July saw a near perfect record for short term trading. Some good high volatility opportunities and a couple of good directional opportunities. July was a good example of the bread and butter trades that I put on all the time. Nothin' really fancy, and one earnings trade. Actually, that's been a good thing, because this earnings season has been pretty wild. Many stocks had +/- %10 moves on earnings.
In August I plan on continuing the same strategy. So far in 2015, I am up ~18%. Stocks as measured by the S&P 500 are up 2.2%. While I'm not ecstatic about July's 2.5% return, it was a solid month that I hope to repeat.
The only bad things? Well, I can't say that it was impatience. The directional shorts I had on stalled out a little, so I took profits. While they were decent profits, a couple could have been super. Gold continues to sell off, and I'm convinced it's going to $1000 and ounce, I just don't know how long that will take. And Facebook ended up selling off right after I got out for a scratch. So, I got out a little early, but, you know, hindsight is 20/20.
Thursday, July 30, 2015
Saturday, July 25, 2015
A Semi-Solid Week of Trades
This past week saw the closing of all but one of my open positions. DIA, GLD, FB, and an earnings trade I didn't post on in SBUX. DIA and GLD went smoothly, and both were profitable. FB? It ran up and then right back down again, so I decided to get out of that one for a scratch. SBUX reported a great quarter and announced a stock buyback, so that launched it to the top of the expected range, only to be pulled down during the day on the backs of a biotech meltdown in the NASDAQ. So, I got out a little too early, and made about $45. Eh.
Only open position now is short the Q's QQQ. With the biotech selloff and the AMZN jump, albeit less so than at the open, QQQ sold off about 1% on Friday. It closed near the lows of the day but failed to break soft support on the close. There is definitely some negative momentum, so I plan to leg out if we clear that 111 soft support. I decided not to leg out in GLD because the broader market began to sell off, and the negative momentum was taking a break, So I just closed it for a $150 gain. I'm still thinking gold will head to $1000/oz but if everyone else thinks that, why hasn't it gotten there yet? Volume decreased as gold sunk lower, never a sign of continuing downside momentum.
All told July is looking to be a pretty profitable month, clocking in at around +2.XX% as of right now. If things go smoothly with QQQ than that could turn into 3-4% for the month.
Only open position now is short the Q's QQQ. With the biotech selloff and the AMZN jump, albeit less so than at the open, QQQ sold off about 1% on Friday. It closed near the lows of the day but failed to break soft support on the close. There is definitely some negative momentum, so I plan to leg out if we clear that 111 soft support. I decided not to leg out in GLD because the broader market began to sell off, and the negative momentum was taking a break, So I just closed it for a $150 gain. I'm still thinking gold will head to $1000/oz but if everyone else thinks that, why hasn't it gotten there yet? Volume decreased as gold sunk lower, never a sign of continuing downside momentum.
All told July is looking to be a pretty profitable month, clocking in at around +2.XX% as of right now. If things go smoothly with QQQ than that could turn into 3-4% for the month.
Monday, July 20, 2015
D'oh!
FB
Don't try to short earnings run ups, or breakouts from rangebound trading.
Don't make a trade just cause you think you might miss out on the morning move the next day
Don't get "double short" with a positively correlated name (QQQ)
Don't make a trade if the option strikes end 5 points away from the current price.
I will most likely dearly pay for these rookie mistakes with this FB position.
I put it on, and then shortly after the close decided ... eh ... I don't feel so great about that one. And wham! 2.5% up move the next day.
Will probably be experiencing some drawdowns from these trades
But the short gold trade is working nicely today
Don't try to short earnings run ups, or breakouts from rangebound trading.
Don't make a trade just cause you think you might miss out on the morning move the next day
Don't get "double short" with a positively correlated name (QQQ)
Don't make a trade if the option strikes end 5 points away from the current price.
I will most likely dearly pay for these rookie mistakes with this FB position.
I put it on, and then shortly after the close decided ... eh ... I don't feel so great about that one. And wham! 2.5% up move the next day.
Will probably be experiencing some drawdowns from these trades
But the short gold trade is working nicely today
Friday, July 17, 2015
New Directional Positions!
Had the chance to find some good directional opportunities today.
First, The Q's ... QQQ
Typical bollinger band short here. This week the markets got way overextended, look how gappy that run is! So everytime the Qs get to the 70ish area on RSI, there are some declines. However, the Qs also managed to break out to new highs on "increasing" volume, so QQQ may go higher!
+5 SEP 113/114p @ 0.45. Not risking a lot here because the momentum monkeys may chase this thing higher.
Next up, Facebook FB
Same deal as with QQQ. FB was up on no real news, just kind of following suit with GOOGL's earnings surge of 15%. FB earnings are in two weeks, so the IV is very high. I sold 5 98/100 call spreads (that's the highest available) for the 7/31 expiration, planning on closing this before earnings. Could run up some more into earnings, but it has to run fast to beat the time decay. 0.65, 70% PoP.
Last, the GLD. Gold.
Gold broke down below its strong support line and has quickly fallen out of favor as the dollar has risen in value and a rate hike is supposedly on the way in September. I think gold will finally trade down to $1000 an ounce over the period, because the "safe haven" value of gold has diminished in favor for the safe haven of the US dollar. Sorry, gold, it was a great run.
+5 SEP 108/109p @ 0.48.
For DIA, things lightened up a bit today. Although the Dow only declined by a few basis points, the position closed the day @ 0.67, 0.12 lower than Thursday. As it stands, it has a 64% PoP and expires in 35 days. Volatility was sucked out of the indices incredibly quickly!
Total Portfolio Capital at risk: 6.54%
First, The Q's ... QQQ
Typical bollinger band short here. This week the markets got way overextended, look how gappy that run is! So everytime the Qs get to the 70ish area on RSI, there are some declines. However, the Qs also managed to break out to new highs on "increasing" volume, so QQQ may go higher!
