Sold SPLK MAY 24 2019 121/132/135 Jade Lizard @ 2.95
#JadeLizard – This thing can go anywhere. If it tanks I’ll get the stock around the 50ma. No upside risk…
Sold ADSK MAY 24 2019 152.5/170.0/172.5 Jade Lizard @ 2.60
So my 5 week full time trading experiment has been over for about 4 weeks now. Not trying to brag, but had my second best trading month ever even in a very choppy market. Over 9% returns for the month on my total portfolio and now up 38% for the total portfolio for the year as of this last weekend. Several losing trades in there as well.
So ran a few experiments and noticed a few things about the market in live time.
1. While tastytrade has found that the best time to sell options is 45 DTE, it takes a long time for the decay to occur, especially if the ticker moves. I found that there is a huge theta crush from 21 DTE to 14 or 7 DTE for OTM options. You will be closer to the money than 45 DTE, but the theta decay is huge. I may have posted this already and if so sorry for the repeat, but I was in EXPE and several other trades. Had opened both 45 DTE and 21 DTE. It took 3-5 weeks for the 45 DTE options to crush 50% but only 10 days for the 21 DTE to do the same. Recycle capital faster, make more $.
2. #spycraft version 5.1 or so idea. The weekly income is awesome, but then the 5 STD moves crush all your profits and then some. I have been setting up hedges using /ES and SPX and keeping them on almost all the time now. On the big moves down, you can roll for cash and reset the hedge to new levels. You can set up a longer term hedge 90 DTE or so to cover you max loss basically scratching the trade. It will cost more but will prevent the losses. I have not figured out the ideal ratios yet but stay tuned. Plan is to sell 21 day IC or credit spreads, use the cash to buy a few hedges, then roll weekly and keep cash coming in to reduce the hedge cost basis to zero. Other option is convert the spreads to ratios or butterflies. The butterfly seems to limit the losses faster and then if whipsaw no additional losses.
3. Keeping hedges on allows you to be a much more aggressive trader. If the SPX goes to zero, you hedges will be worth much more than your portfolio was. Because of the volatility expansion you can also buy cheaper options than you thought. I have been planning for a 10% drop as my starting point. Then figure out which option would be worth 10k at a 10% drop. Then you can figure out how many contracts to cover your portfolio. Best to do when the VIX is 12. The black swam events seem to be occurring on average 2 times a year since 2015 but are only supposed to happen once every 5 years. I will always have a hedge and will pay for it by selling options or rolling profits from the hedges.
4. #jadelizard and #lizardpies are hugely adaptable. You can often move 3-5 strikes and still take in a credit. You can also skew it to up or downside and really increase returns. If runs through the upper strikes just let it all expire, take the cash, and reset the next week. If it moves down, reset the straddle ATM.
5. #pietrades are still the cash machine but can convert to jade lizards or LEAPs if it really implodes on you.
6. Staying out of earnings trades has been helpful to my equity curve.
7. Staring at 1 and 5 minute charts is mind numbing. Congratulations to those of you that can do it and trade directionally. I can’t and have a lot more fun things to do. I will stay mostly non directional with a slight directional bias and enjoy life and my free time. Most of my trading is on my free time so the less I have to spend trading is more time to do other things. I personally will not take any trade on anything shorter than a 15 or 30 minute chart but my real triggers are now hourly or 4 hour for the weekly trades.
8. Spreads can save your bacon in really volatile markets.
9. Keep enough cash on the sidelines for adjustments and opportunities.
10. There is always another trade or opportunity. If you feel pressured to make a trade, it is probably a bad idea. The less emotional you can be also the better the adjustments/recovery you can make. Think before hitting the confirm and send button and have a plan and stick to the plan if the trade goes against you. Be mechanical in your trading and adjusting. It may seem boring to some but the reason I trade is to make money. I want adrenaline I will go kiteboard or ski and hopefully not break my face again.
11. Having a group to trade with is like extra eyes on the market. Everyone sees different opportunities. Thanks for sharing 🙂
12. Being a specialist pays off. I am a family practitioner but specialists make more in the medical field. Also true in the market. Have a handful of tickers you know, watch and trade. They all have their own personalities and once you know them it is easier to trade them. I think once you have above 10-12 names you are probably trying to do too much. Trading the same tickers over and over has improved my consistency and results. Sure, play the occasional lottery ticket but to pay the bills stick with what you know. And also make sure your tickers are diversified.
Cheers, Chris 🙂
EOG batch 2 assigned at 89 at a cost basis of 92.63. This is a small account and I plan to take it to spreads to juice returns so just wanted to take the loss so I can redeploy capital on Monday.
EOG batch 1 I rolled up to the 97 cc for next week at 6.75 and after selling the 97 for 1.35 cost basis 96.14. I never figured out why it spiked so much yesterday?
FAS 57 cc assigned at cb of 54.20.
ERX 23 cc rolled 2 weeks for 0.5 credit. Cb 21.81
LNG 4/12 67 put sold for 0.54 yesterday.
