Friday, March 30, 2012

$AAPL trade that has made a house pmt

UPDATE: (since i posted this about an hour ago)

$AAPL here is the update i promised earlier this am regarding to the trade that made the house payment.

3/30: Sold another weekly $AAPL Iron condor during the woosh down around 7.40am pst. I had an order for the 585/80 -630/635 saved and pricing got juicy over a dollar. But, I stayed on the conservative side and reset the order to 575/570 - 630/635.
So when aapl was 600 premium for this iron condor was .76. I did this 12x and collected 886.70.
Here are the theoretical probabilities for this trade
* Sold aapl weekly credit put spread 575/570 (575put delta is .15; 86% chance that aapl won't breach 575 by next friday)
* sold aapl weekly credit call spread 630/635 (630call delta .12; also 86% chance that aapl won't breach 630 by next friday)
sure anything can happen but these are decent odds for me.


ORIGINAL POST 03/30 am:
I originally posted a similar trade a couple of weeks back (you can find the post in this blog) only the header was "$aapl trade that could make a car payment." The trade was successful for almost max profit and made decent buck.
I then tweeted that I did the same trade on weeklies expiring today 3/30 and that one looks like it will expire worthless for full profit if apple stays between 570 and 625. If so then i would have netted $1,088.94 by selling an Iron condor 570/565 - 525/530.
So at this point it's more than a car payment; it's more like a house payment.
Having succeeded twice, I will look to put this trade on today and will tweet it later if I do. today's aapl price action is not good but i feel confident that we can find a weekly trade that will fund a go-kart race perhaps.

weekly trades recap:
3/30: look to put a trade on. will tweet it when i do.
3/22: weekly aapl Iron condor for credit of $1088.94 will expire today for max profit
3/19: weekly aapl Iron condor for credit of $823.16 got full profit less 70.83 to close it on last day




As with any trade there are risks but in this case the I am very comfortable with the dollars at risk. I always try to know and manage my risk; I ask 'what will I lose if the crap hit the fan in the worst possible way.' If I know the answer to this and am ok with it then I should be ok.

THIS IS NOT A RECOMMENDATION OF ANY KIND. I ONLY INVEST MONEY I CAN AFFORD TO LOSE.

$AAPL $AMZN $bidu $SPX $NDX $RUT $C $GS $wynn $SPY $GOOG

Thursday, March 29, 2012

$FOSL $817.33 trade

I was short $FOSL at 135 via Apr credit call spread.
2/15 sold Apr 130/135 credit call spread for $.67. P was 117. did this 10 times & collected 654.46
3/13 rolled my short into april credit call spread and higher (out and up) to 135/140 for $.45cr. P was 129.48 for this i collected 428.91
this morning i read that it will be added to the S&P so popped to 136. Usually this is a preview of where the stock likely to go once all the S&P trackers add FOSL into their line up.
So i decided to mess with a winning trade.
3/29: I sprawled my 135/40 position into an April iron condor 125/20 - 140/45 for .07 cr. $33.39
So as of now: i have collected $817.33.
Ideally, i need the stock to stay between 125 & 140. My logic is that it now has a inherant bid under it but not enough momentum to reach 140.
Theoretical stats:
71% chance fosl WILL NOT reach my short put leg (125 Delta .24)
75% chance fosl WILL NOT reach my short call leg (140 Delta .24)
Btw, if you like these posts spread the word+ folo @racernic. Also peruse rest of my posts including the sides to help finance the java (if you know what I mean ;-). I do these post for free and have no subscription pitches etc.



As with any trade there are risks but in this case the I am very comfortable with the dollars at risk. I always try to know and manage my risk; I ask 'what will I lose if the crap hit the fan in the worst possible way.' If I know the answer to this and am ok with it then I should be ok.

THIS IS NOT A RECOMMENDATION OF ANY KIND. I ONLY INVEST MONEY I CAN AFFORD TO LOSE.

$AAPL $AMZN $bidu $SPX $NDX $RUT $C $GS $wynn $SPY $GOOG

Wednesday, March 28, 2012

$CF April trade set up

4/16 UPDATE:
On 4/12 I published a "trade conviction" post describing 3 trades where my conviction made me money. Here is an example where the lack of conviction cost me money. My lack of conviction caused me to shy away from an entry point into another April credit put spread in $CF on a day it tumbled.
I even sounded smart a la Dennis Gartman, I said I didn't want to catch the CF falling knife as it has a 2inch handle and a ten inch blade. Hindsight I should have done it.
Having said that, given the same situation I would probably pass on the trade once more.

