Tag Archives: SPYcraft

fuzzballl 5:32 pm on Thursday, December 19, 2019
Tags: , SPYcraft   

Been thinking the last few days (I know…scary!)

#ShortPuts – What do you think about this theory?

Looking back over the last 18 months where I’ve been predominately just selling puts and covered calls I realized something. Besides my crazy, high risk, entries I rarely receive any stock. Maybe 1 out of 10 times at the very most.

So, with that in mind, here’s my idea…stealing a little of this from Whiz but with my own twist. Whiz will trade very narrow spreads that are relatively safe but uses many contracts. He either wins or loses and rarely adjusts and his wins seem to outnumber losses enough to where he makes pretty darn good money. I was very skeptical at first but after watching him a couple years he really does do pretty good.

My theory is to do something similar but with my rule of never doing it on something I don’t want to own. I’m thinking that on the put sales that you’re reasonably confident on to crank up the number of contracts and use spreads. Then one of two things can happen…

1. The trade will bring in multiple more times the profit of just the put sale
2. The trade will implode and you’ll get stock at a limited downside

Now my strategy would be to allow assignment of number of shares I’m comfortable with and roll the spread loss into the basis and recover with call selling. (Whiz would just take the loss and move on) To help minimize the damage I would close one of the long puts (or however many shares you are willing to take) right at the close on expiration day. This would lock in profit there and leave one short put to get assigned.

If this losing situation were to only happen once every 10 or so trades the additional profit on the winners would be very nice.

Let’s use LULU as an example. I would only want 200 shares max if everything goes bad so that would be selling 2 naked puts the way I’ve been doing it.

Sell 2 Jan 24th 210 puts @ 2.05 for $410 premium

My new trade would be using say a 5 to 1 ratio on the sales vs stock I’m willing to receive and selling 5 wide spreads. You could use more or less depending on risk tolerance. The more you sell the more you have to make back on an implosion but also the more you make on a good trade.

Sell 10 Jan 24th 210/205 BuPS @ .82 for $820 premium.

LULU

Based on the TOS analyze of the spreads the max loss would be about 4180 at expiration on an implosion. My theory would be to sell two of the long puts on Friday afternoon and receive the stock from the two naked shorts that would leave. Whatever those puts bring in the 4180 loss would be reduced by that amount. The worse case scenario would be for the stock to end up right at the bottom of the spread where the longs wouldn’t be worth anything and the spreads would be at max loss. Of course the stock is at a higher level to start call writing which is good.

Let’s say at expiration the stock is at 200. The position would be at max loss but the 2 longs I’m selling are worth a total of one grand reducing max loss to 3180 and giving me 200 shares. The stock would be at 200 and my basis would be at about 226 (210 put sale plus 16 dollar loss on the assignment). I would have to depend on call writing to get that back.

So big picture, if you did this trade 10 times total premium would be $8200. If you happened to get stock once you’d be in the hole the one time and have to recover.

If you did the trade 10 times just selling the 2 naked puts the total premium would be $4100 and you’d own the stock at some unknown levels depending on how much it dropped.

With my “theory” at least the starting point for repair would be manageable if the thing were to “pull an ULTA” on me.

Another twist on this would be to buy an extra long put. It would reduce overall profit but really cap losses on an implosion. In fact if the stock were to tank enough you could make money on the drop. Here’s a sell 10 buy 11 scenario. Max gain drops to about 700 but losses start getting reduced as soon as the spread gets blown out. This would probably be well worth the extra buy.

LULU skewed

Hope some of this makes sense!!

#spycraft

hcgdavis 10:37 am on Wednesday, November 27, 2019
Tags: SPYcraft   

#spycraft The low volume march…

#spycraft

The low volume march to infinity has triggered my adjustment level so I closed the CCS side of the 12/13 318/322 for a 0.83 loss. I am hoping for a pull back on Monday when people return but hoping has never made me any money.

Left the put side open, will close when it is down to 0.05 then loss will only be 0.20.

Following the new rules I opened the PCS side for 12/20 at the 304/301 strikes for 0.24 credit. Will stay one sided until there is a definitive change/reversal.

A rapid flush down I would back ratio.

Happy Thanksgiving Bistro’ers!

hcgdavis 4:39 pm on Monday, November 25, 2019
Tags: SPYcraft   

#spycraft v 6.1 12/13 291/295…

#spycraft v 6.1 12/13 291/295 and 318/322 IC

Have not added any the last 2 weeks. I am trying a full cycle before adding additional spreads. But what I have so far has proven what almost always happens with these. They are challenged in 1 direction only, in this case the upside. I have a profit but negligible ($49 on a 5 lot vs. 315 at expiration). The short strike is 318 for the 12/13 expiration.

So this is the decision point. Do I close the short calls and leave the puts open? Do I back ratio? Do I butterfly and cap losses to the upside? Or do I just sit on my hands and see if we eventually stay in the range and close for near full profit.

Here is my thought process. We can certainly keep grinding higher but if I back ratio and it stalls or reverses I basically lock in a loss at that point. If I close I lose on the calls but still have the puts making a few extra $. If I butterfly same as the back ratio, basically lock in a loss to one side.

So since I have not breached the short strike I will let it sit and decay and hope for flat or a little pull back. Then might be able to close early for a small profit.

But additional rules to putting these on, I will start them only one sided, then add the other side only at a definitive reversal. In the indexes the credit is generally higher on the put side and father OTM as well. That is something that has been persistent since 1987 black Monday (or was it Friday?). So there is more room and time to adjust to the put side anyway. Plus the market goes down faster than up so at that point a back ratio would make sense and likely give you a nice directional pop to the account.

Also will probably be going shorter time frame, looks like 10-21 DTE may be ideal as opposed to 28-45 DTE. I know the TT research shows 45 DTE ideal and it seems to be for naked options. But with spreads the decay is soooooooo slow it gives the market too much time to move.

Will update if I do anything or if it expires. Then will try the ladder one sided and will post as I open/close.

Anyone else has any ideas feel free to share? I know these can work, the math and probabilities are there, just need to avoid the big losses or convert losing trades to winners or flat.

hcgdavis 7:54 am on Thursday, November 14, 2019
Tags: SPYcraft   

#spycraft Added the Dec 13…

#spycraft

Added the Dec 13 put side since we are just chopping for now. Now that I put the trade on watch the market move.

STO 296/292 CCS for 0.29. 5 contracts completing the IC with the calls at 318/322. 0.63 credit total.

hcgdavis 10:53 am on Monday, November 11, 2019
Tags: SPYcraft   

#spycraft Starter position this morning….

#spycraft

Starter position this morning.
STO the Dec 13 318/322 CCS for 0.34 when the market opened lower.
You could do better now or move up a strike. At the time the short was at delta 15-16.
5 contracts so max risk around $1700 with commissions.

Will wait on adding put spread until a bigger pull back.

Plan is to add new positions each week and manage at 21 DTE or 50% profits, or big movement to the short strike whichever occurs first. If the short delta hits 30-32 would modify.

hcgdavis 8:23 am on Thursday, November 7, 2019
Tags: SPYcraft   

#spycraft Version 6.1 or so….

#spycraft

Version 6.1 or so.

Trying these again with a small account. Starting value around 6k. They work, the issue is controlling the 1 or 2 out of 10 that go against you and wipe out the gains on the other 8-9.

Here are the mechanics.
Start 28-45 DTE. Sell the 16 delta puts or calls then buy options 3-5 strikes outside that. Manage at 21 DTE or 50% profit, whichever is first.
Set up as ladder so add new positions each Thursday or Friday. As they are managed, roll or close.
Adjustments: back ratio works if you catch it early. The problem is it usually reverses then you lose some on the spread and the back ratio. But if you are going to back ratio I would do it when the delta of the short option doubled to 32.
Other options are convert to butterfly when it hits the short strike. You will still lose but will be much less and if you happen to get a pin then could make some money.
Final option is convert it to a diagonal or calendar. This depends on your outlook for the time the short option is in play.

Will also leg into iron condors depending on overall direction.

Nothing more complex than that.
Plan to start in 2 weeks when my current XBI puts expire in this account. Will post results monthly or so but will post the weekly trades as I open them.

hcgdavis 6:17 pm on Wednesday, May 22, 2019
Tags: , , , , SPYcraft, SPZX1dte   

Random stuff that may be useful.

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 🙂

#spx1dte, #spzx1dte

MamaCash 10:55 am on Monday, March 4, 2019
Tags: , , , , , SPYcraft   

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.:-)
#spx1dte

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

MamaCash 12:55 pm on Monday, February 11, 2019
Tags: SPYcraft   

SPY 21dte IC petri dish

After selling an eight-rung ladder of SPY ICs, 21 dte, 16delta both sides, starting with Feb8 expiration, one IC has closed with $38 in profits. I’m confident that with proper management, the spycraft strategy has edge and a positive expectancy over time. However, it doesn’t jive with my trading style. There are lots of positions to manage and then at best a small profit. I could sell 10x or 20x instead of 2x but I’d rather trade SPX than do that.

After my SPY Mar1 spreads expire, I’m going to move on. I may come back but for now, there are other strategies that keep me more engaged; hence better profits. I will report back here on total profits when the last spreads close.

