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$25,000 Virtual Portfolio – Month 7 – Profiting from Chaos!

Wheeeeeeee, this is fun!  

There’s nothing like an active virtual portfolio to get you through a rough market.  The last update to our very aggressive virtual porfolio was on the July 28th, when I said to Members "On the whole, we’re pretty short so we’ll be either adding longs or cashing in shorts tomorrow to get a little more even into the weekend but still bearish if there’s no debt deal."  There was, of course, no debt deal that week and the next morning I said in our Member Alert:  

Volume is not very high – this is a retail panic so far. If you have short positions, strongly consider put tight stops on them (this includes the $25KP and Income Virtual Portfolio) as they put plenty of cash in your pocket and we can always find another layer of shorts if the RUT can’t hold 775.

Needless to say, the RUT failed (10% ago!) and we stayed generally bearish.  At the time we "only" had $57,760 of virtual cash (after starting with just $25,000!) with $960 worth of unrealized losses in our remaining, mostly bearish positions.  How do you think that worked out?  That’s right, possibly our biggest gains of the year!  In the last two weeks, we closed the following positions as the markets collapsed around us:

  • 10 USO 8/5 $36 calls at $1.35, out at $2.35 – up $1,000
  • 3 CMG Aug $310 calls sold for $18, out at $16 – up $600
  • 2 CMG Dec $340 calls at $18, out at $20.40 – up $480
  • 5 WYNN Aug $155 calls sold for $6.60, out at $4 – up $800
  • 4 WYNN Oct $165 calls at $6.60, out at $7 – up $160
  • 10 BXP Aug $105 puts at $2, out at $2.75 – up $750
  • 4 GMCR Sept $97.50 puts at net $5.50, out at $4.30 – down $480
  • 20 QQQ Aug $58 puts at .63 out at $1.55 – up $1,840
  • 20 QQQ 7/29 $37 calls at .72, out at $1.45 – up $1,460
  • 20 USO 8/5 $38 puts at .44, out at $1.35 – up $1,820
  • 10 USO Aug $37 calls at .97, out at $1.17 – up $200
  • 4 PCLN 8/5 $570 calls sold for $11, expired worthless – up $4,400
  • 20 USO 8/5 $36 calls at .55, out at .39 – down $320
  • 20 DIA Aug $119 calls at .80, out at .75 – down $100
  • 10 USO 8/5 $33 calls at .88, out at $1.05, up $170
  • 10 USO 8/5 $34 puts at .45, out at .75 – up $300
  • 10 USO 8/12 $32 puts at .35, out at .50 – up $150

We have (drum roll please!) a whopping $14,190 as we finally caught a big wave going in the right direction AND, MOST IMPORTANTLY, we were wise enough to take it off the table!  That brings our cash up to a massive $71,950 and we are well on the way to our $100,000 goal for the year.  Our biggest winner was our PCLN ratio backspread from the 1st, where we set up the following play for earnings at the end of the week’s earnings:  

PCLN – I’d sell 4 weekly $570 calls for $11 against 3 Sept $605s at $11 for net $1,100 credit on the assumption they don’t go all the way up to $581 and, even if they do, you should be able to roll to the Aug $585s at least and then 5 more weekly rolls before you hit trouble and you can DD on the long calls and do a 1.5X roll if they gain more than 10% but I super doubt it so let’s do one set in the $25KP.  

You can see why these are my favorite kind of earnings plays.  WYNN and CMG were similar trades and GMCR is the leftover loss from a winning bullish trade.  We still have an unrealized loss on 3 open PCLN Sept $605 calls ($1,500) but PCLN had excellent earnings AND we can sell weekly calls so I think we’ll keep them a bit.  

The following are our remaining open (unrealized) positions:   

  • 10 GLL Oct $22 calls at net $1.95 ($1,950), now .50 – down $1,450
  • 10 GLL Aug $23 calls sold for net $0 ($0), now .05 – down $50
  • 10 TBT Aug $32 puts sold for $1.10 (-$1,100), now $3.80 – down $2,700
  • 20 GLL Aug $22 calls at .40 ($800), now .10 – down $600
  • 10 RIMM Aug $26 puts sold for .93 ($930), now $2.95 – down $2,030
  • 20 UUP Dec $21 calls at .53 ($1,060), now .68 – up $300
  • 3 PCLN Sept $605 calls at $11 ($3,300), now $6 – down $1,500
  • 20 UYG Aug $49/50 bull call spread at .55 ($1,100), now .50 – down $100

We have then, $8,130 of unrealized losses, up over $7,000 from last week but that is the nature of this kind of trading, where we play both sides and, when presented with a large gain on one side ($14,190 in the past 10 days) we cash that and then we see if we can salvage the losers.  All in all, our virtual net is up to a very respectable $63,820 as we hit our 28th week of tracking this virtual portfolio and that’s up VERY NICELY from the $10,000 it all began with last year.  

Notice this is not about "luck" – we were simply more bearish than bullish but only 2:1, which is about as imbalanced as it gets.  Had we been wrong and the virtual portfolio had gone the other way, then we would have lost money on the short bets but made money on our unrealized side.  We have plenty of cash and we know we are way too bullish so we’ll be looking for some aggressive short plays this week, very likely some backspreads on remaining earnings for companies we REALLY want to hold the long end of.  