4/10 UPDATE: If we get another run down tomorrow i may get to get in for a quick/small credit put spread or maybe an iron condor. I don't want to put a position in may until after earns. i have not had much luck betting on earnings especially w/fast runners like $CF.
Possible entry levels as of today's numbers:
Credit put spread 165/60: 87% it will expire worthless for max profit; lower pad 8% decline
Credit call spread 195/200: 89% it will expire worthless for max profit; upper pad 9% run
total credit abt .75 do it 10 or 15x and collect $700/1000
Reward to risk is lower than what i like but will make a car payment or a go-kart race.

$CF down $6 today 3/28. This is one stock that I almost never try to catch as a falling knife. I will wait another day before I go long it.
Tomorrow I will revisit level where I can sell Credit Put Spread in the area of April 165. It seems to have defended the 168 twice recently. But again it all depends on tomorrow's price action. My last trade (sold apr credit put spread was 100% successful and netted me $848.36 in about 10 days.
I would rather miss a rebound then try to catch a falling knife and grab a handfull of its sharp blade!

Btw, if you like these posts spread the word+ folo @racernic. Also peruse rest of my posts including the sides to help finance the java (if you know what I mean ;-). I do these post for free and have no subscription pitches etc.


As with any trade there are risks but in this case the I am very comfortable with the dollars at risk. I always try to know and manage my risk; I ask 'what will I lose if the crap hit the fan in the worst possible way.' If I know the answer to this and am ok with it then I should be ok.

THIS IS NOT A RECOMMENDATION OF ANY KIND. I ONLY INVEST MONEY I CAN AFFORD TO LOSE.

$AAPL $AMZN $bidu $SPX $NDX $RUT $C $GS $wynn $SPY $GOOG

Tuesday, March 27, 2012

Bring Back Alt-A Loans $SPX Lift

4/13: $WFC CFO said that housing has not yet bottomed. I agree and I have the solution:
BRING SUB-PRIME BACK! the part of sub-prime that was called ALT-A... the real Alt-A.
Shocking: I keep hearing 'housing bottom' and cramer buying FL props etc.
I disagree. Housing won't bottom until (brace yourself) we bring back the Alt-A loans!
Logic:
Jim Cramer said the other day that the appraisal process is messing up the deal is a new phenomenon. Not true! Appraisals have always been a major source of hiccups. The difference is that during the housing boom you could always find a lender to do the deal regardless of challenges. Not anymore.
Also cnbc's Bob Pisani this morning actually uttered the words '18% cancellation is fantastic!' what? what kind of a housing market success is this where an 18% loss in sales is great? Bottom? Please.
Why do i think that bringing the Alt-A loans will help? consider this scenario:
If I am self employed with Fico over 800 (720+ is excellent)
If I also have 500k in cash
If I also have a decent valuation on my house
If also my business has suffered in the past two years; hence, I cannot show income (though still doing ok; haven't touched my savings etc)
I CANNOT GET A LOAN (to refi or upgrade houses) because the banks are bound by borrowing rules that would exclude me from approval if I cannot produce income on tax forms after two difficult years.
What's the solution?
Bring back the REAL Alt-A type loan: those are loans given to borrowers who have excellent credit (measurable and tangible) AND real verified assets (also measurable and tangible).
I personally know dozens of people in similar situations that would upgrade houses NOW if they could get a loan.
This is not the Sub-prime loan that got us in trouble. These are loans given to credit-worthy borrowers. Sub-prime were loans give to undeserving borrowers AND on over-valued houses!

I personally am in a 3.25% vairable loan that adjusts once per year so I have no incentive to refi now because my rate would more than double (self-employed etc).
Should I be able to refinance, maybe I would draw a cash-out and be inclined to spend it back into the economy therefore helping grease the wheels of recovery.
You see my point? Give money to people who have shown they can pay it back (again, not a subjective call - real fico scores with real assets) and housing would be much better off and so would the economy.


$LEN  $HOV $KBH $DHI

Thursday, March 22, 2012

protect $AAPL for free not $VIX

The cnbc fast money crew often recommend to 'buy protection when it's cheap.' By that they mean by vix calls which will go up as the market sells off. The only problem is that recently the $VIX pricing is strange and unpredictable (cash price now is 15ish yet if you look at April futures it's 18.4; May futures it's 21.5).

