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Tuesday, February 27, 2024

Bond Investing, James Bond That Is!

Well, we stuck to our guns and stayed short on the market and, painful though it was at times, we sure were richly rewared for it this week!

My long-time readers know I don't set out looking to be bearish – I never have fun shorting the market as I like to stay on the positive side of things but, as a fundamentalist, when I don't like the undercurrents that are forming in the markets I'm not so hopelessly optimistic that I don't shift the virtual portfolio to an appropriately negative stance.

One of the mistakes many traders make is they become attached to their positions and seek to defend them, despite new data coming in.  I suppose part of this is that a natural fondness you develop for a position that's "been good to you" in the past and the other part is that everybody hates to admit they are wrong – and selling something you bought, especially with a small or not profit, is an admission you made a mistake.

There's a James Bond marathon on one of the cable channels this weekend and it struck me that he would make a good trader.  Bond searches for clues, takes calculated risks, isn't afraid to get shot at once in a while and leads with his instincts but then questions his own decisions along the way.   James Bond isn't afraid to to commit to a position but he's always ready in case the ally he's with at the moment suddenly pulls a knife on him.  Bond forms temporary alliances with people (positions) he hates because he is focused on the big picture – solving the case.

In Octopussy, James Bond bids on a Faberge egg at an auction, not because he wants it, but to flush out who the real buyers are.  He then follows that egg around the world, picking up clues along the way but he is patient and, when the opportunity presents itself, he takes decisive action based on the best information he has available.  In one scene he is able to fight with a woman, make love to here and then arrest her and he's not ashamed or embarrassed by his changes of heart – this is how we need to be with our positions!  Sometimes we love them and sometimes we hate them and sometimes they are good to us ans sometimes they try to kill us – there is no room for "loyalty" in the options market.

We live in a society where "flip-flopping" or being "wishy washy" is frowned upon.  Politicians are derided for changing their stance on an issue and we elected a leader who's a "decider," somehow proud of the fact that no amount of evidence will ever convince him to change his mind.  If you take that attitude into the options market you will be killed!  Stocks go up AND down and you are operating in a very short time frame in which you need to be correct.  Loyalty to a stock can be rewarding over time but loyalty to an option makes NO sense.  It's called an OPTION for a reason!  You may exercise it, you may not, but you pay a serious premium to give yourself the flexibility to change your mind – holding onto an option contract through thick and thin means you paid that premium for nothing.

That doesn't mean that we flip around like a weather vane whenever the market wiggles but it does mean that we remain open and flexible as new information is presented to us and we need to be ready to cut and run, reposition, double down or roll at a moment's notice because the windows of opportunity are very small and the market calls for decicive action.  We need to search for clues as to what to invest in, take a few chances and stay "On Mission" at all times and our mission is to make money, not to wait for the market to turn!

Our mission this week was to take advantage of the dip in the market and get back to cash.  After calling for half cash last week and again this week, I am very happy to report that the virtual portfolios are roughly 2/3 in cash and, of course, well ahead for the year.  Although our stance is still generally bearish, as I said, I'm not really a downside player so I prefer to watch the carnage with money on the side, looking for opportunities as the tide of the market recedes from our beach.

High tide was our theme of the week and we'll see how far back the market will pull in next week's heavy data cycle but, as I said on Thursday morning, Obi Won had some very good advice on going with the flow so we will not head into the week banking on a collapse or praying for a comeback – we will "let go" of our prejudices and reach out with our feelings until the market picture comes into focus, keeping ourselves ready to take advantage of whatever situation presents itself.

We closed out 77 positions for the week with a 45% average gain on 16 average days open, not our best performance but our goal was to get back to cash, not to make a lot of money.  Since we mainly stopped out of positions that weren't working anymore though, the remaining positions are a pretty spectacular set:

The Short-Term Virtual Portfolio is down to "just" 53 open positions (down from 69 last week) which are up 126%, a huge improvement from last week (96%) due to it's bearish nature but, with a much smaller base of remaining positions, we can expect a lot of volatility in the weeks ahead.  Most of the windfall came from our large DIA protective put positions, which we cashed mainly out on Friday, taking a slightly more neutral stance into the weekend to avoid giving back these spectacular gains.