We’ll give it through the Fed statement tomorrow (2pm) to stick with our bullish premise (that The Bernank will once again turn on the money spigots) before we go hunting for bear again.  You just have to take the profits from a 10% drop off the table though – especially in a virtual portfolio where your goal is "Get in, get out – back to cash!"  

 


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  1. Phil

    Oil/Snow – Wow!  That was a nice little dip to $81.  Time to buy:

    USO Aug $32 calls at $1.23 – 10 in the $25KP stop if we blow $81.   

    Submitted on 2011/08/08 at 3:01 pm

    Wow – So much for taking a poke at USO calls already.  Quick .10 loss in $25KP was worth a try but let’s not do that again…

    Submitted on 2011/08/09 at 3:03 pm

    TBT weekly $25 calls at .90 10 in the $25KP.  

    Submitted on 2011/08/09 at 3:11 pm

    10 More TBT weekly $25 calls at .60 in $25KP!  

    Submitted on 2011/08/09 at 3:29 pm

    TLT Sept $104 puts at $2.15, 10 in $25KP.  In a bigger portfolio, you can sell the Aug $110 calls for $1.42 to offset.

    Submitted on 2011/08/10 at 5:28 am

    TBT/$25KP, Pat – For sure we have to get 1/2 back off the table tomorrow.  Avg entry was .75 and, unless there’s a big pullback, we should get a double.  I think if we’re above $1.50 it’s 1/2 out with a .25 trailing stop and, below $1.50 it’s just a cash out.  In the $25KP, we added the longer (all the way to next Friday) TLT puts so it’s not like we’ll miss anything if we get a really nice pullback.  

    Note to all – notice in the $25KP, I did not risk trading all day UNTIL after the Fed when I saw an opportunity to make what I thought was an obvious trade.  That trade made 100% in less than an hour so it was worth waiting for rather than messing around and throwing cash here and there and chewing up buying power trying to chase the latest 30-second trend.  Impatience will kill you as a trader – there will ALWAYS be something good to trade if you have CASH and PATIENCE.  

    $25KP – 10 GLL Oct $22 calls at .50 can be rolled to $20 calls for .70 and then a DD at $1.20 becomes net 20 at avg $1.92 ($3,850).  

     

    QQQ WEEKLY $53 puts at $2.13 have very little premium and make a nice momentum play on the Nas below 2,400 so a stop at that line (about $2) if you think you are too bullish but I still think 74.80 is a top for the Dollar so I’m more interested in the DIA Aug $112 calls at $1.20 now so 10 of those in the $25KP.  

    Big breakout in the Dow at about 11,050 – clean sailing back to 11,300 from there.   Willing to hold the DIA calls in the $25KP but keep in mind it’s a VERY AGGRESSIVE portfolio.  

    Dollar going the wrong way, stopping out of DIA $112 calls at $1.40 in $25KP (and I bet I regret it!).

    Submitted on 2011/08/11 at 10:42 am

    USO/Nicha – No, those should have stopped out early.  Remember they were $1.34 and I said we SHOULD take them off but we needed something in case we had a terrible open.  We didn’t and that was that but the .29 we made was supposed to be our buffer.  They opened at $1.10 and sank since then.  If you are still in them at .80, I’d sell the Tomorrow $32 puts for .33 and roll those out to the Sept $30 puts (now $1.10) AFTER the tomorrows get worthless (otherwise you can get hurt on the deltas).  Keep in mind if a trade is not in the $25KP or Income Portfolio I am NOT tracking it (and even those I get distracted) so PLEASE follow normal rules. 

    Submitted on 2011/08/11 at 12:41 pm

    $25KP – 20 DIA Aug $114 calls at .92, stop at .85

    TLT/Terra – I don’t really do targets.  $105 was too high and the 50 dma is $97 so it would be nice to get there and a good place to take the money and run but Sept $104 puts just doubled in the $25KP but we missed the sale so now I have to see what the action looks like (now $3.40, up from $2.15).  This "rally" isn’t very impressive and it may even be wrong-headed as that auction sucked but, on the other hand, if the auction sucked then bonds are dangerous and we chase people back to stocks, which are a good value.  

    In $25KP, let’s move stops on DIA $114 calls up to .95.  No reason to hold these if we lose our momentum.  

    Submitted on 2011/08/11 at 2:38 pm

    Now we’re getting somewhere with those DIA calls!  Let’s kill 10 (of 20) at $1.15 in $25KP and keep the stop at $1.05 on the rest.  Since they are Aug, I’m HOPING to hang on overnight.  

    Submitted on 2011/08/11 at 3:52 pm

    Done with DIA $114 calls at $1.40 in $25KP.

    Submitted on 2011/08/12 at 11:41 am

    TBT/Pat – Aug you take the money and run, Sept can be waited on.  As long as people are nervous, TBT will have trouble getting traction.  From the $25KP, we were in the Sept $104 puts at $2.15, now $2.95 but they were $3.80 yesterday and I already said that we blew the chance to get out at that price yesterday morning so I don’t know what to say if you are still in it after giving back 60% of the profits.  If you didn’t want to get out at $3.80 (up 76%), what is your plan up "just" 37% now with only 5 days left, where any move against you can wipe you out next week with no time to recover?  I still think TBT turns up long-term, but that’s no reason not to take profits along the way – When in doubt, you can always sell half…

  2. Phil

    Submitted on 2011/08/15 at 10:40 am

     

    USO Aug $35 puts at $1.26 have very little premium, 10 in the $25KP with a stop at $1, looking for $1.50+. 