Instead of messing with the vix, here is an alternate strategy to protect your Positions. I will use aapl since it's the wall street darling as of late:
* say I own 100 shares of apple; current price is 600. It doesn't really matter where i bought; what matters is that i want to continue to own it but am a little nervous about a sharp decline. I can stomach a little drop but not a woosh down.
1) I can buy April 1xaapl 580 put. This give me the right to sell my stock at 580 even if it drops to 0. this will cost me $12.5x100= 1250. That's a lot of money just for protection. I am going to make it cost me nothing by
2) To finance step number 1, I sell April 1xaapl 620 call. This obliges me to sell my stock at 620 regardless of what market price is in April. for this i will collect $12.5x100=1250.
So between the money i paid to buy the 580 put (protection) and the money i collected for selling the 620 call, this combination cost me NOTHING.

Possible outcomes:
1) aapl goes nowhere (stays between 580 and 620): both the put I bought and the call I sold will expire worthless. Not a waste of time since i slept better knowing that i limited my downside risk holding my apple stock.
2) aapl drops below 580: my loss is limited to 580 ($20) and i can exercise my right to sell it at 580 (even it is dropped to 550, 500 or 100). hidden fast money trade here: If aapl drops to say 575 and i feel like it's a temporary drop rather than an exodus from aapl then i may decide to sell my protection since now it would be worth 1000% more than i paid for it and keep the stock waiting for recovery. The 620 call i sold will expire worthless (didn't need to use it)
3) aapl runs to 650 700 or 1700: i may be forced to sell my stock for 620 like i promised when i sold the call. Big deal since this means that I got my protection for free and participated another $20 up in price appreciation.

Btw, if you like these posts spread the word, folo @racernic & peruse the rest of my post including the sides (if you know what I mean ;-). I do these post for free and have no subscription pitches etc.
TRICKS: in the above example I can get more creative. take the exact scenario BUT if i feel that aapl is toppy and won't break 615 before 30days from now, i can buy the 580 put BUT sell the april 615 call instead of the 620. why? the 580 put cost me 1250; the 615 call gives me 1423 so i actually make money putting on a safety trade.

As with any trade there are risks but in this case the I am very comfortable with the dollars at risk. I always try to know and manage my risk; I ask 'what will I lose if the crap hit the fan in the worst possible way.' If I know the answer to this and am ok with it then I should be ok.

THIS IS NOT A RECOMMENDATION OF ANY KIND. I ONLY INVEST MONEY I CAN AFFORD TO LOSE.

Wednesday, March 21, 2012

$AAPL $10k trade in 30days.


I recently posted a 19% yield while owning $aapl stock. Here is another way of generating income a la Dividends. btw, if you like these posts spread the word, folo @racernic & peruse the rest of my post including the sides ;-) I do these post for free and have no subscription pitches etc.
Instead of buying the stock, I can buy a deep-in-the-money (DITM) long-dated call (out a few months or even year+ - LEAP).
Here are the numbers as of yesterday's close (i wrote this yest and didn't have chance to update)
Aug12 aapl 550 call is $84ish. so, buy 10x100x84= $84k (as opposed to if i wanted to buy 1000 shares of appl fir 605k)
I can sell april call 645 against this long DITM position that I own. For this I collect $10. For this to make sense, i sell a shorter-dated call (much shorter). Time decay will be on my side eating away at the near-dated short 645 call. Since I own 10xDITM call, I can sell 10x call so my take would be $10 x 1000 = $10,000.
that's a return of 11.9% in under a month.
To close the position I either manage the short call to expire worthless in April (for max prof) then sell my asset (the long-date DITM call). Or I can close the position anytime by buying back the april short call and selling the long Aug call.
Desired outcome is: aapl closes below 645 by April 20th (April option expiration) and I keep the whole $10,000 I collected today. and I sell my long DITM call (I can choose to keep it and do it over again).
In case aapl raches 645, i can adjust the position until I let it expire or close it to pocket most if not all the 10k. The theoretical probability of aapl NOT reaching 645 is abt 80% (that's darn good in my favor).

if 84k is too big i can go half
- buy aapl  DITM Aug12 550 call 84; 5x so outlay 5x100x84= $42,000
- sell aapl Apr12 645; 5x so collect 5x100x10ish = $5,000 (same 11.9% return on a smaller scale)
- close trade by managing 645call to expire; sell the long DITM call to recoup investment +/- change in price

Or even smaller with just one lot (which is what i do for my 10year old son)
- buy aapl  DITM Aug12 550 call 84; 1x so outlay 1x100x84= $8,400
- sell aapl Apr12 645; 1x so collect 1x100x10ish = $1,000 (same 11.9% return on a smaller scale)
- close trade by managing 645call to expire; sell the long DITM call to recoup investment +/- change in price


As with any trade there are risks but in this case the I am very comfortable with the dollars at risk. I always try to know and manage my risk; I ask 'what will I lose if the crap hit the fan in the worst possible way.' If I know the answer to this and am ok with it then I should be ok.