Only 3 positions were closed in our Long-Term Virtual Portfolio and those 32 positions are up 127% for the year, just weeks away from our major July rebalancing.  Hopefully we'll get a really nice sell-off in the next week or two so we can position ourselves in '09 and '10 leaps at lower prices!   2 of the cut positions were our shorter XOM plays as they finally turned positive, leaving just the '09 $80 puts as our virtual portfolio's largest short position.

The $10,000 Virtual Portfolio "improved" to a 30% loss but I'm still sick about that one.  DIS killed us more than any other single position and, although we got that one back in the STP, we just didn't have the wiggle room in the $10KP to save it here.  Tomorrow marks a month since we started it and, although I meant to make some moves there this week, the market was just too choppy to risk a major change and all we did was get 1/2 out of our TWX calls and roll our FWLTs.

Our Complex Spreads Virtual Portfolio is up to a 40% gian since 5/1 but I have to confess there's no longer a condor or a butterfly in it!  I simply can't leave those positions alone as there is always an opportunity to improve them with a little tinkering so they end up getting broken up into seperate trades which are generally back to my favorite calendar call spreads augmented by long puts and calls on the same position.  Our GOOG condor has already changed from Thursday's open as we dumped our put and bought out our caller on Friday's strong open, reestablishing with a $500 put (vs. $490 originally) and selling the $520 call (vs. $510 originally) giving up about $1,000 in credit in exchange for $20 in position – a good trade-off I think!

5 AUG 500.00 GOOG PUT (GOPTO) $ 5,910.00 6/22 $ 4,750.00  
$ -1,160.00 -19.6 %
5 JUL 510.00 GOOG PUT (GOPSU) $ 4,150.00 6/22 $ 6,490.00  
$ 2,340.00 36.1 %
5 JUL 520.00 GOOG CALL (GOPGV) $ 9,500.00 6/22 $ 8,240.00  
$ -1,260.00 -15.3 %
5 AUG 530.00 GOOG CALL (GOPHW) $ 7,660.00 6/22 $ 10,150.00  
$ 2,490.00 32.5 %

Our Stock Virtual Portfolio held steady at 32% with only GST and MRB uncovered so we won't expect much action there into expirations.  Staying flat is good in a down market so we are absolutely on mission as far as our stocks go.

The Free Picks Virtual Portfolio continues it's astounding performance, now up 165% since its inception on 4/30.  There are just 10 open positions and only $14K in securities with the rest in cash as, much like the less lucky $10KP, I simply couldn't find anything good to do that would be risk appropriate for a smaller virtual portfolio.  The Google plays need to be watched carefully as a huge spike would hurt us so active management is critical here.

