$5,000 Portfolio Update - Week 6 - $5,614

by Phil - August 15th, 2009 4:04 am

Well we’re back to cash…

After getting off to a great start, up 12% in the first 3 weeks, we were lucky this week to get back to 12% after having a run of bad luck (or bad skill actually, as we went bearish too early and got punished for it).  The goal of the $5,000 portfolio is to play around the volatility of earnings and make no mistake, it’s a high-risk way to trade $5,000 and is meant to be a small portion of a large portfolio - not something you would want to do with your only $5,000.  Of course the usual disclaimer is, this is a virtual portfolio, don’t try this at home, trading is dangerous, always consult a professional financial adviser, etc, etc.  The idea is to practice different option strategies and we’re learning from our successes and failures - I hope! 

Our first play 5 plays that we closed were on AA, DIA, SGR, MCD,  and DELL, which had a total gain of $629 in our first 6 days.  For details on those trades, go to the Day 6 post.  We have been posting all of the moves for the $5KP in member chat, of course, but also on Seeking Alpha’s Stock Talk, where we have discovered the added bonus that, like Twitter, you do not have to refresh the page to see new comments!  If you want to follow these trades, just click on "Follow" under my picture and you will automatically see any comments made there.  A full review of Stock Talk commentary regarding the $5KP is available here and please make sure you click "Follow" on my picture so that you will be able to track further updates.

We closed positions on WFC and AXP, up $258 in our last review on July 25th and we have since closed our YUM position with a $256 loss on the 28th, which was a shame as we gave up on 8 Aug $35 calls at .45 ($360) and they flew up to $2 ($1,600) just a week later.  Unfortunately, in a small portfolio, you don’t have the luxury of riding out your losses and, at the time, we felt lucky to escape this underperfomer with a relatively small loss.

A VNO put spread we couldn’t fill the week of the 21st, was an easy fill the next week and 3 Sept $50 puts were in at $3.70 ($1,110) and 3 Aug $50 puts were sold for $2.90 ($870).  The premise of this play is a tough one to hold on through as we expected VNO (and all commercial realty) to…

Tags: AA, CY, DELL, DIA, MAR, SGR, SRS, URE, VNO, WFC, WHR, YUM

Posted in Appears on main page, Immediately available to public, Portfolio Review | No Comments »

 Email This Post del.icio.us Digg Reddit Stumble Yahoo Facebook Twitter

More Profits on Urban Outfitters

by Andrew Wilkinson - June 16th, 2009 5:08 pm

Today’s tickers: URBN, URE, IPG, WDC, JPM, STEC & ATHR

URBN– The clothing-haven for hipsters jumped to the top of our ‘hot by options volume’ market scanner this afternoon after one Urban-bear was observed taking profits in the January 2010 contract. It appears that this individual originally established a 40,000 lot put spread on July 22, 2008, at a net cost of 4.50. The trader partially unraveled the spread on November 13, 2008, leaving open interest of approximately 28,000 lots at each of the strike prices involved in the spread. Today he has once again targeted his urban-hunting ground to go in for the kill by closing out the position completely. The January 15 strike price saw 26,500 put options purchased for a premium of 1.19 apiece spread against the sale of 26,500 deep in-the-money puts at the January 30 strike for 10.04 per contract. The gross premium realized on this leg of the trade amounts to 8.85. Subtracting the 4.50 paid to initially purchase the bearish put spread yields profits of 4.35 or approximately $11,527,500. – Urban Outfitters, Inc.

URE– The bruised and battered real estate ETF has deflated more than 4.5% today to $3.50. In just a few short days, it will have been one full year since the fund was trading a staggering 841% higher at $32.94. One investor, who has no doubt witnessed the plunge in the price of the underlying over the course of the year, has taken a bearish stance on the stock today. This individual looks to have sold short 25,500 puts at the July 3.0 strike price for a premium of 15 cents per contract or $382,500. If the price of the URE falls beneath $3.00 by expiration, the trader appears happy to have the underlying shares put to him at an effective price of $2.85 each. Otherwise, he retains the full premium received on the transaction if the puts land out-of-the-money by the third Friday of next month. – ProShares Ultra Real Estate

IPG – Shares of the advertising and marketing services firm have declined more than 2% today to stand at $5.53. Despite the current erosion in the price of the underlying, one option trader was observed getting bullish on the stock through expiration in October. Hoping for a significant recovery in shares, the investor purchased 31,500 calls at the October 7.5 strike price for an average premium of 35 cents per contract. The price…

Tags: ATHR, IPG, JPM, STEC, URBN, URE, WDC

Posted in Uncategorized | No Comments »

 Email This Post del.icio.us Digg Reddit Stumble Yahoo Facebook Twitter

$100,000 Hedged Portflio Update

by Phil - April 18th, 2009 4:39 pm

We didn’t do a wrap-up last week as I instead wrote a long, Members Only post (only Part 1 too) on "Setting Up A $100,000 Hedged Portfolio" concentrating on a virtual $20,000 allocation in the financials for our first sector.

We’re going to do more of these on the weekends as people find them useful and also because, although they are very popular, I do get tired of just reviewing what we did for the past 5 trading days every week.  So maybe a little of both today but I aim to keep this short (as I usually do, but it never works out) so we can do another post on earnings plays tomorrow.

How is our new sample portfolio looking after a week?  Well let’s see: 

• 500 UYG at $3.48, selling 5 May $3 calls for .72 and 5 May $3 puts for .28, net $2.48/2.74
  • UYG now $3.79, May put and call combo now $1.12 = net $2.67 ($95 profit on $1,240 = 7.7%)
• Selling 2 FAS $7.50 puts for .45 naked
  • FAS closed at $9.40 so 100% profit of $90
• 500 C at $3.04, selling May $3 puts and calls for $1.11, net $1.93/2.47
  • C now $3.65, May $3 put and call combo is $1.19 = net $2.46 ($265 profit on $965 = 27.5%)
• Selling 2 IYF May $36 puts for $2 naked
  • IYF closed at $40.26, May $36 puts $1.20 ($160 profit on $400 =40%)
• Selling 2 JPM May $29 puts for $1.95 naked
  • JPM closed at $33.26, May $29 puts $1.17 ($156 profit on $390 = 40%)
• Selling 7 FAZ May $10 puts for $2.40 naked (adjusted to reflect Monday’s gap down open)
  • May $10 puts are now $2.67 so a loss of $189 (-11.3%).  Both our July and Oct escape rolls are still intact so no worries here anyway (this is a hedge to the others)
• 5 FAZ Oct $12.50 calls for $4 (adjusted), selling 5 May $21s for $1.05, net $2.95.
  • The Oct $12.50s are now $3.29, May $21s are now .45 so net $2.85, a loss of $50 (3.4%)

So far so good!  The FAZ hedges are holding up nicely while all of our upside plays were winners.  Our 3 April put sales are expired $90 in profits so risk off the table and cash put back to work and May Put sales look safe enough at the moment, up $316, while the May option plays are up $360 against a $239 loss on the hedges.  Overall, we put less than $1,500 of capital to work (there were, of course, some margin requirements - see original post) to make $527 in a week.  While…

Tags: C, DBC, FAS, FAZ, GE, Hedging, IYF, PGF, Portfolio, UNG, URE, UYG

Posted in Portfolio Review, Uncategorized | 6 Comments »

 Email This Post del.icio.us Digg Reddit Stumble Yahoo Facebook Twitter