TLT Thriller Brings Home the Bacon

I have a rough time when trading TLT options. The setups always look good, the prices are too. So I jump in, and TLT goes where I want it briefly. Then it turns on a dime after giving me a taste and pounds against me until I get out for a loss.

This time, I sold some puts just underneath some strong support at 129.50, the 4/17 127/129p spread for 0.53. TLT has been hanging out right around that support point for about a week, and since the options I'm in expire this Friday, sudden movements cause wild swings in option prices.

Today TLT jumped up 1.35% and the option values tanked 75%. My spread was valued at 0.37 as of yesterday's close and today I closed it at 0.10 for a 75% gain.

Thank you TLT!





In other news, USO is also hanging out just underneath 19, where the call side of my 5/1 iron condor is. Volatility is dropping in USO and time is passing, which is offsetting its slow rise towards 19. Hopefully USO dips a little before the end of the week and then I can hop put of this position alive.

**I have decided to get out of USO at a scratch. If she breaks above that resistance, she's screaming higher. With only weeks to expiration, better take what I can get and move over. I will instead get ready to trade a breakout. A scratch is acceptable because the PoP was only 52% to begin with.
Out @ 0.38 +$20.

Relative Success with TLT (knock on wood) and USO trade

My TLT vertical is up a decently, initial credit was 0.53 and now its at 0.35, so not bad. Today's big up move may continue into the end of the week and IV may drop as well, both good for my position.

I also traded an iron condor in USO, an oil company. It's up better than 4% today and it's IV has remained elevated due to the fluctuations in crude oil. I'm getting a little bit closer to the market than I normally would, but the credit for further OTM options just doesn't justify the risk.

I'm taking a little less risk with the USO trade than with TLT because it has a much lower PoP. TLT had a 71% at inception, and the USO position, a May 1st 15/16/19/20 iron condor has a 52% PoP.

Why so close to the market? USO has resistance at 19ish and support at 16ish, so it's likely to turn around once it gets close to those strikes.

I've sold 10 of them, risking a max $600 and gaining a max of $400. (cr = 0.40)

Dipping My Toes with TLT

I've taken a nice break to clear my head from all my impatience and now I'm back with a new position in TLT.

This one is a standard Bull Put with the APR15 126/129 for 0.53 x 5 for a credit of $265 and a max risk of $735, making the R/R = 0.36 (good!) with a 71% probability of profit (POP).

I haven't had the best luck with TLT in the past, but hopefully this can break the streak. IV Rank for TLT is at 62%, so it makes sense to sell rather than buy.

I've Been Trading Poorly, So It's Time For a Small Break...

I've been very impatient with my trades recently. If I had held the original spread, realized losses would have become big... BIG gains.

So I'm taking a couple of weeks off from trading. Clear my head, get back to what works. Most importantly, get refocused and my mojo back.

I can afford to that, too. Even though February, and thus far March, sucked, I'm still clocking the stock market. Yeah yeah it's not a good benchmark since I trade options but whatever it's the only one I got that makes sense.

S&P 500 YTD: +0.33%

Dow YTD: +0.40%

NASDAQ: +3.31%

Russel 2000: +2.65%

Bflakaz Trading Log: +7.44%

Here's all the trades. Unfortunately, many were not posted on the blog because they were either quick adjustments or I simply forgot...