Stock

Description

  Basis

Open

 Sale Price

Close

 Prof/Loss

%

$VIX 10 JUL 15.00 $VIX CALL (VIXGC)  $    1,210 6/15  $       840 6/22  $     (370) -31%
ABX 40 OCT 30.00 ABX CALL (ABXJF)  $    6,820 5/18  $    6,990 6/20  $      170 3%
ABX 10 JAN 30.00 ABX CALL (ABXAF)  $    1,760 5/1  $    2,390 6/20  $      630 36%
ADBE 10 OCT 42.50 ADBE CALL (AEQJV)  $    2,420 5/11  $    2,840 6/20  $      420 17%
AIG 7 JAN 70.00 AIG CALL (VAFAN)  $    1,830 11/11  $    7,060 6/20  $   5,230 286%
AIR 10 JUL 35.00 AIR CALL (AIRGG)  $       980 5/23  $       990 6/20  $        10 1%
AXP 50 JUL 67.50 AXP CALL (AXPGU)  $       260 5/31  $       990 6/18  $      730 281%
BA 20 JAN 100.00 BA CALL (BAAT)  $       110 4/18  $  12,690 6/20  $  12,580 11436%
BA 20 JUL 100.00 BA CALL (BAGT)  $    2,510 6/14  $    4,990 6/20  $   2,480 99%
BBY 10 JUL 50.00 BBY CALL (BBYGJ)  $       110 6/18  $       190 6/19  $        80 73%
BEAV 20 JUL 40.00 BEAV CALL (BQVGH)  $    1,610 5/23  $    3,490 6/18  $   1,880 117%
CAT 15 JAN 75.00 CAT CALL (VKTAO)  $         85 11/6  $  23,990 6/20  $  23,905 28124%
CAT 15 JUL 80.00 CAT CALL (CATGP)  $    5,410 6/7  $    3,665 6/20  $  (1,745) -32%
COP 50 JUL 80.00 COP PUT (COPSP)  $   10,760 5/16  $  12,490 6/20  $   1,730 16%
COP 50 JUL 80.00 COP PUT (COPSP)  $   10,760 5/16  $  12,990 6/22  $   2,230 21%
CROX 10 JUL 40.00 CROX PUT (CQJSH)  $    2,610 6/7  $       370 6/20  $  (2,240) -86%
CROX 10 JUL 42.50 CROX PUT (CQJSV)  $       790 6/7  $    4,740 6/20  $   3,950 500%
CROX 10 JUL 42.50 CROX CALL (CQJGV)  $    5,510 6/7  $    8,390 6/20  $   2,880 52%
CROX 10 JUL 45.00 CROX CALL (CQJGI)  $    4,510 6/7  $    3,690 6/20  $     (820) -18%
CROX 10 JUL 40.00 CROX PUT (CQJSH)  $    2,610 6/7  $       340 6/20  $  (2,270) -87%
CROX 10 JUL 42.50 CROX PUT (CQJSV)  $       760 6/7  $    4,740 6/20  $   3,980 524%
CROX 10 JUL 42.50 CROX CALL (CQJGV)  $    5,610 6/7  $    8,390 6/20  $   2,780 50%
CROX 10 JUL 45.00 CROX CALL (CQJGI)  $    4,510 6/7  $    3,590 6/20  $     (920) -20%
CVX 15 JUL 85.00 CVX PUT (CVXSQ)  $    3,985 6/20  $    5,915 6/20  $   1,930 48%
CVX 15 JUL 85.00 CVX PUT (CVXSQ)  $    3,985 6/20  $    5,390 6/22  $   1,405 35%
DELL 50 JUL 27.50 DELL CALL (DLQGY)  $    4,510 6/6  $    4,490 6/20  $       (20) 0%
DIA 40 JUN 137.00 DIA CALL (HLKFG)  $    1,010 6/16  $       990 6/21  $       (20) -2%
DIA 200 JUL 136.00 DIA PUT (DAZSF)  $   42,010 6/7  $  55,990 6/22  $  13,980 33%
DIA 200 JUL 137.00 DIA PUT (DAZSG)  $   54,010 6/7  $  65,990 6/22  $  11,980 22%
EBAY 50 OCT 35.00 EBAY CALL (XBAJG)  $    3,260 5/16  $    5,740 6/20  $   2,480 76%
EOG 10 JUL 80.00 EOG PUT (EOGSP)  $    2,310 6/16  $    2,540 6/19  $      230 10%
ESLR 10 JAN 7.50 ESLR CALL (LZEAU)  $    1,960 5/30  $    2,590 6/20  $      630 32%
EWJ 20 SEP 15.00 EWJ CALL (EWJIO)  $       910 5/4  $       790 6/20  $     (120) -13%