THIS IS NOT A RECOMMENDATION OF ANY KIND. I ONLY INVEST MONEY I CAN AFFORD TO LOSE.

$RUT trade 611 in 5days


UPDATES:
3/21: i closed the lower the lower leg so bought back the 805/800 short put spread for $.02.
By end of day i will likely get to close the upper leg for abt the same (if not today tomorrow).
3/22: closed (bought back the credit call spread 855/860) for .04. this was a sure winner (what are the chances of open tomorrow mkts up 4%? since the answer is not ZERO then i close this cheap spread)

NOTE: this is am settled so thursday is last day to trade and never leave a short leg open into fridays.
Also, you can read my older RUT post for more details that may apply here (chart there too).
Summary:
3/16: i put this iron condor on for a week. I collected 611.12 ($.7)
3/21: I closed 805/800 leg for -33.44
3/22: I closed the upper leg 855/860 for -51.44
Total profit in 6days $526.24 not goldman sachs money but music to most mortal ears.
I will likely repeat similar trade tomorrow for another week.

Btw, if you like these posts spread the word, folo @racernic & peruse the rest of my post including the sides (if you know what I mean ;-). I do these post for free and have no subscription pitches etc.

Original trade post:
As soon as I closed my last Mar RUT winning trade for max profit (less .05), i shared the setup for the next RUT trade. I chose weekly Iron condor:
3/16:
sold 805/800 Put spread
Sold 855/860 Call spread
order executed at  $.70
Did it 9times so collected 611.12 remember that this is a weekly trade and wanted to stay away from trouble as much as possible and still have a decent premium.

As with any trade there are risks but in this case the I am very comfortable with the dollars at risk. I always try to know and manage my risk; I ask 'what will I lose if the crap hit the fan in the worst possible way.' If I know the answer to this and am ok with it then I should be ok.

THIS IS NOT A RECOMMENDATION OF ANY KIND. I ONLY INVEST MONEY I CAN AFFORD TO LOSE.

$EQIX trade w/87% max profit probability


I successfully did this trade in Mar and i am putting it on again here.
$EQIX popped sharply in mar and i sold 155/60 credit call spread that expired worthless for max profit.
Today eqix popped on news on someone taking 6% stake in it. so i will do the same trade over:
sell april 160/65 credit call spread for abt .4 to .45. Again, this is not huge money but it's a car payment.
I will have a 9.5%buffer in price to strike.
and 87% chance of max profit. The only thing that doesn't thrill me (but not a deal breaker for me here) is the reward/risk ratio=.09 (risk $1 to make .09).
Usually i try to stay over .15.

If i don't get the execution i might turn this into an iron condor 130/25 - 160/65.
It will pay me $.8 Reward/risk=.19; probability of max profit is abt 76%
I would have a 10% price to strikes pad which is decent.


As with any trade there are risks but in this case the I am very comfortable with the dollars at risk. I always try to know and manage my risk; I ask 'what will I lose if the crap hit the fan in the worst possible way.' If I know the answer to this and am ok with it then I should be ok.

THIS IS NOT A RECOMMENDATION OF ANY KIND. I ONLY INVEST MONEY I CAN AFFORD TO LOSE.




$BIDU trade 90%win prob

$BIDU this morning looking  to breakout of its trading range. I like to bet WITH bidu and never against it.
Only 1 time my credit put spread got all in-the-money (the wrong way) but i was able to punt it and get the max profit out it anyway.
So today looking for entry levels. I don't have a clear cut level yet.

Here are the two that are on radar:

* sell Apr credit put spread 125/120: only pays .36 but on the safe side 90%+ chance of max profit

* sell Apr cr put spread 130/25: pays .70ish w/80%+ max prof chance. rew/risk= .16 (risk$1 to make .16)
I can do this 10 or 15x so won't be huge dollars but still money nonetheless.



NOTE: As with any trade there are risks but in this case the I am very comfortable with the dollars at risk. I always try to know and manage my risk; I ask 'what will I lose if the crap hit the fan in the worst possible way.' If I know the answer to this and am ok with it then I should be ok.