2015	Capital Limit upped to $30000 or max $1500 per position
Ticker	Date Open	Asset Class	Spread	Strikes	Expiration	Lots	Opening Price	Closing Price	Date Close	P/L	Commission	Risk	% of Capital	ROC
Z	01/06/15	Option	Bull Put	85/90	FEB 2015	4	1.40	0.70	01/08/15	280	20	1440	4.800%	19.44%
TLT	01/06/15	Option	Bear Put	130/131	MAR 2015	12	0.50	0.65	02/10/15	180	20	600	2.000%	30.00%
VIX	01/06/15	Option	Bear Call	24/26	FEB 2015	9	0.40	0.10	01/08/15	270	20	1440	4.800%	18.75%
XLE	01/14/15	Option	Bull Put	68/70	FEB 2015	5	0.52	0.22	01/21/15	150	20	592	1.973%	25.34%
SPY	01/14/15	Option	Bull Put	193/195	FEB 2015	6	0.41	0.15	01/22/15	156	20	954	3.180%	16.35%
VIX	01/14/15	Option	Bear Call	24/26	FEB 2015	6	0.35	0.15	01/22/15	120	20	990	3.300%	12.12%
GLD	01/21/15	Option	Naked Put	123	MAR 2015	5	2.95	3.35	01/29/15	-200	20	1475	4.917%	-13.56%
GLD	01/21/15	Option	Leg Out	125	MAR 2015	5	3.95	6.00	01/29/15	1025	20	1975	6.583%	51.90%
TLT	01/26/15	Option	Naked Put	125	MAR 2015	12	0.55	0.75	02/10/15	-240	20	1200	4.000%	-20.00%
TSLA	01/27/15	Option	Bear Call	220/225	FEB 2015	3	1.30	2.60	02/05/15	-390	20	1110	3.700%	-35.14%
FB	01/28/15	Option	Strangle	66/86	Jan-30 2015	5	0.32	0.00 (expired)	01/30/15	160	10	2000	6.667%	8.00%
TSLA	02/03/15	Option	Bull Put	185/190	FEB 2015	3	1.05	0.40	02/05/15	195	20	1185	3.950%	16.46%
AAPL	02/03/15	Option	Call Butterfly	118/120/122	FEB 2015	8	0.24	0.35	02/10/15	88	20	192	0.640%	45.83%
GMCR	02/04/15	Option	Strangle	98/148	Feb-6-2015	4	0.50	0.00 (expired)	02/06/15	200	10	3000	10.000%	6.67%
STX	02/06/15	Option	Bear Put	57.5/60	APR 2015	4	1.00	0.80	03/02/15	-80	20	400	1.333%	-20.00%
TSLA	02/11/15	Option	Strangle	175/250	Feb-13 2015	3	1	0.00 (expired)	02/13/15	300	10	2500	8.333%	12.00%
FEYE	02/11/15	Option	Strangle	30/43	Feb-13 2015	4	0.5	0.00 (expired)	02/13/15	200	10	3000	10.000%	6.67%
INTC	02/13/15	Option	Bull Call	34/35	APR 2015	8	0.5	0.5	03/05/15	0	20	400	1.333%	0.00%
XLU	02/18/15	Option	Bear Put	45/46	MAR 2015	6	0.5	0.41	03/02/15	-54	20	300	1.000%	-18.00%
MCD	02/26/15	Option	Bull Put	92/94	MAR 2015	5	0.35	0.12	02/27/15	115	20	875	2.917%	13.14%
MBLY	02/27/15	Option	Bull Put	30.5/31.5	MAR 2015	8	0.15	0.05	03/05/15	80	20	680	2.267%	11.76%
MBLY	02/27/15	Option	Bear Call	39/41	MAR 2015	8	0.2	0.05	03/02/15	120	20	1440	4.800%	8.33%
YUM	02/27/15	Option	Bear Call	84/85	MAR 2015	14	0.25	0.1	03/03/15	210	20	1050	3.500%	20.00%
MBLY	03/02/15	Option	Bear Call (roll)	36/38	MAR 2015	8	0.25	0.9	03/09/15	-520	20	1400	4.667%	-37.14%
MBLY	03/05/15	Option	Bull Put (roll)	32/34	MAR 2015	8	0.25	0.05	03/09/15	160	20	1400	4.667%	11.43%
MBLY	03/09/15	Equity	Long			100	38.55	40.32	03/12/15	177	10	3855	12.850%	4.59%
Profits	Commission	Net Profit	ROC
2702	470	2232	7.44%

IT'S TIME FOR SPRING BREAK YEAAAAAAAAAH!!!!!!!

A Frustrating February

February 2015 was the month of coulda-shoulda-woulda...

I SHOULDA stayed short TLT, it would have been big profits. I SHOULDA gone long AAPL after the ATH breakout, it would have been huge profits. I SHOULDA liquidated my positions at the beginning of the week, I WOULDA been up $160, and now I'm down $230.