#spycraft

MamaCash 9:55 am on Thursday, February 7, 2019
Tags: IC_Defense, SPYcraft   

Defending ICs

@hcgdavis is so good to recap his trading strats and share lessons learned. I’m going to try to follow his example here.

Over the last six weeks or so, I’ve traded multiple SPY/SPX ICs using different time frames. It’s a given that defense is absolutely necessary to survive. However, defending too early robs you of potential profits more often than not. Although it will be more expensive, I’ve decided not to defend ICs anymore unless the short strikes are breached. Expensive defense 10% of the time is cheaper than inexpensive defense 40% of the time. If you’re selling spreads outside 1sd, most of them are going to be safe.
#IC_Defense

#spycraft

MamaCash 8:03 am on Tuesday, February 5, 2019
Tags: SPYcraft   

SPY 21dte IC update

Quick update on SPY 21dte IC strat. I’m rolling put credit spreads up as they close for .05. Converting call spreads to back ratios and flies when they are close to being breached. Too many trades to capture here but strat is up $225 since I started it 17 days ago. First layer is Feb 8. All layers are 2x per side. I’ll know soon how well this is working. So far, it’s a ton of work for peanuts but peanuts add up over time.

#spycraft

MamaCash 7:41 am on Monday, February 4, 2019
Tags: SPYcraft   

SPY 21dte IC

Sold Feb25 BuPS 264/262 x2 @ .30. Moved short put to 25 delta due to low vol.
Sold Feb25 BeCS 278/280 @ .28 to complete the IC.
Continuing to build my SPY 21dte positions. Waited for an MT reversal to sell the call side.
#spycraft

MamaCash 11:32 am on Thursday, January 31, 2019
Tags: SPYcraft   

SPY 21dte

Closed 6 pcs on 3 SPY 21dte ICs @ .05. Sold for .20 each. Profit $90. Hopefully the turtle wins the race because I am the turtle.
STO replacement pcs at 16 delta.
#spycraft

MamaCash 7:04 am on Wednesday, January 30, 2019
Tags: SPYcraft   

SPY 21dte ladder

Sold SPY Feb20 274/276 ccs @ .26 x 2. SPY 21dte ladder strat. Will sell pcs on reversal.
Sold SPY Feb20 254/252 pcs @ .20 x2 to complete the IC.
#spycraft

MamaCash 8:03 am on Tuesday, January 29, 2019
Tags: SPYcraft   

SPY 21dte ladder

Sold SPY Feb19 IC 274/276/250/248 @ .42 x2. Now have four of six max layers in the ladder. All ICs look fine at this point.
#spycraft

MamaCash 9:34 am on Monday, January 28, 2019
Tags: , , SPYcraft   

SPX 1-dte IC defense again

Converted SPX Jan28 2625/2620 put side to Jan28 2630/2625/2620 fly @ 1.55. With credit received on IC, net debit is 1.05 per lot x6. This either locks in a loss or a possible profit if SPX closes between 2625 and 2630. Decision made on breach of 2625 level and then waited for bounce to enter.

Defending every other trade is getting old so will probably stay on sidelines or use long ICs as @jeffcp66 is doing. All depends on the HV/IV ratio on SPX after today.

#spx1-dte

#pietrades, #spycraft

MamaCash 10:35 am on Friday, January 25, 2019
Tags: SPYcraft   

SPY 21dte ladder

Sold SPY Feb15 255/253 BuPS @ .20 x2 to start third step of SPY 21dte IC ladder strat. Will add call side before the close.
Sold SPY Feb15 276/278 BeCS @ .24 x2 to complete the IC.
#spycraft

hcgdavis 8:49 am on Friday, January 25, 2019
Tags: , , SPYcraft   

#fuzzy WDC 40/40 rolled out…

#fuzzy
WDC 40/40 rolled out 7 DTE for 0.45 credit. cb now 18.04.

#pietrades
AMAT 7 DTE 39 puts sold for 0.71 credit. Cb 38.29 if assigned. Smaller account so only 3 contracts.

Hoping the bottom on the chip sector holds but will roll or take assignment if not, true PIE style.

Holding on further #spycraft at the moment until we figure out the best defense, market is moving more than the options are priced for.

hcgdavis 9:43 am on Thursday, January 24, 2019
Tags: , , , SPYcraft   

Clearing the decks/resetting several accounts

Obviously what I have been doing the last 4 months has not been working. Hit all time low balance again Jan. 4 this year. So I am going back to what works and has been proven through several market cycles and rebuilding the equity curve. At least last month have recovered and higher than the Feb. 6, 2018 SVXY losses and lowest balance from then.

So I am clearing out losing trades, closing a bunch of #fuzzy, some at profit, some at loss, and re-deploying capital. My trading will mostly consist of #pietrades, #lizardpies, #spycraft and the occasional directional play/scalp and a few #fuzzy

Some closings today, but have 2 more weeks to clear out the primary account.

#fuzzy
EOG 110/110 closed for 5.16 loss per contract. It is so far ITM can’t get decent premiums anymore. My intial loss was 17 so this tactic works.
EXPE closed the back ratio credit spreads, left with 120/120 and 125/126. This is sitting on a profit and will close it over the next 2 weeks as the shorts expire. Cb 9.43 and right now can close for min. 11.45. another week of decay that will be better. Lost $600 on the credit spreads after butterflying to control risk (could have been 2000).
MU 35/35 now ITM Cb 14.80 and will roll next week.
WDC 40/40 cb 18.49 and waiting for the short to implode after earnings today.
XBI 80/80 cb 13.97
LNG 50/60 rolled 15 DTE for 0.5 credit for 13.56 cb.
GILD 67.5/69 rolled 15 DTE for 1.3 credit. Cb 7.60

#pietrades and #lizardpies
XBI 78 put 82/82.5c 8 DTE for 1.26 credit
TQQQ 50 CC rolled out 15 DTE for 0.45 credit. CB 57.56 so will manage aggressively
TQQQ 50 cc lot 2 cb 57.30 same
LNG STO the 8 DTE 63 put for 0.92. CB 62.08 if assigned. LNG is my best performer for the year so far 🙂

#spycraft
Batch 1 closed for a $214 loss after the back ratio adjustment did not work. SPY reversed.
Batch 2 closed for a $344 profit, but only because tradestation messed up and sold 20 contracts of the put side instead of 10 so even with the back ratio that did not work I made a few $. Now I am on hold in this account until tomorrow. Tradestation does not give you credit for closed trades until after midnight so I only have $614 buying power in this account until tomorrow morning. Another reason I prefer TOS over TS.

What I have learned most recently.
#fuzzy works well but I think the real value of them is to close them once you have a profit. The EOG trade would have worked if I had just closed it early. If you still like the trade, reset the strike prices. I will use these as shorter term trades out 1 week or a month, take my profit and reset. Commissions are cheap enough to do that most of the time. A 6 % return in one month and then resetting is 96% annualized. Instead of trying to take the cost basis to zero will just take profit and reset. Will probably just use a 90 day option for the long side.

#spycraft
I think the best adjustment when the short strike is challenged is to butterfly it. You can set a defined p/l by broken winging it and skewing it if you have a bias. Just to stop losing can simply butterfly it. Seems to be the cheapest way to do it and least affected if it reverses. Yes you may lock in a loss, but much better than a full loss on the credit spread.

#pietrades and #lizardpies
Upside directional bias set it up as a synthetic long.
No directional bias, set up as a straddle jade lizard.
Downside directional bias set it up as a strangle jade lizard.
But I think setting it up as a jade lizard initially gives more flexibility in managing because of the extra credit. I will be doing A LOT more of these.
Can also leg in and out depending on how the stock moves.

Pouring here so going to work out in my garage gym. First bike race is in 8 weeks so need to lose 10 pounds and make friends with my fast again 🙂

Hope everyone has a good expiration!

MamaCash 6:52 am on Wednesday, January 23, 2019
Tags: SPYcraft   

SPY 21dte ladder

Sold SPY Feb13 IC 274/276/251/249 CALL/PUT @.49.
With SPX caught between support and resistance and volatility a little elevated, I added a layer to my ladder. Not a Tide trade.
#spycraft

hcgdavis 1:08 pm on Tuesday, January 22, 2019
Tags: , SPYcraft   

For some reason the reply…

For some reason the reply button is not working for me at the moment.
Adding to @jeffcp66 and @kathycon discussion below on SPX/SPY/ES credit spreads below, the idea is to get a directional kick if the short strike is violated. Sometimes it works and you get a good profit spike. From what I did with #spycraft the other day, not looking so good today but I did not have time to adjust. Hoping for a snap back rally tomorrow.

The way I see it there are 3-5 adjustments that may work most of the time, none are going to work all the time.
1. delta neutral buy back half of your short strikes. Works great if it keeps moving, not so much if it reverses like it has for me.
2. delta neutral, buy some options between your strikes. Same as above but probably a little cheaper and the same problems as above.
3. just closing it down at a certain loss level or closing it early. You could also roll out and up/down but may be hard to get credits if it has already moved that much.
4. butterfly, either BW or regular. This is probably the cheapest and can be skewed but then will have loss on one side, but fixed gain or loss on the other. At least you stop the bleeding at that point and lock in your gain/loss.
5. convert the short side to a calendar or diagonal like a #fuzzy and then manage from there but then you may be in a position a lot longer than you want.