    Submitted on 2011/08/15 at 11:42 am

    USO puts in $25KP, take the dime and run as EU is done (our premise) and we topped out at $1.45.  

    Submitted on 2011/08/16 at 11:40 am

    $87.50 was our goal on oil – 10 Aug $35 puts again in the $25KP at  $1.15, out if they top $87.60

    USO Aug $35 puts ($25KP) still $1.10 but USO heading up – I think we can hold out for $88 as it’s just 10 and hopefully we won’t regret it.  

    Submitted on 2011/08/16 at 12:55 pm

    USO/Asaenz – We were lucky to get .20 yesterday but I am hoping we do a little better today as those Sept barrels gotta be rolled on the NYMEX but if we don’t get a good gain by 1:30, I think we can’t risk the run back up into the NYMEX close.  That’s for the Weeklys in the $25KP, not the Sept puts, which are meant to hold for the big drop. 

    Submitted on 2011/08/16 at 1:35 pm

    USO $35 puts out at 1.40 – too unstable with too short a timeframe to hold in $25KP.  

    Submitted on 2011/08/17 at 9:47 am

    As I said earlier, we like the Futures short at RUT (/TF) 710 and S&P (/ES) 1,200 but the big play today will be shorting oil (/CL) below the $88.50 line or, hopefully, below the $90 mark if they get that high.  Expect the Dollar to re-test 73.50 and, if they hold it, then it’s a great time to hit the shorts but, with oil, we’re waiting on that inventory report at 10:30.  

    As an overall short on oil, the Sept $32 puts are down to .65 and .60 is a good spot to DD in the $25KP (10 more).  AFTER that, with an average of .75 per contract, we want to consider rolling up to the Sept $33 puts, now .90 for .30 or less.

    FAS/Yodi – Today (now) was supposed to be the low of the week, from this point forward, we expect more positive outlook on QE3.  I was right about the low of the week so it would be kind of strange to suddenly decide I’m wrong about the bounce just because we’re at the low I predicted, don’t you think?  

    Good idea Matt!  

    Hopefully this will be the ned of the sell/off so let’s cash the short positions (FAS Money too).  QQQ $52 calls have very little premium at $1.33 so 10 in the $25KP with another decision if they hit $1.17 but maybe a DD.  

    Still good on the USO Sept $32 puts in $25KP, now .76, hoping for a bigger move down but half out even is the way to play!  .  

    Submitted on 2011/08/17 at 2:12 pm

    Speaking of which, back to the well on TLT – Let’s buy 10 Sept $106 puts for $2.20 in the $25KP!  

    Submitted on 2011/08/17 at 2:22 pm

    QQQ $52 calls in $25KP already $1.60 so stop at $1.50 as we have no faith in these things if we don’t keep going up.   After $1.75, it’s a .15 trailing stop.  

    Now THAT’s the point you give up on the QQQ calls ($25KP) we failed 2,500 and done at $1.45.  That’s how you play a stop, when you get near it, you find some resistance point to focus on and then hit the button if it fails!  

    Submitted on 2011/08/18 at 9:57 am

    TLT Sept $110 puts at $3.15 and that’s a .85 roll from the $108 puts for the $25KP and a DD.  

    Submitted on 2011/08/18 at 10:18 am

    TNA tomorrow $42 calls are .80, 20 in $25KP. 

    Submitted on 2011/08/18 at 11:02 am

    TLT/$25KP, Doro – Oops, I thought we bought the $108 puts!  The Sept $106 puts are $1.60 and they can be rolled to the $109 puts ($2.65) for $1.05 and that’s plenty to spend and then the DD for 10 more at $2.65 makes a good average entry on 20.  In a bigger portfolio, you could sell the Next week $114 calls for $1.05 to drop the net.  

    Submitted on 2011/08/18 at 1:20 pm

    In $25KP – I realize now that I neglected to mention setting stops on the TNAs.  I hope no one is still in them (now .30) but, if so they make a good DD here (or a good new entry) as they should hold .20 through tomorrow morning so let’s call that 20 more in the $25KP but, for goodness sake, if that makes it 40 at .55 average – you get the hell out of all but 10 at .55.  That goes for new entries too!  

    HPQ Sept $26 calls at .60 – 20 in $25KP.  Selling 5 Sept $23 puts at $1.57 as well.  

    $25KP Adjustments are simple, any short Aug put, simply roll over to an even Sept position, we will adjust positions after next weekend, when we get the word (or no word) from Jackson Hole.  

  3. Phil

    Submitted on 2011/08/22 at 8:45 am 

    Meanwhile, nice 1.5% bounce now.  Gold pulling back, AGQ will make a nice short at the open, maybe Sept $180 puts for $5 or less – 5 in the $25KP if we can get that price. 

    Submitted on 2011/08/22 at 9:52 am

    Those AGQ Sept $180 puts came in at $4, which is a go for the $25KP (5) and USO Sept $32 puts are just $1.30 so worth a toss for 10 in the $25KP IF AND ONLY IF they get down to $1 as we’re willing to bet oil does not get over that $85 line with September NYMEX contracts closing out tomorrow. .  