THIS IS NOT A RECOMMENDATION OF ANY KIND. I ONLY INVEST MONEY I CAN AFFORD TO LOSE.


Tuesday, March 20, 2012

$AAPL dividend trade for 19%


So much has been made of the $aapl dividend. For aapl shareholders, here is a strategy to make your own dividend in appl:
say I own 100 shares of the stock.
I can sell april call 645 against those shares that I own. For this I collect $10.
Since i own 100 shares, I can sell 1x call so my take would be $10 x 100 = $1000
Likely outcomes:
* aapl closes below 645 by April 20th (April option expiration) and I keep the whole 1000 I collected today.
* aapl closes higher than 645 and i am forced to sell my 100 shares at 645 even if aapl selling higher than that.
So, worst case scenario (other than aapl cratering) I get to sell my shares for 645 (so i participate in its climb from 605 to 645) and keep the grand I collected today. How can I be upset at that?
I can always rebuy the stock!
*** Why do this? I basically created my own aapl 1.6%/MONTH dividend. If I repeat monthly it calculates to be 19%/yr. I don't think this would make sense with the weekly options given the volatility of appl of late and the premiums not worth it. I also usually don't like to play the earnings. Still this is a strategy that I believe can put my aapl stock to work. Say I decide to sit out 3 months this is still well over 10% yearly yield (14%ish). The theoretical probability of max profit from selling a naked 645 apr call is 73%.

As with any trade there are risks but in this case the dollars at risk is no higher than me simply owning the stock. Since this is NOT a dividend payout, gains will cost me cap gains taxes.

THIS IS NOT A RECOMMENDATION OF ANY KIND. I ONLY INVEST MONEY I CAN AFFORD TO LOSE.

$FXE iron condor w/43% reward/risk

My last $FXE iron condor was a 100% profit trade. Meaning my iron condor expired for full profit (see earlier blog I already posted).
Now I think I can do it again with this trade:
Sell Iron Condor 128/126 - 134/136. The upper leg is closer than my usual buffer but fxe has failed to break out several times and i don't see any change in Eurozone to change it in april.
I should be able to take in $.58 and I will do it 10x so collect credit of $580.
1) FXE stays between 128 and 134 by 4/20 and I get to keep the entire 580 amount
2) FXE runs up and breaches my upper short call leg. Then I would have to either close it for a loss or adjust it. More than likely I will be able to easily adjust it so not to take a loss.
3) FXE drops below my lower short put leg of 128. Here too I will have to adjust.
* Probability of maximum profit is 60%
 - Probability of the 128/26 credit put spread alone expiring for max profit is 88%
 - Probablity of the 134/36 credit call spread alone expiring for max profit is 69%
* Reward (.58 premium i collect) ratio to risk is .43 (risking 1 to make .43... risk i am willing to take all day).
I have the order saved and will likely pull the trigger today. I ONLY RISK MONEY I AM WILLING TO LOSE. THIS IS NOT A RECOMMENDATION OF ANY KIND. Thank you for the read. If you like this follow me on twitter @racernic (also on stocktwits).


$MA $1066 trade w/charts

3/22:  As of today, it would seem that resetting the position was prudent. 70%+ chance that MA will be under 435 but Apr opex.
btw, if you like these posts spread the word, folo @racernic & peruse the rest of my post including the sides ;-) if you know what i mean; I do these post for free and have no subscription pitches etc. 


2/17: I thought after a long run $MA was due for a pull back.
So I sold a call spread Mar 420/25 for net credit of $765.41.
Obviously since then $MA kept on running and last week, my short leg (420) was in-the-money (ITM) the wrong way.
Instead of buying the spread back and taking the loss, i decided to punt it into this week.
So, 3/15: I rolled my 420/25 Mar spread into 3/25 (weekly) 425/30 spread. The roll gave me another $26 credit.
3/20: $MA dropped almost $6 but since I have had bad luck timing this trade I decided to not take the chance to get caught short in a weekly short call spread ITM.
So, I took advantage of this drop to roll it again into April position.
I rolled the 425/30 short weekly call spread into a short April 435/40 call spread.
This netted me another $375 credit.
So far, i have taken in $1166 in credit. Should MA close at or below 435 by april 20 I will close this position for max profit and keep most of the 1166 if not all. If MA keeps running I will then again have options to stay out of trouble.
Lesson: Not all trades go as planned. So, when I put a trade on I make sure to structure it in a way that leaves me with options in case of trade sours. It is important not to panic and take advantage of price changes to reset bad trades. Ideally I wanted the 420/25 mar short call spread to expire for max prof but that didn't happen so I acted on it twice already.
Sure I had the option to wait another day and hope that MA would continue to drop but i don't like to depend on HOPE too much.