Final decision up to you but I am going to keep experimenting with all 5 options to see if there is one that always works the best. Like @kathycon I think the butterfly will be the most efficient. Once on you can leave it alone and let it expire. Everything would cancel out.

hcgdavis 9:38 am on Friday, January 18, 2019
Tags: SPYcraft   

#spycraft Closed 5 of the…

#spycraft

Closed 5 of the 10 short 266 calls for the Feb 1 expiration for 3.49. The new Tradestation screens apparently put my orders in last week twice, so I ended up with 20 contracts instead of 10 on the put side. It is doing well so will leave them but I don’t have the margin for the ladder now. So anyway, sitting on my hands on this one until next week.

Once I can close the put side will re-ladder.

However, I don’t really see any reason to sell the call side at the moment so will just open the put side and leg into the call side later. If you are going to iron condor I would skew to the upside a lot. Looks like there is panic buying now.

So now have 20 contracts of the 245/242 puts, 5 of the 266 and 10 of the 269 call side. Keep on rallying. Cost 3.49.

I also adjusted the other account. It is now the 242.5/240.5 put spread 5 of these and 3 of the 268/ and 5 of the 270. Cost 2.38 to close these.

I figure if we can keep rallying will be a winner. If not can resell on the pull back.

Ladder on 1 account STO the Feb 8 255/252 put spread for 0.21. 10 contracts

No point in adding the call side until we have 2 sided action again.

MamaCash 9:08 am on Friday, January 18, 2019
Tags: SPYcraft   

SPY 21dte IC ladders

Sold SPY Feb8 275/277.5/255/252.2 call/put IC x2 @ .45
Joining the SPY21 dte ladder party with @hcgdavis. Will add a layer whenever a 21dte is available. Starting small but will increase size after I defend a couple to find out how that goes.
#spycraft

hcgdavis 6:53 am on Friday, January 18, 2019
Tags: SPYcraft   

#spycraft Making some adjustments to…

#spycraft

Making some adjustments to the call sides in SPY and EXPE. Too busy to post the actual trades at the moment, just trying to get them through. Will update later.

Looks like we are back in slow grind higher mode everyday.

MamaCash 6:42 am on Wednesday, January 16, 2019
Tags: , SPYcraft   

SPX 7dte IC defense

Per my SPX IC defense plan, I bought back half of my Jan18 2635 short calls. This will allow one of the long calls to run unhedged in case this rally continues into Friday.

#spxstrategy

#spycraft

hcgdavis 8:14 am on Monday, January 14, 2019
Tags: , SPYcraft   

#spycraft Just opened Feb 1…

#spycraft

Just opened Feb 1 expiration IC at the 245/242 puts for 0.25 credit and the 166/269 calls for 0.39 credit. Could probably get about the same now.

#fuzzy

WDC rolled the 4 DTE 70/70 out a week for 0.62 credit. Cb now 18.49.

The #spycraft trades will be managed as per the discussion last week. Hard adjustment points as soon as the short strike is breached or if in expiration week closed for a small loss or rolled. As long as we have 2 or more weeks left to expiration will back ratio.

hcgdavis 9:23 am on Friday, January 11, 2019
Tags: SPYcraft   

#spycraft Opened leg 2 of…

#spycraft

Opened leg 2 of the IC. STO the 21 DTE 268/270 ccs for 0.24. Now have the 242.5/240.5 and 268/270 IC for 0.44 credit.

I will open another batch on Monday after some stocks are finally called out.

Every Thur. or Fri. add another rung to the ladder but with so many SPY expirations you can do M,W, or F.

hcgdavis 8:38 am on Thursday, January 10, 2019
Tags: , , , SPYcraft   

Finally unraveling some trade adjustments…

Finally unraveling some trade adjustments over the last 14 weeks and bringing in some profits again. Have been flat for 3 months but a very nice week today 🙂

#fuzzy
EOG 110/110 with the back ratio ccs wrapped around it from the other day. With the slight pull back this morning I was able to sell 5 99 calls for 15 DTE for 1.97. What this did was lock in a no loss trade on the credit spread. Original trade was the 97/98 ccs. Back ratioed the other day. With todays trade I locked in a gain of $25 total if it closes at 98.02. Anywhere above 99 or below 97 that expands to $505. Basically inverted a butterfly but because of the gains from the back ratio now have that part of the trade risk free.
After the original post, rolled the 22 DTE 110 put out to 43 DTE for 0.45 credit. Cb now 13.96.
EXPE 120/120 125/126, 117/118 ccs and 118/120 ccs at cost basis of 9.43. Managing same as EOG. Any of the short strikes breached will delta neutral hedge (usually buy back half of the shorts).
GILD 70/70 cb 8.48. Will roll in 2-3 weeks.
MU 35/35 cb 14.80 and will roll 1-2 weeks
WDC 40/40 cb 19.11. Roll next week. This will be the longest to recover. Good thing I have a lot of time.
XBI 80/80 at 13.97 rolls in 2 weeks.
LNG 50/60 1 DTE rolled out 15 DTE for 0.48 credit. Cb 14.06
GILD 67.5/69 cb 8.90 and rolls in 2 weeks

#pietrades
LNG batch 1 61 CC should be assigned tomorrow at 57.70 cb
LNG batch 2 61 cc should be assigned at 58.53 cb.

#lizardpies
SQ should expire for full profit tomorrow. 667.50 profit on 3 contracts in 2 weeks. Finally an easy winner chicken dinner.

#spycraft
22 DTE 242.5/240.5 pcs for 0.20 credit. Small account so only 5 contracts. However, once batch 1 LNG expires this is one of the accounts I will re-dedicate to #spycraft with the mechanical management rules. Trying to double the 2 accounts in a year. Easy to keep track of since the new year.

I will be legging into an out of a lot of trades now. Anytime I can lock in a gain will do it. No guessing about what to do when short strikes are violated, they will be delta neutral hedged or shut down at a minimal loss, no questions asked. After looking at 4 years of #spycraft trades, controlling losses was the number 1 way to make this tactic profitable. The other way appears to be applying some timing by legging in and out of sides.

MamaCash 7:13 am on Thursday, January 10, 2019
Tags: , , SPYcraft   

SPX 7dte IC ladder strategy

Sold SPX Jan18 IC 2635/2640/2480/2475 CALL/PUT @1.30 x2

#spxstrategy
#bitty

#spycraft

hcgdavis 11:07 am on Wednesday, January 9, 2019
Tags: , SPYcraft   

Being mechanical and following my own rules.

EOG 97/98 16 DTE credit spread was breached on the short side this morning. I delta neutral hedged it by buying back 5 of the 10 contracts at the 97 strike . Actually could have done 3 but was in a hurry. Price was 3.1 after I had sold them for 1.48 last week. The math is complicated because I now have a 5 short: 10 long ratio against a put #fuzzy but looks like anything above 99.04 and I break even or make money. If we drop I can always sell 5 again to take the ratio back to 1:1. Since doing that I am up $1635 on the credit spread part this morning.

I will be doing this with any breached credit spread going forward based on the TT research that showed violated credit spreads rarely return to the original range. As long as there is more than a week left to expiration. If inside that would roll first out to 21 DTE or so and then back ratio.

EXPE STO 10 of the 23 DTE 118/120 CCS for 0.40 against a 20 contract put #fuzzy.

Will start some #spycraft on Monday once my LNG and XBI cc are assigned.

hcgdavis 4:15 pm on Sunday, January 6, 2019
Tags: SPYcraft   

#spycraft version 3.2 Ok guys…

#spycraft version 3.2

Ok guys (and gals). I did a bunch of research over the last 2 weeks. With the market volatility I wanted to restart these trades and also want the consistency back. My trading has been all over the map the last 14 weeks. I used to belong to a service that used this tactic exclusively but I dropped out after I thought I knew everything there was (wrong I still could not contain the max loss trades). Anyway, I was able to find results and trades going back to 11/14/14 to present. I had most from the service up until last year but was able to find a track record up to just a few weeks ago. I will spare you the details but the numbers are still impressive and include some wicked volatility spikes. I looked at every trade and if I had questions about the close used thinkback to see where prices were for opening and closing. Yes it was a lot of work but worth it.

Trades were placed every Friday during that time.

A total of 6 losing trades over that time but only 3 went to full loss. You can probably guess the dates (2 in August and 1 in December of 2015). Surprisingly Feb. 2018 did not result in a loss. The other losses were shut down early and I think that is what saved the service from having major losses. There were a few that were closed early either for a scratch or only a few pennies within the opening price.

Over that time the trades made 563.2% total returns.
78% annualized returns.
93.9% win rate, expected win rate was only 84% confirming what a lot of TT has proven. There is your “edge”.

So anyway I am restarting these in 3 smaller accounts, all under $7500 and one with only $1500 with the goal of doubling the account yearly.This most recent year they had 299% returns. I plan to manage it very mechanically but there are other options for those that want to do it differently.

Here are the rules and some guidelines to be consistent and prevent the big blow outs that can happen with credit spreads/Iron condors.