     Here’s why oil is up – let’s NOT do the short USO play in the $25KP (still too high) as they’ve gotten rid of all but 19Mb already.  Still a crazy 650Mb in the front three months so we should get a wild ride in Sept but best to wait to short after the holiday weekend (or maybe into it):

    Submitted on 2011/08/23 at 10:54 am

    Selling calls/GS – I think most brokers will treat it like a naked spread if you don’t have a PM account.  Option Monster, IB and TOS seem to be the most flexible but you’d have to talk to them to see what the rules are.  $25K sounds like too little for serious naked selling – keep in mind our virtual $25KP is meant to be a 10% or less risk carve-out of a conservatively invested $250,000 portfolio (which would have plenty of margin) – in a stand alone, you don’t generally do any sort of open-ended naked shorts.  

    Submitted on 2011/08/23 at 1:19 pm

    TLT/Alik – In the $25KP, we rolled them up to the $109 puts and doubled down.  

  4. Phil

    $25KP Update – Week 30:  
    This will, hopefully, be a quick, down and dirty update of our virtual portfolio.   
    We left off on the 8th with $71,950 in virtual cash and 8 open positions with $8,130 of unrealized losses.  Since then, we have closed the following in a busy couple of weeks:  
     

    3 PCLN Sept $605 calls at $11, out at $4, down $2,400
    10 USO Aug $23 calls at $1.23, out at $1.13 – down $100
    10 TBT 8/12 $25 calls at net .75, out at $1.50 – up $750
    10 TBT 8/12 $25 calls at net .75, out at $2.25 – up $1,500
    10 TLT Sept $104 puts at $2.15, out at $3 – up $850
    10 TLT Aug $110 calls sold for $1.42, expired worthless – up $1,420
    10 DIA Aug $112 calls at $1.20, out at $1.40 – up $200
    20 DIA Aug $114 calls at .92, out at $1.27 avg – up $700
    10 USO Aug $35 puts at $1.26, out at $1.35 – up $90
    10 USO Aug $35 puts at $1.15, out at $1.40 – up $250
    20 USO Sept $33 puts at avg. $1.05, out at $1.85 – up $1,600 
    20 TNA Aug $42 calls at .80, out at .35 – down $1,000
    20 TNA Aug $42 calls at .30, out at .15 – down $300
    10 QQQ $52 calls at $1.33, out at $1.45 – up $120
    10 GLL Aug $23 calls sold for net $0, expired worthless – even 
    20 GLL Aug $22 calls at .40, expired worthless – down $800
    20 UYG Aug $49/50 bull call spread at .55 ($1,100), expired worthless – down $1,100

    We picked up another $1,780, which brings our realized gains up to $73,730.  Now, if only we can manage to work our way out of our unrealized losses!  So now, let’s see how we’re doing on our open (unrealized) items:  

    20 GLL Oct $20 calls at net $1.92 ($3,840), now .60 – down $2,640
    10 TBT Sept $31 puts sold for net $1 (-$1,000), now $6.50 – down $5,500
    10 RIMM Sept $26 puts sold for $1.08 (-$1,080), now $1.59 – down $510
    20 UUP Dec $21 calls at .53 ($1,060), now .53 – even
    20 TLT Sept $109 puts at net $2.95 ($5,900), now $2.80 – down $300 
    20 TLT Aug 26th $114 calls sold for $1.05 (-$2,100), now .32 – up $1,460
    20 HPQ Sept $26 calls at .60 ($1,200), now .70 – up $200
    5 HPQ Sept $23 puts sold for $1.57 (-$785), now .82 – up $375
    5 AGQ Sept $180 puts at $4 ($2,000), now $4.50 – up $250

     
    That’s net $6,665 of unrealized losses which is better than the $8,130 we had last time so – PROGRESS!   Overall, we’re netting out to a virtual balance of $67,095 and pretty much on schedule for our $100,000 goal – especially if we can keep picking up $3,000 every couple of weeks like this! 
    We’ve been holding back ahead of the Fed, notice the net cash committed is just net $9,035 so 87% cash at the moment, which may be overly cautious but, with 4 months left to make $33,000 (50%) – I’m not too psyched about playing into this much uncertainty ahead of the Fed.  
    That’s what "Cashy and Cautious" means! 

  5. Phil

    Submitted on 2011/08/24 at 10:06 am 

    Oil is shaping up as a tempting short again into this morning’s inventory report, let’s speculate on 10 USO Sept $32 puts (our usual favorites) at .93 in the $25KP and we’re very happy to DD at .77 or less. 

    Submitted on 2011/08/24 at 10:32 am

    Gold and silver coming down nicely now!  $1,773 on gold, $40.30 on silver.  Our AGQ Sept $180 puts are selling for $7.40, up almost 100% for our $25KP play and I’d say ask for $8 on 2 (of 5) and put a stop at $6 on the other 3.  They could go to $20 if we’re lucky so I hate to see them go but we’re not leaving a quick double completely on the table!  

    Krugman/JC – He’s got a great way of putting things.  

    AGQ/$25KP – Since we can get $10 for the last 3 Sept $180 puts, seems silly not to take it off a $4 entry.  You never know what tomorrow will bring….  That’s $4,600 cashed out on all 5 from a $2K entry and it’s not like that’s not a lot of money…

    On TLT in the $25KP, I REALLY think we can afford to be greedy but we have our poor TBT short sale to make up for so blowing these gains would be beyond foolish so let’s take $4.50 for 5 of our Sept $109 puts and set a stop at $3.50 on 5 more ($1 trail) and see how the last 10 hold up.  In the very least we accomplished our goal after a DD of drastically lowering our basis and we’re back to the original 10.   