Monday, March 19, 2012

$AAPL trade that could make a car payment

UPDATE: I just closed the lower leg of this winning weekly trade. I bought back my credit put spread for $.03.
Recap:
3/19: sold weekly Iron condor (575/570 - 630/635). for this i collected $823.16 (8x)
3/23: bought back the lower leg 575/570 for -.03x800 = -39.41
this 1week trade netted me 783.75.
yesterday i posted that i repeated it into this week at 570/565 - 625/630 for $1.1 10x so took in abt 1100. will post updates on that one too.

ORIGINAL POST:
I you think $aapl will stay between 570 and 630 between now and friday? here's a trade for abt $.97 iron condor.
Sell to open 570/565 credit put spread and Sell to open Credit call spread 630/635.
For that you collect about .97 x900 = 900ish (may change a bit if it takes me too long to type this note).
estimated stats: 75%+ chance of max profit; abt .2 rew/risk.
The stats on chart assume 9x lot. if u wait till end of day u may need to reset lower/higher depends on aapl move from now.
BTW: not a recommendation; play at ur own risk and always one should only risk money one can afford to lose.


Friday, March 16, 2012

$AMZN trade profit 1609


2/2: I sold to open Mar $AMZN credit put spread 170/165 1.25.
I did this 13 times and collected a net $1,609.26.

3/16: I decided to let this one expire worthless for maximum profit and got to keep the entire premium in my self-managed IRA.

Lesson in conviction:
This trade sure was critized on twitter by the amzn haters (plenty out there). Though don't care who the company is; all I saw was a stock that got mispriced so I took action.
The stock got punished on shocking news that it was willing to sacrifice margin for market share. Apparantly, this was news to the sellers that week.
So, I jumped in with this spread.

Price at the time of position open was 180.2. Even then I gave myself a decent pad of 5.7%. Further more, I was fairly confident that in case I needed it I could manage the trade to keep my short leg out of the money.


Should the stock had continue to go down, I had options:
1) reset lower within the same period + more lots (ex: close 13x170/65 open 15x160/150 etc.)
2) punt out and up (close Mar13x170/65 open Apr13x140/135 or several other ways)
3) punt out and into an iron condor (allows for much further out of the money cr put spread but then will have a credit call spread too)
4) sprawl into an iron condor in the same period




$AAPL $AMZN $bidu  $SPX $NDX $RUT $C $GS $wynn

$BWLD trade management

4/10 UPDATE: i can close the whole position for $.05 so i get to keep all but 887.35 i collected (less abt $55). I will likely close it tomorrow and make margin room.
Going forward with bwld: i won't put another trade until AFTER its earns which are 4/24 post (confirmed).
playing the earnings on stocks like this one is a coin flip and i am no good at gambling.

2/16: $BWLD had just popped a mountain and rubbed me the wrong way so I shorted it via selling call Mar spread 90/95.
I did this 10 times ($.75) collecting net $734.48.
3/12: Price 88.61 and approaching my 90 short call spread fast. Also, the pricing was looking ugly with regards having options to dance out of it without a loss.
So i decided to punt out of my March short position into April while it was still possible. I was convinced that the stock is over extended and doesn't deserve the price it has.
so on 3/12, I BTC my mar 90/95 short call spread and STO Apr 95/100 short call spread for net credit of 152.87. This is in addition to the premium i initially collected for the mar short.
3/16: bwld got downgraded so I feel good about my decision to stick with my short on this one.

The bottom line:
You don't always get the timing perfectly. But, as long as the thesis is still correct it is best to stick with it and reset if and when is necessary.



$AAPL $BWLD $bidu  $SPX $NDX $RUT $C $GS $wynn 

profitable trade in $BIDU

2/24: I sold to open Mar 125/120 credit put spread for $.62.
I did this 12x and collected net $728.39. P was $134.86.
I decided to let this postion expire worthless today for full profit.

Note: I entered the trade after a decline in bidu that I didn't think was warranted. I also gave myself a good sized buffer (7.3% as price at the time was 134.86). In addition, I was also confident that should the stock continue to go down, I could:

1) reset lower within the same period + more lots (ex: close 12x125/20 open 14x120/115 etc.)
2) punt out and up (close Mar12x125/20 open Apr12x110/105 or several other ways)
3) punt out and into an iron condor (allows for much further out of the money cr put spread but then will have a credit call spread too)
4) sprawl into an iron condor in the same period


I don't have a good April bidu entry point yet. I will continue to watchlist it.