1. This is designed for SPY but would also work on SPX or /ES for those with larger accounts. However other tickers may even be better. I am sure IWM, QQQ, DIA would all work. I will use SPY.
2. 1 trade opened each week, usually Friday but since I am off Thursdays that will be my trade day.
3. Most of the time open an IC with short strike deltas around 16. However may leg in when the market is whippy.
4. DTE 21-56 but most often will be 3 weeks to 5 weeks. I plan on starting 21 DTE.
5. Run it as a ladder, each week will add a new rung.
6. 2-5 points between strikes. Need to have a little room there for adjustments but will also bring in more credit but keep the risk reasonable. The service mostly used 3-4 wide on the strikes. I will use 3 at first to not use up too much margin.
7. Keep enough cash available to make adjustments or close early. You will probably need enough cash to either buy back half of your shorts or add half as many long options between the strikes.
8. Delta neutral hedge when needed to create a back ratio. I personally will be using 2:1 but a ratio of 3:1 or even 4:1 may work depending on how early you catch it.
9. Expiring options that look like they really will close OTM will be allowed to expire thereby saving commissions. However, a lot of the time they will be closed early if there is enough profit.
10. Options that are close to being ITM will be rolled to new series.
11. There are probably 3 ways to control risk when the short option goes ITM but I am using a hard rule for this now. As soon as the short strike is violated I will do 1 of 3 things. This based on some TT research that showed violated credit spreads return to their range less than 2-20% of the time. If the strike is violated, you are probably in a trending/directional market at that point. These also depend on how much time to expiration. If there are a few weeks will go directional. If in expiration week will just shut it down.

A: buy back half of the short options creating a 2:1 back ratio. Then if we keep moving, you make some money from
the directional kick.

B: If I don’t have enough cash for that then I will just close the violated spread. In TOS you can probably set a
conditional order that would get you out for a 1.5-2 x the credit.

C: Add some long options between the strikes in same ratio as A, 2:1. This may be cheaper than buying back
the short strikes. Since SPY has 0.5 strikes would go 1.5 strikes from the short on a 3 point spread.

That’s it. We know this works, just have to control the losses and I think that is the key to success with this tactic. Let’s see how it works again with the hard rules for adjusting.

Jeff 11:05 am on Friday, January 4, 2019
Tags: , SPYcraft   

SPX Feb condor

#SPX1dte Sold $SPX Feb 2250/2270-2730/2750 condors for 3.00. Will close at or near 50%, or 1.50.

#spycraft

hcgdavis 7:07 am on Friday, January 4, 2019
Tags: , SPYcraft   

Credit spread tweaks

EOG STO the 21 DTE 97/98 ccs for 0.23. Cb now 14.41 against a 120/120 and 125/126 put #fuzzy
EXPE STO the 21 DTE 117/118 ccs for 0.20 credit. Cb now 9.43 against a 110/110 put #fuzzy.

It rained over the weekend and my family was busy so I watched a bunch of tasty trade re-runs. 2 things I forgot about. They did a section on defined risk and looked at the number of times tested credit spread returned back to the level you placed the spread. It was less than 2:10 times, actually I think as they looked across multiple occurrences and it was much lower around 2%. So gave me an idea for credit spreads and #spycraft which I will start up again next week after some CC are called away.

I will be very mechanical in adjusting credit spreads now. As soon as the short strike is breached, I will delta hedge it to neutral and create a back spread. Odds improve that if it is breached will not return to that level so at that point you have a directional trade and might as well take advantage if it.

What this means is that if the short strike is breached, I will buy back half the # of shorts calls/puts as the original credit spread thereby creating a 2:1 back ratio. Then if we keep moving in that direction you get the boost from the directional kick.

Probably best to set these up 21-45 DTE so you have some room. A weekly probably would not work as well once ratioed because of the gamma effects close to expiration.

hcgdavis 3:32 pm on Monday, December 31, 2018
Tags: , , SPYcraft, synthetics, unhingedfuzzies   

Happy New Year!

Good riddance to trading in 2018. I survived but given the SVXY melt down in Feb. and the last 3 months did not make any money, in fact flat for the year at the same levels I dropped to in Feb. Some accounts up a little, some down but the total portfolio basically flat.

However, as much as I thought I knew I learned a lot more, thanks to a lot of people on this site.

Some fairly decent changes and adjustmentswill be made to my trading for next year. The biggest changes will be changing my directional bias early, always keeping a portfolio hedge (but not until VIX drops and options are cheaper) and bringing in more income with proven strategies.

You will see a lot more #lizardpies using either straddles or strangles depending on the ticker, #unhingedfuzzies, #spycraft will be resurrected but with a hard rule for adjustments based on deltas/gamma, and a lot more synthetic trades to capture directional moves. This may include #riskreversal or outright #synthetics.

Cheers to a new year, new opportunities, and the collective ideas of the group making us all more successful traders!

Chris

hcgdavis 4:20 pm on Monday, October 22, 2018
Tags: SPYcraft   

#spycraft If I can generate…

#spycraft

If I can generate enough cash with some rolls this week, I might start nibbling on SPY IC or at least one sided credit spreads. Would be a shame not to at least collect a few $ with the premiums being higher than they have been in a long time.

hcgdavis 5:38 pm on Sunday, August 5, 2018
Tags: , , SPYcraft   

#hedge Thanks for all the…

#hedge

Thanks for all the ideas below. I gave this some thought while mowing the lawn, push mower, ear plugs in, so I tend to think trading issues over while I am doing it and have about 1.25 hours to do that every week because it keeps raining and my grass keeps growing. Most years it is brown by now and I take a few weeks off mowing. Some of my best ideas have popped in my head while mowing but also some of my dumbest (no you really shouldn’t build a mini plane using a lawnmower engine, well you can but does not make it a smart idea and you would likely end up making a flaming hole in the ground).

So here are the best options I can figure out.
1. Straight SPX/SPY put purchase. Most months will lose almost all of it. Have to adjust as the market moves. If your hedge was set up at 2700 and the SPX is now 2800 your hedge will not cover as well as it did when you put it on. Maybe 1-2 times a year pays out decently, once every 15 months is a lottery ticket. Can sell other options to pay for it but bottom line is you are buying insurance and we all know how that usually works out. Can roll it to at least recover a little of the premium you paid. This is what I put on Friday.

2017-12-01-TOS_CHARTS

2. Risk twist. Cheaper than above good downside protection but leaves a gap at expiration where max loss can still occur. Same issue as above, needs to be adjusted as the market moves but starting 90 DTE gives you more time and less expensive even if doing 4 times a year. I suspect the payouts are about the same as straight puts since you are long puts on a ratio. Switched to SPY for example. 3 long, 2 short ratio with a 10 point spread. Similar to a back ratio or a modified butterfly.

2017-12-01-TOS_CHARTS

3. Credit spread on SPY or SPX or /ES but you have to act quickly on adjusting. Say you sold the SPX delta 16 put and then bought an option 10 points below. For example sell 10 the 2600 and buy the 2590. If the delta on the short makes it to a delta 30 you would buy 3-5 of 2595 puts to effectively create a back ratio. No graph, we have discussed this as an adjustment in the #spycraft discussion. The only issue with this is you have to act quickly sometimes and occasionally the move is in the middle of the night like on 8/24/2015. The /ES was down 300 points when I woke up and any adjustment then was limiting losses, not making more $. At that point it was going to be painful no matter what I did. I suppose if you traded /ES you could adjust it in the middle of the night or even SPY and SPX now. The big advantage here is you take in a credit when you put the trade on so buying options could be taken out of the credit. On a big move buying extra options will cost more though. Likely would only have to adjust 2 times a year and you could also ladder and start 45 DTE to make the most of theta decay until the move happens. You also need to leave enough room between the strikes so that you can buy in between. The others are set and forget for a while, this one would need checking every day like any sold option. Most of us here do that anyway.

4. Front spread/back spread or back ratio depending on your vocabulary or possibly a #rocketmanhedge here?
On SPY assuming a 10% correction which I did with all of these, you sell one 265 put and buy two 260 puts for $175 debit. The debit on the risk twist above would be $219 for a similar looking graph. Also keep in the mind the straight put purchase is for 30 DTE, the risk twist and the back ratio are set up for 90 days and the credit spread at 45 DTE. So there are some timing differences and the time component would need to be managed on all of them. Front spread is buy one sell 2 so really would not help in this case, unless it was a call spread and set up for a credit. Then in a correction you would keep the credit.

2017-12-01-TOS_CHARTS

So the winner is? Up to you. I suppose it depends on what you want. Lottery ticket go with straight puts but most months like a lottery ticket you will lose your money. The risk twist and the back ratio decrease the cost but still need a really big move to pay off. Advantage is you can get another 2 months out of them for a cheaper cost than the monthlies but in either case as the market moves would need to be adjusted. A 10% correction from 2800 is going to be a lot different strikes than a 10% correction from 2600 on SPX.

Finally we have the credit spread converted to a back ratio. Paid up front, theta helps you, but on those 5 standard deviation moves might not have time to pull the trigger at the right moment. But at least you are then risk defined and can probably roll until the market settles down. I was able to do that with a few of my accounts on 8/24/15 and actually broke even after about 3-4 weeks. Still there was a lot of red on the screen until then. Also the markets became really wide and it was hard to get decent fills. TS and TOS did ok with it, optionsxpress and fidelity not so much and is why I do not have accounts there anymore.

My personal vote is probably the back ratio or a credit spread adjusted to a back ratio early. Cheaper than a straight put purchase, longer acting, but still pays out the lottery ticket when needed and simpler than a risk/twist, less moving parts.