+5 SEP 113/114p @ 0.45. Not risking a lot here because the momentum monkeys may chase this thing higher.
Next up, Facebook FB
Same deal as with QQQ. FB was up on no real news, just kind of following suit with GOOGL's earnings surge of 15%. FB earnings are in two weeks, so the IV is very high. I sold 5 98/100 call spreads (that's the highest available) for the 7/31 expiration, planning on closing this before earnings. Could run up some more into earnings, but it has to run fast to beat the time decay. 0.65, 70% PoP.
Last, the GLD. Gold.
Gold broke down below its strong support line and has quickly fallen out of favor as the dollar has risen in value and a rate hike is supposedly on the way in September. I think gold will finally trade down to $1000 an ounce over the period, because the "safe haven" value of gold has diminished in favor for the safe haven of the US dollar. Sorry, gold, it was a great run.
+5 SEP 108/109p @ 0.48.
For DIA, things lightened up a bit today. Although the Dow only declined by a few basis points, the position closed the day @ 0.67, 0.12 lower than Thursday. As it stands, it has a 64% PoP and expires in 35 days. Volatility was sucked out of the indices incredibly quickly!
Total Portfolio Capital at risk: 6.54%
Thursday, July 16, 2015
Why You Should Sell High Volatility
So I sold some US market volatility by the way of the VIX and the Dow ETF, DIA. The VIX plummeted immediately, as I figured it would. That means volatility across the indices also dropped precipitously.
When I sold the DIA iron condor, IV rank was in the 99th percentile on a 52 week basis, indicating that IV pretty much was the highest it had been in a year.
US stocks had a couple day decline, and then once the Chinese government came out and said they would imprison short sellers, it was off to the mother fucking races.
LOOK AT THAT GAP N FLY. Totally irrational in my opinion, but so was the sell off so, I guess net-net nothing really happened. This pretty much happens after every couple day downturn. The Buy the Dip algorithms come swooping in and bid up the market once the all clear signal is given.
Here's the crazy part. A 6 point move higher in DIA has only resulted in the price of the 166/168/183/185 condor moving from 0.75 to 0.79! Only 0.04 against me!
IV rank dropped from the 99th percentile to the 14th percentile. That's why selling high volatility is so important. Now though, IV is probably the lowest it will get, so if DIA continues higher, it's going to start hurting more. There's some soft resistance just under 182, we'll see what happens. I've got that VIX victory money to hold me over for awhile if things get hairy.
When I sold the DIA iron condor, IV rank was in the 99th percentile on a 52 week basis, indicating that IV pretty much was the highest it had been in a year.
US stocks had a couple day decline, and then once the Chinese government came out and said they would imprison short sellers, it was off to the mother fucking races.
LOOK AT THAT GAP N FLY. Totally irrational in my opinion, but so was the sell off so, I guess net-net nothing really happened. This pretty much happens after every couple day downturn. The Buy the Dip algorithms come swooping in and bid up the market once the all clear signal is given.
Here's the crazy part. A 6 point move higher in DIA has only resulted in the price of the 166/168/183/185 condor moving from 0.75 to 0.79! Only 0.04 against me!
IV rank dropped from the 99th percentile to the 14th percentile. That's why selling high volatility is so important. Now though, IV is probably the lowest it will get, so if DIA continues higher, it's going to start hurting more. There's some soft resistance just under 182, we'll see what happens. I've got that VIX victory money to hold me over for awhile if things get hairy.
Wednesday, July 8, 2015
Let's Sell some US MARKET Volatility ...
The Chinses Connection fell through ... big time. China's stock market is collapsing. Down, down, down! I lost a good chunka change on the ASHR iron condor.
I don't think that the same thing will happen in the US. Right now volatility has spiked because stocks have broken slightly out of their year to date trading ranges. Investors appear to be worried about Greece (I really don't know why) and the Chinese stock slump.
I won't give market commentary. I hate that. So instead I'm just gonna sell an iron condor on the Dow Jones average ETF DIA.
It looks wider than it really is. Only a 53% PoP on this one ... however, my short strikes are at significant support and resistance areas. I think therefore that it has a higher PoP, but not statistically if you assume random walk.
-6 DIA 8/21 166/168/183/185 @ 0.75
On the same note, the VIX is spiking for the same reasons. Ordinarily, I would sell a bear call spread in the lows 20's (its at 18-19) on the front month, but because those expire next week, the VIX might go fairly high before coming back down to earth. Instead I sold naked calls farther out and away from the market. They have a 93% PoP.
-2 VIX AUG 28c @ 0.80
Here's a new thing,
Summary:
Max Profit: $598
Capital at Risk: 5.8% (floating)
I don't think that the same thing will happen in the US. Right now volatility has spiked because stocks have broken slightly out of their year to date trading ranges. Investors appear to be worried about Greece (I really don't know why) and the Chinese stock slump.
I won't give market commentary. I hate that. So instead I'm just gonna sell an iron condor on the Dow Jones average ETF DIA.
It looks wider than it really is. Only a 53% PoP on this one ... however, my short strikes are at significant support and resistance areas. I think therefore that it has a higher PoP, but not statistically if you assume random walk.
-6 DIA 8/21 166/168/183/185 @ 0.75
On the same note, the VIX is spiking for the same reasons. Ordinarily, I would sell a bear call spread in the lows 20's (its at 18-19) on the front month, but because those expire next week, the VIX might go fairly high before coming back down to earth. Instead I sold naked calls farther out and away from the market. They have a 93% PoP.
-2 VIX AUG 28c @ 0.80
Here's a new thing,
Summary:
Max Profit: $598
Capital at Risk: 5.8% (floating)
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