$AAPL $bidu  $SPX $NDX $RUT $C $GS $wynn

my best $goog trade ever


On 2/23 i sold to open Mar $GOOG Iron condor 570/555 - 635/650.
I did this 14x and took in net credit of $3,792.49.
This is wider than my usual 1wide spreads but i knew that i could manage it to expire in Mar.
Really I wanted to strangle it but since I have a rule of not selling any naked strikes (refer to my list of mistakes i will never repeat), I decided to make the spread much wider than usual.

3/16: I let it expire worthless for full profit of 3792.49.

I picked bottom levels that had served as good support for goog and the top mark seem to be very strong resistant. unlike $aapl, I believed that $goog is unloved so not likely to get parabolic moves.
Risk management: I never intended to let the price get too close to my strikes; i would have reset the condor to keep price towards middle of it WITHOUT going into April. this is not a trade I would put going into earns. I usually don't play earnings but if I did I would pick a direction and set a trade up for that.



$AAPL $SPX $NDX $RUT $C $GS
 $wynn

winning with $WYNN trade


01/17: Sold to open Mar $WYNN iron condor 105/100 - 130/135.
I did this 9x and took in net Credit of 1978.99
03/16: Bought to close 130 short call leg for .05 (-57.72). This will essentially close the position since
all the other legs will expire worthless today.


NOTE: here again I practiced what i preach... it's ok for a leg on your short spreads to be
breached AS LONG AS your thesis still intact.
Early mar Wynn ran up +breached my 130 short call leg but held it since
I still believed wynn is a short at 130



$AAPL $SPX $NDX $RUT $C $GS $wynn

Thursday, March 15, 2012

$GLD managing trade


2/10: I sold to open (STO) $3-wide Mar $GLD iron condor 162/159 - 176/179. I did this 17x + collected $1.05 for each.
Honestly, I fell asleep at the wheel and got surprise bu the recent tumble of gold.
Obviously, the lower leg (credit put spread) is in trouble.
I could have closed it today for a loss of about $.50 (not a disaster but still a loss).
I still think that gold should be heading up especially amidst this recent acceleration in the widespread lack of fear.
I didn't want to take the loss. I also did want to wait until tomorrow because premium on the 159 (protection) put asset would crash relative to the leg that is ITM (162).
So, I punted it for another week. I was also able to reduce my count to 15x.

3/15: punted (BTC 17x mar 162/59; STO 15x mar25 162/59 for small credit)
I left the Mar credit call spread as is to expire worthless (maximum profit on that leg)

This is a calculated risk on my part and feel comfortable enough that I can punt out of trouble again next week in case i am wrong abt gold.




$AAPL $SPX $NDX $RUT $C $GS

$RUT winning trade level pick

2/10: sold to open 1-wide Mar credit call spread 855/860. collected 1.45 premium. I did this 13x.
3/15: bought to close the same spread for $.04. Net profit is just under $1900.
Important note: this is an AM-settled issue (you can't trade it on expiration day. although 855 is far from current price, I didn't want to leave anything to chance.)

I chose 855/60 because it's a level that it has had several chances to break but failed (see chart below). Furthermore, I waited until momentum turned negative so I get accelerated premium erosion (good for the seller of the spread -me).
Contingency plan: had it reversed course and started back up to breach 855, I had options:
1) reset higher within the same period + more lots (ex: close 13x855/60 open 16x860/65 etc.)
2) punt out and up (close Mar13x855/60 open Apr13x870/75 or several other ways)
3) punt out and into an iron condor (allows for much further out of the money cr call spread but then will have a cr put spread too)
4) sprawl into an iron condor in the same period

$RUT is a fast runner so pick your levels carefully. Always leave room to adjust if necessary.




$AAPL $SPX $NDX $RUT $C $GS

$FXE winning trade and lessons learned



$FXE: 2/15 Sold to open iron condor for .79  
14x so net credit of $1077. 123/126 - 133/136

Now closing it for almost full profit. will cost pennies to close and order is open.




IMP NOTE:
Recently, $FXE ran up and crossed my upper limit of iron condor.
I didn't close it because i still believed in my thesis: Eurozone still in trouble and dollar is not.
I held my ground and it payed off.
LESSON: When you have a short spread position and market runs against 1of your legs. Before you act ask yourself this:
Do i still believe in my thesis (reason why you put the position in the first place)? or will you put this position on again knowing what you know today?
If yes, then don't close it. maybe even add to it (press it; loosly similar to averaging up/dwn).