Floor open for discussion. Anyone have any other or better ideas please let me know 🙂

I am at the point in my trading career and my accounts are big enough a few of them need insurance most of the time. I plan to do these going forward and will report on what is the best cost/benefit ratio.

ncroadrunr 10:30 am on Monday, July 16, 2018
Tags: SPYcraft   

#spycraft What do the IC…

#spycraft

What do the IC or SPX traders think of this opportunity:
Sell Jul 16 2795/2800/2805 for $3.40. The risk is $1.60 with relatively large cushion. It seems attractive to me but I have little experience with IC’s.

edit: Present price 2799 +/- with price mid-point varying 3.30 to 3.50.

Jeff 8:27 am on Thursday, June 28, 2018
Tags: , , SPYcraft,   

Moving a lot to cash

I’m starting to take a lot of trades off and putting fewer new ones on. I am doing this for these reasons:

1. The #SPXcampaign has not been working well in 2018. It was my core strategy starting in January 2015 and worked well through 2016. In 2017, I got crushed a little too much on the upside, and now this year’s whipsaw has been too difficult. I’m going flat in $SPX. Currently I only have a couple of OTM call spreads which I’ll be closing a bit cheaper. I will look to start fresh in the coming weeks or months after I assess the strategy.

2. I have been long a few tech stocks and selling calls. I was also rolling into strangles when calls got breached. In the last week the puts have been getting hit. So I’m keeping the stock for now but have closed most puts. I will sell covered calls if we move higher, or stop myself out if we move much lower or go into more serious correction.

3. I’m not feeling positive about the market. Of course, me typing this paragraph will likely mean today is the bottom! But the market action, the tariff fears, and other reasons for 2018 volatility do not seem to be abating. Plus record low unemployment is often what precedes a recession, and the nation’s debt and deficits are flying to new highs. I by no means am certain of a crash, and I wouldn’t be including this in my decision if it weren’t for #4.

4. My family is spending a month in Japan from late July to late August (my wife is from there, so we’ll be visiting family and touring). The NYSE opens at 10:30pm Tokyo time… I intend to keep trading lightly, but do not want to be going through volatility with lots of positions and having to stay up all night.

I hope to reset my mind, catch up on bookkeeping (both trading and household), and build out this website a bit more.

So, to summarize: I am closing out SPX, TQQQ
I’m keeping stock in AAPL, BABA, SQ, and FB, all with stops set in not too much lower than current prices. BABA is a bit underwater but the other three are nicely in profit.
I have stock also in these which are currently struggling: #PieTrades in MU and AMAT, and broken earnings trade in OLED. I’ll let these sit, sell calls, and dump them if they can’t recover soon.
The only #VXXGame trades I have are long puts in $VXX, a trade that would have worked every year for the past 9 (except maybe 2011), but is NOT working in 2018. Also long $SVXY stock and short a small amount of $VXX stock. I have way OTM long calls on UVXY and VXX, so I’m prepared to sell volatility should it get expensive.
Still short some puts in RH, YY, and GUSH, which I’ll allow to decay.
Long LEAP calls in PYPL and SQ which were cheap, so no reason to close. I will sell calls against these.

And that’s it! Let me know any questions you have about positions you were following.

#spycraft

MikeL 11:06 pm on Monday, June 4, 2018
Tags: , , SPYcraft, ,   

#vxxgame With the Vol getting…

#vxxgame

With the Vol getting so low, is it a good time to buy some Leap calls in UVXY or VXX?

#fuzzy, #pietrade, #spycraft, #supercharger

hcgdavis 5:54 pm on Saturday, June 2, 2018
Tags: , , , SPYcraft,   

Some observations as I closed…

Some observations as I closed out another week. Good 3 weeks 🙂 the pull back a few weeks ago really helped.

1. Critical mass on accounts seems to be around 50k. At that point the compounding really starts to kick in and the account becomes self sustaining for positive theta, #pietrades, income trades. Trades that need to be adjusted do not seem to affect the account value as much at these levels as well. Trading 6 different accounts with different values, lowest $3500 so can really see the difference. Each contract adds a lot more cash each week. 5-10 contracts is where the income really starts to compound and pay off. Even 3 contracts is a lot better than 1 unless talking AMZN or PCLN.

2. Some names are just better than others. GM is out as soon as it closes this week. Names with perceived high volatility but don’t really move around a lot and have good premiums (0.5-1% per week minimum) do the best and are easier to adjust.

3. I try to suck all the time value out of an option but once down to 0.2 roll it for better theta decay.

4. defending trades, easier to do it before the option goes way ITM or better yet, roll it before it even gets there. You will loose a little in time value but by rolling earlier you can stay ahead and continually bring in credits. Now if it is sitting right ATM I will wait until the last minute to roll it but if there is any time left, easier to roll early.

5. Taking a slight directional bias really increases returns. Allows to sell puts closer to ATM and also time call sales better.

6. For small accounts the #supercharger seems to work the best. Better ROI than credit spreads, less adjusting, less risk overall (defined) and more cushion for pull backs as you are already deep ITM. However, have to work the spread on entry or the exit is not as profitable. For any of my accounts under 10k I will be doing a lot more of these. 10k and up probably #pietrades with some #fuzzies thrown in. Occasional #spycraft as well but to be honest the #supercharger are doing much better when we have pull backs and more consistent gains.

Sitting on my hands until Fri. Hopefully we have a pull back, at least a little one where no one gets crushed 🙂

#fuzzy

ncroadrunr 8:55 am on Friday, June 1, 2018
Tags: SPYcraft   

#spycraft Add another spread Jun…

#spycraft

Add another spread Jun 01 2740/2750 for $1.00cr, delta 0.14 when SPX 2730.01

ncroadrunr 7:26 am on Friday, June 1, 2018
Tags: SPYcraft   

#spycraft STO BeCS Jun 01…

#spycraft

STO BeCS Jun 01 2735/2745 for $1.50cr at 9:55
added BuPS Jun 01 2715/2705 for $0.75cr 10:07, should have held out for $1cr

hcgdavis 7:56 am on Thursday, May 24, 2018
Tags: , , SPYcraft,   

Long weekend=extra theta.

#pietrades normally would have rolled/closed these tomorrow but there are only 4 of us in the office tomorrow (usually 14) so I doubt I would have any time to trade. Will be busy!

BTC MAR 139 puts for 1.70. After 2 rolls still made $459 in 2 weeks. Did not like the way the chart was starting to look. With gas/oil prices climbing may be less travel this summer.

This brings me to my next conclusion. It is debatable whether to trade individual tickers on #pietrades for the higher premiums than we get with ETFs vs taking advantage of some of the leveraged ETFs. Personally I am trying to move to ETFs, but the weekly premium dried up. Today might help. SMH still looked good for a week but IBB, XBI and the indexes all dropped their juicy premiums. So anyway, I have been doing this for several months now, I think it may be safer and easier to trade the leveraged products. You do not have single company risk, the premiums are high enough they are easy to roll. Yes in a big market drop they will get crushed but in looking at their histories most would be reverse split instead of liquidate like XIV/SVXY. Thoughts? Anyone see a risk I am missing?

So with that said with the recent splits looks like the list from a few days ago is still accurate but the liquidity is not all the way back on TQQQ and UPRO. I tried to #supercharger them but the market makers were not giving reasonable fills.

GM 37.5 CC expires 6.8. Was going to try to keep it for the dividend now but rolling only gives me .14 credit, not worth it. Hopefully I will be called out early for the dividend so I can use the cash somewhere more productive.

LABU STO 84 put for next week 8 DTE for 1.45
LABU rolled 85 put to next week 84 for 1.05 credit.
LABU rolled 85 put to next week 84 for 1.1 credit

AMAT rolled 51 CC to next week for 0.36 credit. Cost basis now 53.11 and will keep chipping away.
AMAT 50.5 CC rolled to next week for 0.42 credit. Cost basis now 49.93. Will allow assignment or roll again next week depending on premiums.

#spycraft closed the 15 DTE 265/262 pcs fro 0.25. sold for 0.24 so lost .1 and commissions.

#supercharger Found a good use for SOXL and BIB since they don’t have weeklies.
SOXL 22 DTE 125/130 vertical debit spread for 4.65. Should close for 5 credit close to the end. 30 + points ITM and still able to squeeze out 13-14% return for 22 days. That’s 169-182% annualized and easy to mange if it implodes.

Hope everyone has a great long weekend! Thanks to all those who served!!

#fuzzy

hcgdavis 8:41 am on Thursday, May 17, 2018
Tags: , , , SPYcraft   

Done sitting on my hands,…

Done sitting on my hands, theta did it’s thing.

#pietrades
MAR 139 put expires tomorrow rolled out to next week for 0.81 credit. Cb now 137.08 if assigned.
GM CC expires in 3 weeks 37.5 cb 37.72 but if ITM good bye finally. That will be 22 weeks in the trade to almost scratch it. The money will be put to better use somewhere else!
BTC MU 52.5 put for 0.04 sold for 0.63
STO LABU 85 put at 1.45. cb 83.55 if assigned 8 DTE
STO LABU 85 put at 1.2. Cb 83.8 if assigned 8 DTE
AMAT 55 put should be assigned tomorrow at 54.02 cost basis. Will flip to CC on Monday.
BTC AAL 42 put at 0.04 sold for 0.53
AMAT 52.5 put should expire tomorrow, cost basis 50.80 even if assigned. Reload monday.