    Submitted on 2011/08/24 at 4:07 pm

    USO/$25KP, Savi – Yes, I think they have a huge overhang of 650Mb in the front 3 months, demand sucks and we tested $75 in early Aug and $79.38 2 weeks later – so worth riding for a while.   Had we not caught a huge break on Silver and TLT/TBT I would be more inclined to take profits but it’s a relatively small trade and we just had a day that made our whole month of September (providing we don’t blow it).  

    Good morning!  

    USO./Jomp – It’s up with the rest of the market and our goal was to DD on the $25KP at .77 on the Sept $32 puts and they still aren’t there so no change of plan as oil is only up with the market.  I still like them here (.85) but it is a dangerous play ahead of Bernanke.  

    QQQ/Rustle – Great suggestion.  QQQ NEXT weekly $52 puts at .92 make good protection in case AAPL heads south later and, of course, good overall market protection.   10 in the $25KP.  

    How ridiculous that RIMM Sept $26 puts are still $1.20.  You can sell those to offset the Qs (we have them in the $25KP already) or you can sell the Sept $25 puts for .93. 

    Meanwhile, BNO still high at $73.52, Sept $71 puts are $2.20 so 10 of those in the $25KP makes a matching set with USO.  

    $25KP – $1.40 is good enough on the USO puts.  We have the BNOs to gain from a bigger drop so best to take a near double off the table.  

    Submitted on 2011/08/25 at 11:22 am

    Let’s stop out the QQQ weekly $52 puts at $1.20 in the $25KP.  

    Submitted on 2011/08/25 at 12:08 pm

    74.30 holding – waiting for the Dollar to give us a signal.  Oil back to $85 – that was fun!  XLF right back to yesterday’s close so the Sept $13 calls seem very tempting at .43 – 20 in the $25KP.  

    Submitted on 2011/08/25 at 12:46 pm

    TLT all stopped out in $25KP.  $109 puts topped out at $4.40, now $3.95.  

    Submitted on 2011/08/25 at 1:11 pm

    There are not really any good short-term plays because the front-month puts and calls are so extreme into the Fed tomorrow.  Things are priced for a 10% move either way.  I still favor the Financials though and the FAS tomorrow $13 calls were $2 in the money this morning so I like the NEXT week $13 calls for $1.25 with a plan on selling the 1/2 the tomorrow calls for $1 or better (now .66).  10 in the $25KP.  

    Submitted on 2011/08/25 at 3:52 pm

    FAS/$25KP, GS – We did not get the move up I hoped for an the Next week $13 calls are now $1.42 so we may as well just take the small profit and forget it as the idea of turning it into a .25 spread is shot.  

    GLD next week $170 puts at $2.35 is a fun way to play a gold sell-off, stop out if they break $1,800 – 10 in the $25KP.  

    Dollar back to 74.20, oil down to $83, silver fell back to $40, gasoline $2.75 again and that is now my favorite futures long (/RB) into the weekend due to the hurricane.  

    We are holding up well.  In the $25KP, llet’s switch to 10 Next Week QQQ $52 calls at .95 and also 10 TLT Sept $107 puts at $2.  

    Submitted on 2011/08/26 at 11:21 am

    $25KP – Gotta take $1.60 and run on the QQQ $52s so let’s set a stop there (now $1.68) so call it a .20 trail if we head higher.  On the TLT $107 puts, those are good long-term as are the GLD puts unless, of course, we go over 20% today, then we’ll see.  

    BNO/Morx – In the $25KP, I’m going to give it the weekend.  Oil prices are held up on the Hurricane – demand is down, inventory is way too high, no more Libya problems, vacation season is over and the EU economy still sucks – not a good combo for Brent.  

    Hashish/Jabob – I wish!  More like Cashy and Cautious still but now more on the bullishly cautious side but, if anything, we’ve LOWERED our exposure in the $25KP below 15% invested – that’s always a good indicator of my short-term perspective.  We did, however add (and are likely to hold) the TLT and GLD puts but the QQQ already came off the table as it made too much money too fast to keep.  If we pull back I might go for another one but Cash, not Hash, seems like a good idea into the weekend.  

    Submitted on 2011/08/26 at 2:52 pm

    $25KP – GLD $170 puts, now $1.35 can be rolled to the $173 puts at $2.25 for .90 and doubled down for 20 at net $2.75 if you still have them (stop out was $1,800) and, if not, then 10 at $2.25 is the new trade.  

  6. Phil

    Submitted on 2011/08/29 at 12:08 pm 

    FAZ Oct $43 puts at $2.10 are a fun play – 5 in the $25KP

    Submitted on 2011/08/30 at 9:43 am

    Gold is giving people another chance to get short as CNBC pumps it in a special today.  The $25KP is currently in the Sept $173 puts at net $2.75 and that’s right about where they are now and I still like them as a new entry but shame on us for not taking 1/2 off the table at $3.50 yesterday (as it was a DD and roll) so let’s not make that mistake again and keep tight stops on 10. 

    Again, I assume everyone is bullish enough at the moment so I lean towards looking for short-term bearish opportunities…

    Submitted on 2011/08/30 at 10:12 am

    BNO/$25KP, Morx – Yes, NOW I’m interested.  It’s still the last weekend of summer but the 10 Sept $71 puts are now $1.10 and they can be rolled up to the $75 puts, now $2.40 for $1.30 and that’s the way we want to go at the moment.  

