…
#ContangoETFs Now trading at 61.84, which would be 123.68 in yesterday’s dollars. All options positions have doubled in size.
ZSL May call
#ContangoETFs Sold $ZSL May 20 2016 180 call @ 6.50. Highest strike in May.
Closing trades for margin clearance
#ContangoETFs Bought to close $ZSL Nov 20th 150 call for .25. Sold for 6.10 on August 25th
#SPXcampaign Bought to close $SPX Nov 13th 1970 puts for .15. Sold as part of 1970/1945 put spreads for 1.35 on Oct 23rd.
TZA calls
#ContangoETFs Sold to open $TZA Dec 18th 50 calls for 1.55.Even on the extreme volatility spike of 8/24 this only topped out at 56.
KOLD call
#ContangoETFs Sold to Open $KOLD Nov 20th 136 call for 5.60.
I’m underwater on a handful of short calls in this one, so pressing it a bit here, but this strike is at its recent high, and this is juicy premium for only 8 days until expiration. Also selling puts against the calls, waiting for the eventual fall.
Closed TZA calls
#ContangoETFs Bought to close $TZA Nov 20th 50 calls for .12. Sold for 1.50 on Oct 21st.
ZSL forward split
#ContangoETFs Starting on Friday $ZSL will be trading at half its current price, and any positions will be doubled in size.
http://finance.yahoo.com/news/proshares-announces-etf-share-splits-203000108.html
KOLD puts
#ContangoETFs STO $KOLD Nov 20th 105 puts for 2.05. These are against several short calls I’m already short.
NUGT reverse roll
#ContangoETFs #ReverseRoll
Made the mistake of selling some puts too early… but no worries since it is easy to flip these…
BTC $NUGT Nov 20th 30 put for 5.25. Sold for 2.50 on Oct 12th.
STO $NUGT March 50 calls (x2) for 3.10 each.
$NUGT Calls
$NUGT #ContangoETFs – Taking a small shot in a ticker that’s already a big winner the last couple months…
Sold NUGT DEC 11 2015 40.0 Calls @ 1.10
$UVXY #VXXGame
$UVXY #ContangoETFs #VXXGame – These should be safe even if we get another August type selloff…sitting on a few short Eminis as a hedge.
Sold 1 UVXY JAN 15 2016 70.0 Call @ 1.60
Sold 1 UVXY JAN 15 2016 75.0 Call @ 1.40
Sold 1 UVXY JAN 15 2016 80.0 Call @ 1.30
Sold 1 UVXY JAN 15 2016 90.0 Call @ 1.05
Sold 1 UVXY JAN 15 2016 95.0 Call @ .95
$ZSL $AGQ and TDA margin
$ZSL $AGQ #ContangoETFs – Since TDA jacked up our margin requirements on ZSL I’ve been using short AGQ calls instead of short ZSL puts. Serves the same purpose for much less margin. Finally paying off…
Min value commission free…
Bought to Close AGQ NOV 20 2015 38.0 Calls @ .05 (sold for 1.06)
ZSL call
#ContangoETFs This one keeps rising, which would be scary if I hadn’t seen it die above 120 so many times before.
STO $ZSL Jan 2016 140 call for 3.60
WEBINAR Link info – November 5, 2015
Hello, here is the link to today’s webinar! Please reply here if you haven’t yet signed up and would like to attend. There are a couple spots left. OR, if you signed up but now cannot make it, please reply as well.
Jeff Payne is inviting you to a scheduled Zoom meeting.
Topic: SPX Campaign Webinar
Time: Nov 5, 2015 2:00 PM (GMT-8:00) Pacific Time (US and Canada)
Join from PC, Mac, Linux, iOS or Android:
Options Bistro 