#spycraft 22 DTE PCS at 265/262 was sold for 0.24. Just waiting another 1-2 weeks for some decay to erode it then will roll it.

Will only have 2 trades for Monday, then sit on my hands again until Thurs or Fri depending on what the market gives us.

Raining here but still going out to bike, have a good expiration!

#pietrade, #s

hcgdavis 10:53 am on Monday, May 14, 2018
Tags: , , SPYcraft   

Found a few for the…

Found a few for the weekly #pietrades that expire this Friday.

BTC IBB 104.5 puts for 0.25. Sold Friday for 1.15, thanks mr market

#spycraft SPY 25 DTE 265/262 put credit spread for 0.24. Waiting on call side until the manic buying stops.

STO AAL 42.5 puts 4 DTE for 0.53 credit. Cb 41.97 as long as @fuzzballl stays off the throttles, fly slow!

STO MAR 4 DTE 139 puts at 1.1 for cb 137.9 if assigned.

GM 38 CC 2 weeks rolled out 25 dte to 37.5 for 0.32 credit. Cost basis 37.72 and if it is above 37.5 they can have it. Just want the cash out so can trade other tickers.

STO MU 4 DTE 52.5 put for 0.86 cb 51.87 if assigned.

STO 4 DTE AMAT 55 put for 0.98. Cb 54.02 if assigned.

Usually not that active on a Monday but had a ton of expirations on Friday and since IBB gave me a gift was able to double down on MAR doubling my usual cash income 🙂

Now I sit on my hands until Thurs. or Friday.

#pietrade

hcgdavis 10:21 am on Monday, April 30, 2018
Tags: SPYcraft   

I am usually not an…

I am usually not an earnings player, but the premiums in AAPL are too juicy to pass up.

If I had not used a big chunk of margin I would buy 5 of the 165 cc and sell 5 of the 165 puts for Friday, earnings today I believe. Only have enough to sell 1 contract so:

STO the AAPL 160 put at 2.14. 4 DTE but if up after earnings will close early. If not, roll it.

#spycraft

hcgdavis 8:14 am on Friday, April 27, 2018
Tags: , , , SPYcraft,   

Expiration and learning/growth opportunities

Sometimes it takes blowing out an account (or 2 on SVXY) to really make you focus. I have always learned more with a 2 x 4 to the back of the head than with a gentle nudge. So I went back to the drawing board, looked at all my trades that worked, what didn’t, and some alternative ways to trade and it has allowed me to concentrate on what works since Feb. 6, 2018. You would have thought I would have kept something in my head from Aug. 24, 2015 but apparently not.

So here is what I have going forward in order of how I am trading in the future.

#pietrades. This is my bread and butter, pays the bills, making some of the losses back, easy to roll and adjust and works week in and week out no matter what the market does. Occasionally get stuck with one for a while, currently GM but can usually roll them to even.

#supercharger. Works better than credit spreads for really small accounts. I have learned how to adjust from @jeffcp66 and from the options for edge book, but because of my schedule I can’t always make the adjustment in time before they go ITM or breach the short strike. By then you are already controlling losses not making money. They expire for full profit most of the time because you set then up deep ITM, if assigned on the short strike easy to exercise your long, and very easy to convert to a #fuzzy or calendar leap if they explode. Then fairly easy to work back to even or profit.

#spycraft will be rolling some of these out on the mid size accounts again but found that the ones that were farther out in time were easier to manage. So these will be 21-45 DTE in the future, mostly using spy but some qqq, iwm and maybe even dia. 3-5 points between strikes so I can manage by buying in between the strikes when needed and will not let them go to expiration, will close at 50% profit or any profit that is decent.

CC straddles or strangles if have just taken assignment on a short put and at a support area.

CC return more on a cash basis than puts so with my #pietrades will be selling puts a lot closer to the money with the hopes of getting assigned so I can immediately flip to CC.

#fuzzies are a great way to convert losing trades into break even or winners.

The higher the premiums the easier it is to roll. So I am looking at the history of how often the move is exceeding the expected move. GM is a good example, expected move exceeded almost weekly but the premiums were crap so I have been rolling it for 15 weeks now. The higher premium names even when exceeded were usually back to break even in 2 weeks. Less work + more money = more free and fun time!

Never being short unhedged volatility again!!!

Sticking with those tactics and keeping it simple and profitable until the market changes and these no longer work and have to adjust again, but I think these are tactics that can work in any market condition.

With that said, bunch of rolls today and was assigned early on a few.

ERX #supercharger 20/25 assigned for full profit. Put on 21 days ago for 4.55 debit closed at 5 credit

EXPE 104 put expiring worthless :). That account will open #spycraft on Monday.

Smallest account AAPL 145/150 ITM call debit spread. 3 contracts max gain $207 for $1293 at risk. That is a 16% ROI if AAPL anywhere above 150 or 206% annualized. I will be doing a A LOT more of these going forward on the smaller accounts now that I have seen how they work for 8 weeks and even adjusted 2 to #fuzzies.

FAS 65 CC in 3 different accounts. Rolled for 1.14, 1.1, 1.15 credits and cost basis now 57.92, 55.74, 61.33 with FAS at 64.03.

Hope everyone has a good expiration and great weekend!

Jeff 12:49 pm on Wednesday, April 4, 2018
Tags: , SPYcraft   

SPX calls stopped

#SPXcampaign I do not see clear skies ahead, but I still gotta keep call spreads from becoming ITM. I legged out of this one, something I rarely do. But when this market moves up or down so clearly into the last hour, there’s little chance of a reversal.

Closed $SPX Apr 6th 2650/2675 call spreads for 6.60. Sold for 3.65 on Monday.

Will look to roll on the next extreme, whether it be a high or low extreme.

#spycraft

hcgdavis 5:32 pm on Friday, March 23, 2018
Tags: , SPYcraft   

Not done with the Mark…

Not done with the Mark Sebastain book but a few things about adjustments, may need them. Unfortunately I have a few trades that will take me a while to unwind so won’t be able to do these for a while.

Butterflies, adjust once you are at the long strike. Basically buy some more and the ratio will boost returns.

Credit spreads, leave enough space between the strikes so you can buy in between. Usually a 3-4 contract buy on a 10 lot will flatten your deltas. If it then keeps moving you have a back ratio and any further movement will increase your profits. Other option is just back ratio the spread, say buy back 1 short for every 3-4 long contracts.

Naked options, the best way we have found is to turn them into a #fuzzy.

Full disclosure, I have not had time or the opportunity to do any of these real time, but they look like they will work in thinkback. Most of the time it flattens your loss but don’t expect a huge profit on an adjustment except in the case of a continued move if you ratio it.

Some people may get margin calls over the weekend, Sunday open could be interesting and I might take a directional trade then. Have to see.

Have a good weekend.

#spycraft

hcgdavis 8:17 am on Thursday, March 15, 2018
Tags: , , SPYcraft   

#pietrades STO the next week…

#pietrades

STO the next week 8 DTE FAS 68 CC at 67.20 in IRA, only 300 shares.

Tomorrow have some expirations that look safe for now.
WDC 87 CC will let call out
FAS 67 CC will let assign

That’s all for this week. Mostly need to sit on my hands and let theta do its magic.

I need to place some #fuzzy trades and #spycraft trades to improve ROI but to be honest, my trading confidence is still low after the SVXY debacle. To have an entire year’s worth of trading profits wiped out by one trade has been a major gut punch. Luckily I learned to segregate accounts after 8/24/2015 and only affected 2 out of 7 accounts. I know how to trade, fairly good at it, the SVXY was an isolated event, but still sits in the back of your head and prevents you from hitting the send button on some trades I know are good.

After I successfully manage what I currently have on and have a few cycles of profitable trades it should get some mojo back.

As I am reading “Trading options for edge” realize I probably need to manage the positions and portfolio by the Greeks more, especially delta and gamma. Learning some new hedging techniques that should be very beneficial and will post them as I use them and learn them.

hcgdavis 4:25 pm on Sunday, March 11, 2018
Tags: , , SPYcraft   

#pietrades, #optionladder, and #spycraft Spent…

#pietrades, #optionladder, and #spycraft

Spent last hour looking for trades this week after finishing taxes :). Not much in the way of #pietrades for the week, everything is extended and the decrease in vol sucked out some of the juicy premiums.
The best I can find is the BIB 62-63 CC depending on how aggressive you want to be. Other option is the put side but have to stay close to the money to get any good premium.
Also looking and ANDV (the old TSO) around the 100-103 level either CC or puts, your choice they are at parity.
GM assigned over the weekend, will sell 39 CC a few weeks out. Cost basis 39.3.
LNG already set up for Friday at the 55 CC.

With that in mind, may go out 26 DTE today 25 tomorrow and set up some ladders to give some more downside protection. Bunch of tickers there, AMGN, ANDV, CVX, MAR, MON, NKE, NSC, UNP, PSX, UAL, VLO, XBI. The 20 delta puts all have good premiums on these and don’t mind taking some shares if assigned.