    In the $25KP, we have 20 GLL Oct $20 calls, now .40 and we do want to spend .60 to roll them down to the Oct $17 calls ($1) and DD at $1 for 40 at net $1.76.  

    Submitted on 2011/08/31 at 10:03 am

    Oil should climb into the inventories at 10:30 and $89 is where we want to short them but we can go with 10 Sept $34 puts at .85 in the $25KP and a plan to DD if they get to .65 or lower ahead of inventory and we stop out if they get over $90 – which I very much doubt.  

    NOW is a very good time to revisit some Disaster Hedgesas well as some of our Long Put ideas because, if we fail to make these Must Hold levels – then it’s going to be very easy for us to drop right back down 10% on any sort of bad news.  As a rule of thumb, it’s good to put about 20% of your gains on the way up into hedges.  Only if we FAIL to make our levels, of course…

    Submitted on 2011/08/31 at 11:27 am

    FAZ/David – That was 5 Oct $43 in the $25KP at $2.10?  They are $2.80 now and we need the downside hedge in the $25KP so no change yet.  

    Dollar holding 74 – not good.  Also, we are not holding yesterday’s highs – just the RUT so far but the Dow is right on the line and let’s call 11,600 a bad fail.  The DIA Sept $115 puts are $2.22, 10 in the $25KP with a stop at $2.  

    Submitted on 2011/08/31 at 12:07 pm

    FAZ/David – Oops, my bad!  You are right, they are bullish plays on XLF so we should have stopped out in the $25KP as they topped out at $3 this morning.  Still, looking at the current action and, since they are October – let’s give them a chance but not let $2.50 get away from us.  

    Submitted on 2011/08/31 at 2:54 pm

    DIA/$25KP, Asaenz – I was hoping they would be a quick trade but we’re looking kind of weak but let’s sell 10 DIA $114 puts for $2.10+ so we knock our exposure down to .12 on the $1 spread so we pick up $1,000 if the Dow drops while risking just $120.  Hopefully, they drop to $2.32 so we can book a small profit and keep a $1 spread.

    TLT coming down nicely.   TBT $25.25.  Heads up on TLT if you had too many puts and need to lighten up!  

    Looks like Mr. Stick time into the close.  Make sure those DIA puts are covered up in $25KP and anything else you are short on as that was the dip we expected, nothing more.  This could indicate that all this was nothing more than window dressing for end of month or it may just be panic ahead of unemployment but I don’t see any real news to justify a big sell-off nor any reason to expect the Dollar to keep going up.  

    $25KP – Let’s buy back the 10 DIA Sept $114 puts we sold, now $1.97.  We’ll look to re-sell them again at about $2.20 to lock in a profit.  

    $25KP DIA $115 puts can be rolled to Sept 30th $116 puts for $1.15, selling the Sept $115 puts for $1.80 to another sucker to cover.  

    TZA next weekly $42 calls at $2.25 too interesting to ignore – 5 in the $25KP.  

    Submitted on 2011/09/01 at 1:34 pm

    GLD/Sank – The ones from the $25KP? We rolled those on the 26th and on Monday they popped to $5 so back to down to just 10 open then and if you didn’t stop out the rest on the way back down to $1.83, at this point I’d spend $1.10 to roll up to the $176 puts (now $2.94) and hold them for the weekend as there’s still 2 weeks left.  The next move would be selling a call and rolling to a spread.  

    $25KP – The TZA next weekly $43 calls can now be sold for $2.20 so selling 5 of those locks in another $500 of protection for $25 more.  That’s the way I like to play it at the moment – with very cheap protection.   

    Submitted on 2011/09/01 at 2:30 pm

    QQQ Next week $56 calls at .35 are a fun trade – 20 in $25KP. 

    Submitted on 2011/09/01 at 3:41 pm

    TLT back at $109, where we like to short them.  I like going back to the well on the Sept $107 puts – 10 at $1.25 in the $25KP, happy to DD or roll up if they get cheaper. 

    Submitted on 2011/09/02 at 9:46 am

    LT is coming in right where we expected it and the Sept $112 calls can be sold for $2.05 and that makes the $115/112 bear put spread at $2 net out to a .05 credit on the $3 spread so lets do 5 of those in the $25KP (TOS says margin is $21K) with a stop on 2 of the calls at $2.50.

    Submitted on 2011/09/02 at 10:04 am

    TLT/$25KP, Savi – Yes, roll ‘em up, of course!   In the $25KP, the Sept $107 puts are now .63 and we want to rill those up to the $110 puts (now $1.45) for .85 and DD for 20 at net $1.78, which is .13 over what I predicted at 4pm yesterday

    Submitted on 2011/09/02 at 11:12 am  

    $25KP – Sept 30th $116 puts are now $5.20, lets roll those down (all 10) to the $112 puts at $3.30 to take $1.90 off the table (we shorted the Sept regular $115s at $1.80, now $3.80).  

    Oil/$25KP, Jerconn – We ended up in the $33 puts at net $1.15 and then spent another .30 to roll to the $34 puts ($1.45) and, if you doubled down they were a 1/2 out even earlier.  Now they are $1.36 and we have 10 at net $1.45 but our plan was to roll to wherever we could into the long weekend and our expectation is we sell off next week.  As long as you have a manageable amount, I think it’s a worthwhile play to stick with. 