It's important not to panic when short spread limits are violated as long as you don't use 'hope' to justify your wait.






$AAPL $SPX $NDX $RUT $C $GS $FXE

Friday, March 9, 2012

$AAPL trade from hell and how I am dealing with it

Let me start by saying: you can't argue with stupid. I don't mean that aapl's price is stupid; it's the recent "all at once" grab for it that is sheep-like behavior (moutons de panurge).
* Set up: I had MAR $AAPL iron condor 440/470 just before the AAPL boom.
Needless to say it got in trouble fast so I quickly reset it higher and increased lots.
So upper leg was 505/10 credit call spread.
Then drunken grab for appl took off and soon enough the 505/10 was deep ITM (the wrong way).
Usually I would roll out into Apr condor but since LT AAPL is winning stock and I don't want to be betting against it for that long, i decided to this risky move:
Move #2: I sprawled the DITM upper 505/10 leg into a new MAR iron condor that is $20 wide (4times my usual $5) like this:
490/510 credit put spread AND 570/590 credit call spread.
The point here was to still have a chance at managing the position to expire it in mar.
The drawback is that it takes $20 (14x) way more margin and much higher dollars at risk.
This is NOT recommended especially in such volatile markets, but this is what i did.
Move #3: On 3/8 I decided that there is too much at risk so I took advantage of the fact that it only cost $1.1 to close the whole condor. So i did it.
Still insisting on killing this trade in Mar so I reopened another MAR condor BUT only 1wide ($5 instead of the $20 that i had before).
Good thing: smaller risk $5 vs. $20
Bad thing: strikes are much closer to current price. 525/560
Move #4: after this crazy run up i finally gave up on trying to expire it in Mar so I punted the position into Apr.

LESSON: This was way too complicated in hind sight it would have been better to punt earlier. Still, I  made a move knowing the risk and I live with the consequences. I still have no losses from this trade...yet. I will continue managing it through April and update here. AAPL $SPX $NDX $RUT $C $GS

I hope this helps. let me know if you have questions. @racernic

Mistakes I will Never Repeat:

Here is a list of mistake that I aim to never repeat. If you have some that you think I should add here tell me about them.
* I will never enter naked short option positions EVER! Risk management is the most important part of trading for a living.
* I will always account for the fact that the rules of the game can change at any time (ex: they can double the margin requirements forcing you to trade just to satisfy their new rules even if it goes against your strategy and cost you big bucks)
* I will never forget that ANYTHING CAN HAPPEN AT ANY TIME. To illustrate this fact think of the most highly unlikely thing and assume it can happen and that would have world wide ripple effects that can crash a market. Here are a few that happened: Fukushima; ash clouds, major wars, president assassinations (think of how today's market would react to Kennedy's assassination if it had occurred now); missile crisis; major worldwide fuel shortages. All these have happened and though unlikely, they can happen again.
* I will never under estimate the stupidity of the markets! (this one is new due to recent development in reactions to AAPL upgrades and Bank Stress Tests). AAPL $SPX $NDX $RUT $C $GS

Thursday, March 8, 2012

$TNA trade set up

Here is the TNA trade setup. I only risk money that I can afford to lose.
My thesis is that from these levels small caps have more upside potential than downside risk.
Even then, i am choosing a relatively conservative level: looking to sell April credit put spread at $44/41 (selling the 44 put and buying the 41 put behind it to limit my loss potential). Probability for maximum profit is over 80% and the max loss is $3 (dollars at risk). The reward/risk ratio is a little lower than i usually like but for this fast runner i am choosing lower reward/risk to get into a strike further out from current price. this limits the chance of incident. If I can't get the trade done at my price, i may move the spread closer to price but not too close. i am willing to walk away from the trade.

Wednesday, March 7, 2012

Ralph Lauren trade $RL

Ralph Lauren RL trade:
I was successful in shorting this stock after huge run. Sold 11x mar 185/90 credit call spreads for $.78 (Price was at 173ish). Now worth only $.05 so profit is $.73.
I still think RL is over-rated and today got a pop on back of LuLu upgrade.
So I decided to reopen the same trade for Apr since there is no earning catalyst. Sold 185/90 call spreads for $.78ish. NOTE: I didn't sell the Mar 190 call since it has no bids and besides, you never know... consider it lottery ticket on massive pop might be worth something (hopium example at its best)