#spycraft on hold. Looking back the last several weeks, the expected move on SPX/ES/SPY has been exceeded 3 out of the last 5 weeks both to the up and down side. That means the options are not priced correctly, we are not making enough for the risk. Once the pricing is back in line, or the vol. is higher to reflect the movement of SPY will restart. Also going forward will manage by buying in between the strikes if it looks like the short strike will be breached. See previous discussions for the specifics.

Hope everyone had a good weekend!

Will decide what to do with some of these trades at lunch time tomorrow.

hcgdavis 7:51 am on Thursday, March 8, 2018
Tags: , , , SPYcraft   

#pietrades First positive week since…

#pietrades

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.

1. #pietrades
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.

thomberg1201 7:43 am on Wednesday, March 7, 2018
Tags: , , SPYcraft   

#spxcampaign SPY version #shortputspread Sold…

#spxcampaign SPY version #shortputspread #spycraft
Sold 2 March 16 265/267 put spreads for .40 each

MikeL 2:07 pm on Monday, March 5, 2018
Tags: , SPYcraft,   

#spxcampaign I am curious if…

#spxcampaign

I am curious if there is a version of #SPXcampaign that does not require watching the monitor all day long?
I reviewed all posts on this site for #SPXcampaign going back to 2016 and noticed that Jeff has to do a lot of rolls and must stay on top of the action.

Going far out and down, does reduce the need to watch SPX every day, but it also produces small results.
Someone recommended going with a fewer contracts, but $50 to $100 wide, because it would be easier to manage a spread this wide.

In 2015 I was actively trading SPX spreads $20 wide and got wiped out in August.
Just trying to find something more consistent and less demanding. 🙂

Edit: I have a regular margin account, no portfolio margin.

Any suggestions?

#spycraft, #vixindicator

hcgdavis 9:00 am on Friday, March 2, 2018
Tags: , , SPYcraft   

#pietrades and #optionsexpiration Not much…

#pietrades and #optionsexpiration

Not much today, taking assignment of LNG puts at 55.5 strike. Cost basis 55.02. Start selling calls on Monday.

Rolled NSC 141 covered call today to next week 140 for 1.40 credit. Cost basis now 138.57.

Already rolled GM to next week, will take assignment, collect dividend then sell calls. Cost basis 39.3

MAR 138 does not expire until next week because I hit the wrong button on Monday when I sold it.

Once I clear some of these out will restart #spycraft actually using spy and will adjust by adding in the middle calls/puts if needed. First adjustment would be a roll like @jeffcp66 but if it keeps moving then try the new style.

Will set up 45 DTE and each 3-7 days add new cycle. Once 3-4 weeks rolling manage it like a continuous ladder of credit spreads.

hcgdavis 1:39 pm on Thursday, March 1, 2018
Tags: , SPYcraft   

Credit spread adjustments, will be…

Credit spread adjustments, will be good for #spycraft trades and #spxcampaign among others.

Reading the new book “trading options for edge”. Fairly technical but about half way through now but hit on an adjustment for spreads that is so simple, why didn’t I think of that? Maybe even easier and more profitable than rolling or can at least scratch a trade.

For this to work you have to set up a credit spread that has at least 1 strike between them. For instance you could not do it with a 267.5/267 spy spread but you could do it with a 267.5/266.5. Also need to keep some cash ready for the adjustment.

So if your short strike is in danger of being breached, just buy a few options between the strikes. So say you had the 268/263 spy put spread and about to breach the 268 strike. Say you had 10 contacts, you could buy 3 or 4 of 265 puts and it would basically neutralize your gamma and delta risk. The other benefit is if it keeps moving once you are past your long strike would start showing a profit again because you are net long options and basically have a back ratio spread, just with tweaked strikes. Would work great on a day like today.

Worst case scenario is it stalls out after breaching your short strike but at least you have reduced the max loss a lot and if there is still enough time in the trade you may be able to scratch it for even.

As I said, duh, why didn’t I think of that. I have 8 different ways to adjust a losing credit spreads but this is probably the easiest and most effective. Much easier than diagonal, calendar, butterfly, BWB, back ratio or any of the other adjustments because you do not extend duration. It will all close out at the same time.

I will try it in a week or 2 once I clear out this round of trades. May intentionally set one up to blow up and see what happens.

I also was looking through past #spycraft type trades and the ones that were put on 21 or more DTE had better results than the shorter term ones. More time for a big move to reverse.

Going forward, these trades with be 21 or more DTE and if they need adjustment this will be the primary adjustment.

hcgdavis 4:06 am on Thursday, March 1, 2018
Tags: SPYcraft   

#spycraft Cue the chicken, BTC…

#spycraft

Cue the chicken, BTC the 2480 puts at 13.75 this morning for $760 loss. I will be away for a few hours this morning and don’t have time to adjust or trade against it.

Will revisit later

hcgdavis 4:12 pm on Wednesday, February 28, 2018
Tags: SPYcraft   

#spycraft Booking profits already on…

#spycraft

Booking profits already on the call side of the /ES 37DTE 2480/2900 strangle. Sold the call side for 3.50, BTC after hours (it trades 23/5) for 2.05. 42% profit in few hours so I will book it.

Will leave the put side on and if we get a bounce sell calls again after runup. If we roll down will short 2 futures which would offset the loss all the way down to 2300 or lower, actually the p/l graph at that point shows a 13k profit. The cool thing with futures is you do not always need the same # of contracts as options because of the delta weighting. A future contract carries a hard delta of +-50 and these options are so far OTM you do not need 1:1 ratio for covering like a stock ticker.

geewhiz112 11:49 am on Wednesday, February 28, 2018
Tags: , SPYcraft   

Spycraft / Short Put ALGN / Closed Early BABA

#spycraft
$SPX STO 4/20 2480/2900 Strangle for 18.90 Thank you @hcgdavis

#shortputs
$ALGN STO 4/20 230/240 BUPS at 1.50

Closed Early
$BABA BTC 3/16 200/190 BECS at 20% of full profit

hcgdavis 10:40 am on Wednesday, February 28, 2018
Tags: SPYcraft   

#spycraft Finally learned enough (not…

#spycraft

Finally learned enough (not sure smart would be the correct adjective) to keep some cash on the side for when volatility is higher.

STO the /ES 37 DTE 2480/2900 strangle for 12. Only 4 contracts, the account would handle 8 but see I learned enough to keep some extra on the side to go short or long the future if needed for adjustments or be able to add another week later. Theta is 125 a day on this so hope to hold it for 10 days then roll to next cycle or close for 35-50% profit.

From now on I am taking profits early if they are available. Anything 25-75% would be enough.

hcgdavis 8:45 am on Tuesday, February 27, 2018
Tags: SPYcraft   

@fibwizard whats your next support…

@fibwizard whats your next support point?

Looking at a #spycraft trade but not sure if I want to put it on today or wait until we find support again.

hcgdavis 11:48 am on Friday, February 23, 2018
Tags: , , , SPYcraft   

A years worth of trading…

A years worth of trading and learning condensed into as few lines as I can write.

Had 5 days off to go skiing but was 70 on Wed and raining since, not good for skiing so am getting my taxes done early this year. I review every trade from the previous year so here are some lessons I learned, a few of them the hard way.

SVXY was my biggest winner until it became my biggest loser. Don’t hold unhedged short volatility. Probably better to use spreads or just buy VXX puts. Even if I had just left the #fuzzy would have limited my losses to 5 k.

#pietrades are very effective but occasionally get one that you have to roll for a long time and ties up a bunch of capital. You can eventually roll it for even or a profit but I think there may be a better way to avoid that but have not discovered it yet. I will be looking for the happy medium between tasty trade 45 DTE and 1 week with #pietrades to see if I can avoid having to roll as much. Recent segment on tasty trade says 30 DTE may be between them. Maybe I will start some positions there on Monday.

https://www.tastytrade.com/tt/shows/market-measures/episodes/shorter-duration-or-managing-earlier-01-12-2018

Managing winners really is more important than trying to save a large loss. Had I just closed SVXY at the end of the day when we were sitting at 70 I would have broken even. Instead now have 70-80% to make up loss.

Diversification is good, but once above about 10-12 tickers, tends to water down returns. I will be trading the same names a lot more this year.

CC can make more than naked puts because of the additional capital gains and skew built into some names. I will be doing more balance between CC and put sales.

#fuzzies are a good way to recover a position that really went the wrong way. Less capital at risk and if set up with a hedge limited risk. However, they take a while to repair a really bad trade. Months in some cases.

As much as I try and have the tools, I just can’t make directional trading work for me. Don’t have the time when I am at work and when I am at home don’t want to sit in front of a computer. However, timing the option sales improves returns and winning percentage. Will sell options more often at the pivot points going forward.

Selling options beats the crap out of any other trading strategies I have tried over the years. All my good trades (except SVXY) started with an option sale as the beginning of a position.

Look at positions instead of a trade. You may lose on sales the first 4 weeks but with recovery eventually can get out with a profit.

Weekly options make adjustments a lot easier.

My fellow bistro’ers gave me a lot of ideas that ended up being profitable. Thanks! 🙂

#spycraft also works and thanks to @jeffcp66 for showing me how to roll credit spreads, however, make sure it is in an account that can handle that. Tradestation cannot which is where I was trading those and with the run up the call sides were taken out but they would not let me roll. TOS fine so will be firing up some spy trades again soon with the TOS accounts.