  7. Phil

    $25KP Update – Week 31:  
    Another quick, down and dirty update of our virtual portfolio.   
    We left off on the 23rd with $73,730 in virtual cash and 8 open positions with $6,665 of unrealized losses.  Since then, we have closed the following in a crazy couple of weeks:  

    2 AGQ Sept $180 puts at $4, out at $8 – up $800
    3 AGQ Sept $180 puts at $4, out at $10 – up $1,800
    5 TLT Sept $109 puts at $2.95, out at $4.40 – up $725
    5 TLT Sept $109 puts at $2.95, out at $3.50 – up $275
    10 TLT Sept $109 puts at $2.95, out at $3.95 – up $1,000
    20 TLT Aug 26th $114 calls out at $1.05, expired worthless – up $2,100
    10 TLT Sept $107 put at $2, out at $2.50 – up $500 
    10 TBT Sept $31 puts sold for net $1, out at $5.50 – down $4,500
    20 USO Sept $32 puts at avg .75, out at $1.40 – up $1,300
    20 HPQ Sept $26 calls at .60, out at $1 – up $800
    10 QQQ 9/2 $52 puts at .92, out at $1.20 – up $280
    10 FAS 9/2 $13 calls at $1.25, out at $1.42 – up $170
    10 9/2 QQQ $52 calls at .95, out at $1.70 – up $750
    20 GLD 9/2 $173 puts at net $2.75, out at $2 – down $1,500
    20 XLF Sept $13 calls at .43, out at .60 – up $340 
    5 FAZ Oct $43 puts at $2.10, out at $2.50 – up $200 
    10 DIA Sept $114 puts sold for $2.20, out at $1.97 – up $230 
    2 TLT Sept $112 calls sold for $2.05, out at $2.50 – down $90

    We picked up a nice $5,180, which brings our realized gains up to $78,910.  Now let’s see how we’re doing on our open (unrealized) items:  

    40 GLL Oct $17 calls at net $1.76 ($7,040), now .55 – down $4,840
    20 RIMM Sept $26 puts sold for net $1.14 (-$2,800), now .74 – up $800
    20 UUP Dec $21 calls at .53 ($1,060), now .62 – up $180
    5 HPQ Sept $23 puts sold for $1.57 (-$785), now ..40 – up $585
    10 BNO Sept $75 puts at net $3.50 ($3,500), now $1.80 – down $1,700
    20 USO Sept $34 puts at avg .75 ($1,500), now $1.21 – up $920
    10 DIA 9/30 $112 puts at net $1.54 ($1,540), now $3.46 – up $1,920
    10 DIA Sept $115 puts sold for $1.80 (-1,800), now $3.90 – down $2,100
    5 TZA 9/9 $42/43 bull call spread at .05 ($25), now .90 – up $850
    20 QQQ 9/9 $56 calls at .35 ($700), now .07 – down $560 
    20 TLT Sept $110 puts at net $1.78 ($3,560), now $1.33 – down $900
    5 TLT Sept $115/112 bear put spread at $2 ($1,000), now $1.73 – down $135
    3 TLT Sept $112 calls sold for $2.05 (-$615), now $2.50 – down $135

    That’s net $5,115 of unrealized losses which is better than the $6,665 we had last time so we continue to make progress on whittling down our losses while adding to our cash pile.  Overall, we’re netting out to a virtual balance of $73,795 and pretty much on schedule for our $100,000 goal – especially if we can keep picking up $4,000 every couple of weeks like this! 
    Cash committed is up to $13,925 (18%) so still very cashy and cautious overall.  With 4 months left to make $27,000 (33%) – I’m not too psyched about overly committing into this mess, which is why we have a constant mix of bullish and bearish bets with a lot of quick profit taking but you can see how nicely it adds up if you just keep at it.  
     

  8. Phil

    BNO/$25KP, DC – We gave up on oil shorts yesterday morning, those BNO puts should have come off the table at $2.15 in the morning, the same time we took $1.75 and ran on the USO $34 puts.  If you are still in BNO (now $1.25) at least you know it can move back in your direction but not really enough to be a great help.  I think I would take the $2.25 loss and move it to the more liquid USO contracts, perhaps 2x the Sept $35 puts at $1.20 and be VERY happy to get out even or near even if the move up over $2.  The entry would be on the same basis as our new $34 put play, you would have to DD if they drop to around .90 on a big move up and then there would be a very expensive roll to October if we don’t get our dip so make sure you think about all that before making a commitment.  On the other hand, just going for 10 of the USO $34 puts, now .70, and adding 10 more at .50 or less is 20 at .60 and if those get to $1, that’s $800 back on a much smaller risk – we don’t need to win it all back in one shot.  

    $25KP – To be clear, I do want to go for 10 of the USO $34 puts at .65 and DD at .45.  

    USO/$25KP, Savi – We’re still at .62 on the $34 puts and we’re expecting what we always expect in the last 10 days of the contract cycle when there are too many open contracts – we expect a sharp sell-off at some point.  A $3 drop in oil is a $1 drop in USO and USO is now $34.65 and oil is $89.25 so, as long as we think oil can get back to $85, we should be able to at least get our .65 back and, of course, the plan is to DD at .45 so all we have to do is get .55 back.  If that doesn’t work by Monday, we’ll probably have to roll to October before all our premium is gone.  