EXPE rolled on 4/3 to 37 DTE 113/130/131 for additional credit. Total credit now 3.84 per contract
EXAS STO the 89 put for 4/12 for 1.01, then converted to #jadelizard yesterday 89/89/90 for another 0.6 credit.
SMH closed 4/3 for 0.45 credit per contract
JPM closed 4/4 for 1.08 credit per contract
SQ rolled out to 4/12 for 1.26 credit at 76/76/76.5 strikes. cb 74.74 if assigned.
TNA 60 rolled to 4/12 62.5/62.5/63 for 1.1 credit.
GILD 65/65 cb at 6.39
GILD 65/65 rolled out 37 DTE yesterday for 1.07 credit. Cb now 7.34
1 more week of surgical recovery then back to work but trading full time the last few weeks has been more than I would make at work so good to know for retirement. However, I am really looking forward to some solid food!
EOG 90.5 cc for 4/12 cost basis 90.74. Depending on where it is trading will let assign at slight loss or roll.
EOG 89 cc 4/5 cost basis 92.63. Will roll this one.
ERX 23 cc for 4/5 cost basis 22.31. Will let assign or roll
TQQQ 54.5 cc for 3 weeks cost basis 56.39. Will roll
TQQQ 55 cc for today at 53.79 cost basis. Will assign today.
TQQQ 53.5 cc for 3 weeks cb 56.75. Will roll
FAS 57 cc for 4/5 cost basis 54.20. Will let assign.
XBI 4/5 86/86/86.5 closed today for 0.52 profit per contract. Could only make .69 above 86 so decent profit for 2 day trade. I had skewed this one to the downside but it moved up today.
EXPE 4/26 115/131/132 for 2.31 credit. Looking good now, hope to close for 50% or better profit in 2 weeks. Right now at 25%.
SMH 4/26 100.5/110/111 for 1.38 credit. Same as above.
SQ 4/5 75.5/75.5/74.03 for 1.75 credit. Same but will most likely roll it in pieces.
JPM STO today the 4/5 101/101/102 for 1.81 credit. Looks like it found a bottom.
TNA 4/5 60/61/61.5 rolled this morning from last week. Credit now 3.06.
GILD 65/65 for 2 weeks at 8.41 cost basis.
GILD 65/65 for 3 weeks 6.39 cb
XBI 80/80/91.5 cb 11.74. 2 more weeks on the short calls.
Percentage return wise, the #jadelizard trades seem to work the best and also easier to roll because of the initial higher credit. Live study ongoing and will keep you posted. I am also skewing them depending on which way I think it is moving and that seems to help the winning percentage. Using the #markettide to time entries.
Have a good weekend!
2 more weeks in the jaw wires then back to work for me 🙂 although I am enjoying the extra trading.
The pull back helped a few positions so rolling.
SQ this week 76/76/76.5 rolled the puts to next week 4/5 to the 75.5 put for 0.08 credit. I will let the call side expire worthless then re-establish the #jadelizard on Monday. Cb now 74.14 on put side, no risk to upside.
STO the 4/5 XBI 86/86/86.5 jade lizard for 1.19 credit. Cost basis 84.81 on downside and no risk to upside. Skewed it slightly to downside in case market keeps going down. Anywhere above 86.5 make 0.69 per contract. Below will roll the puts.
EOG batch 1 rolled the 90.5 cc out 2 weeks to 4/11 for 1.05 credit. Cost basis down to 90.74. 1 more roll should be profitable.
Not having a lot of success with directional trades, but by having time to watch the market (not all day) I have been able to time my rolls better and make more income. Not sure I will ever be a full on directional trader. Even watching the 1 minute /ES chart, just missed the pivot.
#Earnings — $BURL reports tomorrow morning. Below are details on earnings one-day moves over the last 12 quarters.
I’m posting this one because it has a remarkably bullish response to earnings. Also, in a very long weekly squeeze. Will probably do a bullish butterfly, or maybe try my first #JadeLizard.
Nov. 28, 2018 BO +12.78%
Aug. 30, 2018 BO -0.86%
May 31, 2018 BO +7.11%
March 8, 2018 BO +5.84%
Nov. 21, 2017 BO -1.51%
Aug. 24, 2017 BO +1.36%
May 25, 2017 BO +4.90%
March 2, 2017 BO +6.66%
Nov. 22, 2016 BO +15.98% Biggest UP
Aug. 25, 2016 BO +3.12%
May 26, 2016 BO +7.44%
March 3, 2016 BO -2.78% Biggest DOWN
Avg (+ or -) 5.86%
Bias 5.00%, very strong positive bias on earnings.
With stock at 170.00 the data suggests these ranges:
Based on current IV (expected move into Friday per TOS): 158.81 to 181.19
Based on AVERAGE move over last 12 quarters: 160.04 to 179.96
Based on MAXIMUM move over last 12 Q’s (16.0%): 142.83 to 197.17
Based on Max DOWN only (-2.8%): 165.27
Open to requests for other symbols.