The TLT and AAPL trades were good set-ups, everything else, not so much. XLU looked like a good setup, and yeah, at one point I was up 50% on that position. But I got greedy: I wanted to leg out and make big $$$ but should have taken what Mr. Market had to offer. I've been punished and am now down $18 on it.

I made a couple good earnings trades, but I should have been more "awake" to place more of those. February was still profitable, and I didn't do too bad in the first week. Marking to market (since I haven't closed a few positions), I've made $868 gross, and $688 after commissions, or +2.29% ROC. The S&P and the DOW beat me this month, my worst since November.

What have I learned from Fuck-You February? Swing trading doesn't always work; you need a directional market to trade directionally. When the market just chops around, nothing gets overbought/oversold and nothing quite hits support/resistance. There's no momentum to drive anything anywhere, and volatility comes down too.

While I will still stick to my directional trades, going forward I'm going to focus more on smaller profit, better probability trading, because being directional and using debit spreads just isn't working right now.

January was a superb month, February was disappointing. It's my goal to get back on my horse in March. Historically, Q1 of any year has the most "jitters." I guess the cold not only makes people apathetic to venture outside, but also to venture out in the markets. Let's hope the Spring gets us moving again - up or down!

Update on Positions

Current Positions:

• +4 STX 57.5/60 Apr puts @ 1.00, now 0.64 -$144 (entered 2/6)
• +8 INTC 34/35 Apr calls @ 0.50, now 0.52 +$16 (entered 2/13)
• +6 XLU 45/46 Mar calls @ 0.50, now 0.60 +$60 (entered 2/18)

STX has been breaking my balls, and now its time to get serious. Down $144 is not what I want, and the modifications I made to cut losses in TLT certainly did not work. I ended up closing that one down $60. Although STX has not broken out of the gap resistance, I'm losing a chunk of cash. If it breaks out, I will just close it and take the hit.

Going long INTC is the opposite of STX; both charts look very similar. I chose to go long INTC because it is in a multi-year uptrend, and after gapping down has had some upward momentum, as shown by the MACD/CCI crosses. In the past two days, however, INTC lost some of that momentum, so we'll see what happens. With my luck, STX will break out and INTC will break down. What a crapshoot month it has been. My plan is to leg out once it passes gap resistance.

XLU hit a good support level and took off on Wednesday, helped by the Fed comments on remaining patient with a rate hike (ya'll know what I think of that...) This is a utility stock ETF, and utilities are kind of used like "stock bonds," meaning that investors usually buy them for their yield, not capital gains. It too lost some upward momentum off that support bounce, but I liked the price action on Friday, where it recovered from being down 1.5% to lose green 0.05%. Because there were no April calendar options available, I had to go into March, giving me a short time for this to play out. My plan is to have this position closed by mid next week, regardless of where XLU is at, due to theta decay.

TLT You Frustrate Me...

Back on January 28th I posted about my hedging adjustment in TLT. TLT has since come down, just as I had suspected it would:

So, one would think that my spread would now be making some money, right?

INCORRECT. I sold the March 125p for 0.55, its now ~1.00. My original put spread, the 130/131, stands at 0.65, meaning I'm actually losing more money than I should be.

The chart on the left shows the original debit put spread, bought @ 0.50. On a $1 wide spread, this means that I can either make a maximum of 0.50 or lose a maximum of 0.50.

The chart on the right shows the current spread, with the short 125p. The red line shows how it would play out upon expiration. As long as TLT stays above 125 on March 20, then that 125p would expire worthless, netting a 0.55 return. Additionally, if TLT remains below 130 on March 20, then the 130p would expire worthless too. The original spread would net 0.50 and the expired 125p would net 0.55, rendering a total possible 1.05 profit.

The orange lines suggest where the spread should be trading currently. Even though I wouldn't be making 1.05, I should still be in the green, above the gray zero line. But, it isn't. I'm down 0.30, which doesn't make any sense.

So, is there a price anomaly in TLT options? This is the last time I will probably ever trade them, because I'm in 12 contracts. -0.30 x 12 x 100 = -$360, so I'm down a good chunk of change!

This is beyond me... I don't know what to do. Sit and wait and let the loss get potentially massive, or exit the trade soon and write this one down as some mo bullshit?