    Submitted on 2011/09/08 at 9:39 am

    We’ve already been playing HPQ and today they should get a nice pop on RUMORS they are in play.  At $50Bn, they are very hard to play with and it’s going to be very, very hard to find someone to put in a 20% premium bid when that 20% is $10Bn so I don’t think too much of it but no reason not to grab 10 HPQ Sept $25 calls for about .35  for the $25KP, just in case the story gets traction.  

    USO/Jercon – We are in 10 Sept $34 puts in the $25KP at .65, looking to DD at .45 but the low was .48.  Inventories were a draw but who knows what was what with the Hurricane, we’ll have to wait for the detailed report at 1pm but I do like shorting oil futures (/CL) below that $90 line (now $89.85).  The net draw is LOWER than expected – I think bearish and they still have that open contract overhang.  

    Oil $90.10 – Don’t say you couldn’t get a good entry!  .46 is good enough on a DD in the $25KP with the Sept $34 puts.  

    Oil bottomed out at $88.60 in that spike down and back to $89.50 already – WILD. 

    USO $34 puts 1/2 back out at .65 in $25KP, of course, so now left with 10 at net .55 with .10 profit off table.   You MUST have discipline to trade in choppy markets!   As soon as you DD, you need to be looking for the exit on 1/2 back even or better.  

    Submitted on 2011/09/08 at 1:12 pm

    NYMEX Oct contracts still 256,000 with 8 days left.  Assume they need to ditch at least 220,000 by Tues, 20th so that’s 27,500 contracts a day need to be dumped or rolled.  At the moment, Nov is 202K, Oct is 200K and Jan is 96K so we have the same 650,000 in the front 3 months so far with A LOT of rolling to do and that’s going to swell up Nov to a ridiculous 400,000+ contracts and then they’d be at 700M barrels in the front 3 months – that’s just madness – something has to give!  

    So – pre-emptively, I want to buy 10 USO Oct $33 puts in the $25KP for $1.22 as we’re going to want to buy them at some point anyway!  

    Submitted on 2011/09/08 at 1:26 pm

    USO/Champ – Well, there’s a reason we only bought 10 in the $25KP for $650 to start when we have $2,500 allocations.  At .53, if you tripled down, you drop the net to 57.67 and you’d be 2/3 out now and right on track.  The key is to work with manageable amounts so even if you miss a mark, you can adjust to still get to your target price.  Oil is coming down nicely again but, if you have too many puts, I would think it’s a good idea to take advantage of the drop this time, rather than being upset again if they don’t get to .65 and then go under .60 and under .55 again.  We’re talking about a 20% swing there….

    Submitted on 2011/09/08 at 3:31 pm

    USO Sept $34 puts now .70 and we don’t need them anymore in $25KP (that’s why we bought the Oct puts!). 

    Since we’re holding our floors (except RUT but they are at 698) we’re going to go with neutral, not bearish into the close.  

    If you need a bullish trade idea to add, try XLF Oct $12/13 bull call spread at .59, selling JPM $28 puts for .75 for a .16 credit on the $1 spread.  JPM is now $33.68 and the break-even (without rolling) is $27.84, 17% down from here.   As the margin is just $2.80 to make $1.16, it’s worth doing 10 in the $25KP.  

    Submitted on 2011/09/09 at 9:50 am

    Dollar over 77 means take the bearish money and run if we break back under (with S&P 1,173 confirming a bounce) but I’m inclined to take bearish profits off the table now – selling into the excitement.  That includes USO puts in $25KP and wherever.  

    Also, in FAS Money, time to sell the Oct $13 puts for $2.35 (1/2).  The weekly $13 puts are .50 and can be stopped out at .75 but, hopefully, XLF hits our target $12.50 later and we get out near zero at the day’s end.  

    In the $25KP, I like 10 FAS Sept $13 calls at .80 for a weekend gamble.  

     


    BCS Sept $10 puts can be sold for .85 and those also make a nice offset for the FXE’s.  10 in the $25KP along with 15 of the spreads should be fun!  

     


    TZA Sept $48/51 bull call spread at $1, worry about a cover if you need it but that’s 3:1.  10 in the $25KP.  

      


    I suppose, even if I had a small portfolio, I’d take $500 and buy the XLF Oct $12/13 bull call spread at .50 as that can make 100% on a very small improvement in the financials.  A stop at .30 limits the loss to $200 and 10 Oct $9 puts can be sold for .15 ($150) as an offset to that but you have to be prepared to own 1,000 shares of XLF at net $900.  Let’s do 40 and 40 in the Income Portfolio and the $25KP following those rules.  

    Submitted on 2011/09/09 at 1:12 pm

    BCS/Trader – Getting assigned at $7.35 sounds good to me so I like the short $8 puts, now .45, especially since they expire in 7 days and $7.35 is 20% below the current price.  There’s really not a better play than this – this is pure panic.  Let’s sell 20 of those in the $25KP.  

    $25KP – Let’s take the $1.10 and run on the UUP Dec $21 calls (up 100%).  

    Good morning!  

    I like the XLF play enough to go 10 in the $25KP with the FAS puts. 

    QQQ weekly $54s at .55 are a fun upside play.  20 in $25KP.  

    QQQ $25KP – May as well take .77 for 10 of the 20 weekly $54 calls as we may not be so lucky tomorrow. 

    2,200 has been a tough nut for the Nas to crack so let’s take the rest of the money and run on our QQQ calls in the $25KP (.80 now).

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