Keep the ideas rolling, looking forward to trading with everyone again this year and maybe we keep a 2 sided market for a while 🙂

hcgdavis 2:38 am on Friday, February 2, 2018
Tags: SPYcraft   

#spycraft Closed the 42 DTE…

#spycraft

Closed the 42 DTE /ES 2575/2955 strangle. It will probably be fine in the long run but I do not have time to watch the market the next 10 days.

The put was bought for 8.25, sold for 7.25 and the call was both for 3.15. 2 contracts so $100 loss plus $2.5 commissions.

hcgdavis 8:20 am on Thursday, February 1, 2018
Tags: , SPYcraft   

#pietrades for next week. Just…

#pietrades for next week.

Just sitting on my hands to let theta do its work, currently 748 in my favor. But here is management for anyone following.

AAPL the time value in the 165 CC should crush after today. As long as I can roll the CC to next week for 0.5 credit or roll up a strike for even, will do either of those. If not will let it assign over the weekend for full $471 profit on 3 lots. If it drops will sell a call next week.

GM is currently 0.25 ITM but still showing a slight profit. Will let it assign then sell CC next week.

GILD is still deep ITM but with the pullback do the same as AAPL. If I can roll it in 2-3 weeks for a 0.5 or higher credit or move it up will roll. If not will let it call out, it still has 21 DTE because of recovery trades.

SVXY 125 puts expire next week, currently ITM and will probably let them assign and flip to CC the following week.

I am fairly flat at the moment. Going snowkiting (skiing with a kiteboard kite) in Maine next week to a place there is no internet or even cable TV so did not want anything on I had to babysit. I can take assignment on everything I have on or let it expire for max profits. May even tackle Mt Washington, have not been up there in 17 years!

The only trade I may close or tweak before leaving is the #spycraft /ES strangle which is already showing a profit but will let some more value decay over the weekend. I can trade until Wed.

hcgdavis 5:37 pm on Wednesday, January 31, 2018
Tags: SPYcraft   

#spycraft Sold the 44 DTE…

#spycraft

Sold the 44 DTE /ES 2955 call as the market was pulling back for 3.55. That gives strangle at 2575p and 2955 c, 2 contracts. Of course after hours now the market is up again. For those that wanted the SMI settings I will post later, crazy at work and the code is on an old computer and have to dig it out.

hcgdavis 5:48 pm on Tuesday, January 30, 2018
Tags: SPYcraft   

#spycraft /ES trades 23/5 and…

#spycraft

/ES trades 23/5 and did not have time to trade today, so I am looking at legging into a short strangle. Nice boost to premiums with the still small vix spike. Will probably leg in, tech indicators are about to give long signal. Went back to SMI, percent r still too whippy even with the longer settings. See below and if you want the smi settings I can post. To be honest, I personally like /es better than spy or spx. Better margin, more trading hours, easier to hedge with a smaller $ amount, good liquidity, and better margin treatment.

So signal just printed while I am writing this. Selling the 45 DTE 2575 put at 7.5 (went through). I will wait on the call side in case this is another BTFD. This is a delta 8 option.

2017-12-01-TOS_CHARTS

hcgdavis 7:57 pm on Sunday, January 28, 2018
Tags: SPYcraft   

#spycraft BTC /ES 31 DTE…

#spycraft

BTC /ES 31 DTE 2615 put for 2.20. Sold for 5.25 but this was part of a strangle that I had to close the call side on for a loss. Made $5 on it total but still have the 31 DTE 2675 put. Will let it decay another week and close it.

Looking at opening another 2 contracts 47 DTE depending on how the week starts. We get even a little pull back will open strangle. If not, just sell puts, the calls keep getting run over.

hcgdavis 8:40 am on Friday, January 26, 2018
Tags: , , SPYcraft   

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!!!!!!!!!

#pietrades
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 🙂

hcgdavis 11:12 am on Wednesday, January 24, 2018
Tags: , , SPYcraft   

SWKS closed half a #fuzzy…

SWKS closed half a #fuzzy the 100 put 2020 leap and the 104 9 DTE for 12.10 credit.

Starting clean out to get back to cash so I can restart #pietrades and #spycraft trades.

Will take me 2,9, 16, 23, and 30 days to have everything flat or until the time value is out of the short options, hopefully before then 🙂

hcgdavis 6:31 am on Wednesday, January 24, 2018
Tags: , , SPYcraft   

#spycraft Since the market only…

#spycraft

Since the market only goes up now, sold a 35 DTE 2675 put for 4.65. No short the 2675 and 2615 puts for 35 DTE after closing the call side of the strangle yesterday. Easier to defend in 1 direction as well.

#fuzzy, #pietrades

hcgdavis 12:42 pm on Tuesday, January 23, 2018
Tags: SPYcraft   

#spycraft BTC the 36DTE 2910…

#spycraft

BTC the 36DTE 2910 call on the strangle for 7. Sold for 2 so total loss on that half is $102. Total on the strangle was $400 so can still make close to 300 on the put side.

This stupid market just won’t stop, annoying really 😦

I would have left it, but have you ever had one of those days where everything on your screen is red!? I just need the SPX to not go up anymore, GILD to go back down, SWKS to go up, and WDC to pull back a little. Every stinking one of them is going the wrong way, so I really did this to keep from getting a margin call. I can recover the other 3 now.

The other issue is my theta is high but because everything is in the wrong direction it is not making a difference, at least I flattened the deltas buying back the /es call.

One of the best TT episodes was titled “I am not greedy, I just want it faster”. I think that was when they discovered 45 DTE is best decay rate for OTM options. That’s how I feel this week, huge decay but not doing me any good because they are all ITM now.

I think time to close everything out at break even or a slight profit and reload 🙂

hcgdavis 5:20 pm on Sunday, January 21, 2018
Tags: SPYcraft   

#spycraft No panic at the…

#spycraft

No panic at the futures open tonight. Will hold on doing anything with the /ES strangle. However, once the government is open for business market will probably keep chugging higher so me may close the call side soon.

hcgdavis 3:14 pm on Saturday, January 20, 2018
Tags: , SPYcraft   

Too busy to post trades…

Too busy to post trades yesterday, not much just some clean up.

SWKS rolled 102 and 104 puts for 1 DTE and 7 DTE for 0.94 and 0.60 credits. Sold for 4.15 and 5.25 after rolls. I was ready to close out the #fuzzy on this at max profit, then it dropped 3 points yesterday. So will roll a few more times until I can close it at a profit. Had recovered the 17 point drop, now need 3 more for some profit.

Lost my chicken scratch trade sheet but I also rolled some SVXY puts around 100 out 28 DTE for 1.35 credits.

#spycraft may need to close the /ES strangle 2615/2910 39 DTE depending on what the futures does at the open Sunday night. @fuzzballl cue the chicken, maybe.

If we are down 25-50 points will actually be perfect. We start moving more than that will probably just close. Be ready for anyone else in this trade. We have a lot of range to play with, but I don’t have a lot of margin left so for me will be a necessity to close if it starts going negative. If this were next week, no problem, have some big trades closing but my margin cushion is thin this week.

hcgdavis 7:25 pm on Tuesday, January 16, 2018
Tags: , , , SPYcraft   

I ran a little experiment…

I ran a little experiment for about 8 months last year, did not post because I was not sure how it was going to work out but here is another easy to manage, high return tactic. I got this from options income blueprint. I do not subscribe to this particular branch of it, but easy to understand and I reverse engineered it using different names. They were using AAPL, LNG, and GILD.

It is called perpetual income engine. Very simple, take about 2-5 stocks that tend to stay in a range with good option premium. Start by selling a 1 week put either ATM or 1 strike below. It is either assigned or is not. If it is assigned immediately take delivery of the stock and then on Monday sell the ATM or 1 strike out of the money covered call. If not assigned, then sell the next week put. It is very easy to implement and does not take much time.

I used 3 tickers last year, TSO which has since become ANDV, XBI, and WDC. As I am starting to review my trades from last year for taxes, I see how effective it was. It takes a while to sort everything out but the results were impressive given the simplicity.

8 months, 3 contracts each name so only tying up about 50,000 of capital earned a 57.7% return. Annualized 86.55% return. Pretty impressive given the simplicity. Obviously I will keep this going and will start posting my trades now. They will be known as #pietrades.

I do not have all the numbers yet, but the last year appears that naked puts and strangle selling was the most effective, followed by PIE trades, and a very close third goes to #fuzzies based on return on capital. However the #fuzzies worked the best for recovery of positions that went really bad. Not surprisingly given the one-sided market credit spreads did not do as well last year.

I am always looking for the most efficient way to use capital, make money, and give me more free time. Based on these results I will probably focus on those 3 strategies most of this year and will add in the occasional #spycraft when the volatility is decent.

#perpetualrollingstrangles

hcgdavis 9:22 am on Tuesday, January 16, 2018
Tags: SPYcraft   

#spycraft alternative. While waiting on…

#spycraft alternative. While waiting on SPY to show better prices, the /ES is showing better prices with the slight increase in VIX.

1 contract (sticking to the initial guideline) STO 1 /ES 43 DTE strangle at 2615 put and 2910 call for 8.0 credit.

Plan is to take it off at 25-50% profit hopefully in 1-3 weeks.