One Last Home Run to Finish 2014

I've been quite busy writing papers and studying for finals, and I thought that I had posted about my entry into MasterCard (MA). Turns out I didn't.

Well about a week ago, MA was coming up as fairly overbought. So, like usual, I bought an ITM/ATM put spread, 3 of the Jan 89/91 for 1.00.

But I decided I was going to try a new strategy called "legging out." When put on a spread, you buy a contract and then sell a contract simultaneously. This hedges against losses but also caps gains. For a $2 wide spread, like 89/91, the max price of the spread is 2.00. So, if your short strike, in this case the 89 put, becomes ITM, you can take that off and "let the long put ride." This way, your gains aren't capped, and you can ride the downward momentum.

I was going to attempt to do this on YHOO and AAPL, but, as it turns out, I never got the chance because I was too early on entry. MA, however, worked beautifully. 

I entered short MA on that peak black candle, because I like to see black candles above bollinger bands with a declining MACD and RSI > 70. It's an optimal short entry. This is a textbook Bflakaz overbought short play.

So I legged out on 12/9, and just kept the long put, the 91 strike, on. I had originally bought this side of the spread for 1.85 (the short 89 strike was a credit of 0.85, making the cost of the spread 1.00).

I exited and sold those puts today for 5.45 for a profit of $1080!!!

I really was not expecting that kind of success! The recent market slip-up definitely helped my position, so I got lucky on the timing in some respects but WOW!


Also, I was eyeing Stratasys (SSYS). It was getting oversold and approaching support at 85. It hit support at 85 and immediately bounced, then pared losses on the day. I entered a short put spread, Jan15 75/80 for 1.20 shortly after it confirmed support. SSYS then rallied hard yesterday, and I bought it back for 0.50 for a $140 profit.


I'm very close to reaching 100% ROC this year, but I don't think I'll make it.