EWZ 10 SEP 55.00 EWZ PUT (EWZUK)  $    2,510 6/7  $    1,190 6/22  $  (1,320) -53%
FIZZ 5000 National Beverage Corp. (FIZZ)  $   57,410 5/1  $  64,740 6/20  $   7,330 13%
FWLT 3 JUL 100.00 FWLT PUT (UFBST)  $       535 6/8  $       590 6/18  $        55 10%
FXI 40 JAN 120.00 FXI CALL (FAHAP)  $   28,810 4/19  $  64,390 6/20  $  35,580 124%
GENZ 10 JUL 67.50 GENZ CALL (GZQGU)  $         60 5/1  $    1,190 6/18  $   1,130 1883%
GENZ 10 JUL 67.50 GENZ CALL (GZQGU)  $         60 5/1  $       840 6/20  $      780 1300%
GFI 60 JAN 17.50 GFI CALL (GFIAW)  $    8,410 6/1  $    8,690 6/20  $      280 3%
GOOG 10 JUL 510.00 GOOG CALL (GOPGU)  $   16,510 6/20  $  16,490 6/21  $       (20) 0%
IBM 5 JUL 105.00 IBM CALL (IBMGA)  $    1,360 6/7  $       990 6/19  $     (370) -27%
ICE 5 JUL 160.00 ICE CALL (IHHGL)  $    3,360 6/20  $    4,240 6/20  $      880 26%
JSDA 20 JUL 17.50 JSDA CALL (QJDGW)  $    1,110 6/6  $    1,290 6/20  $      180 16%
MRO 40 JUL 62.50 MRO PUT (MROSZ)  $    6,890 5/30  $    7,590 6/20  $      700 10%
MRO 40 JUL 62.50 MRO PUT (MROSZ)  $    6,890 5/30  $    8,990 6/22  $   2,100 31%
NTE 200 Nam Tai Electronics Inc. (NTE)  $    2,430 5/22  $    2,436 6/20  $          6 0%
OIH 20 JUL 170.00 OIH PUT (OIHSZ)  $    4,210 6/19  $    4,090 6/20  $     (120) -3%
OIH 7 OCT 170.00 OIH PUT (OIHVZ)  $    5,050 6/14  $    5,240 6/20  $      190 4%
OIH 20 JUL 180.00 OIH CALL (ODLGP)  $    8,410 6/22  $  10,590 6/22  $   2,180 26%
PTR 20 JUL 145.00 PTR PUT (PTRSI)  $    5,110 6/20  $    6,990 6/20  $   1,880 37%
PTR 20 JUL 145.00 PTR PUT (PTRSI)  $    5,110 6/20  $    5,590 6/22  $      480 9%
QI 400 Qimonda AG ADS (QI)  $    5,770 3/1  $    6,510 6/20  $      740 13%
QQQQ 100 JUL 48.00 QQQQ CALL (QQQGV)  $    5,510 6/8  $    7,990 6/20  $   2,480 45%
RHT 5 SEP 25.00 RHT CALL (RHTIE)  $       835 6/5  $       840 6/22  $          5 1%
RIMM 40 JUL 165.00 RIMM PUT (RFYSM)  $   21,810 5/4  $  21,990 6/20  $      180 1%
RIMM 20 JUL 165.00 RIMM PUT (RFYSM)  $   10,910 5/4  $  10,990 6/22  $        80 1%
SHLD 4 JUL 175.00 SHLD PUT (KDUSO)  $    1,690 5/25  $    1,790 6/19  $      100 6%
SIRI 50 JAN 2.50 SIRI CALL (OAJAZ)   $    2,760 4/16  $    5,490 6/20  $   2,730 99%
STZ 20 JUL 25.00 STZ CALL (STZGE)  $    2,010 5/21  $    1,490 6/20  $     (520) -26%
SWIR 10 JUL 25.00 SWIR CALL (IYQGE)  $    1,260 6/11  $    1,740 6/20  $      480 38%
T 25 JUL 40.00 T CALL (TGH)  $    1,260 6/3  $    1,240 6/23  $       (20) -2%
TASR 20 JUL 12.50 TASR CALL (QURGV)  $       710 5/30  $    1,490 6/20  $      780 110%
TIE 20 JUL 35.00 TIE CALL (TIEGG)  $    2,410 5/24  $    2,790 6/18  $      380 16%
TIE 40 JUL 35.00 TIE CALL (TIEGG)  $    6,330 5/23  $    5,590 6/18  $     (740) -12%
TIVO 20 AUG 5.00 TIVO CALL (TUKHA)  $    2,010 5/15  $    2,090 6/20  $        80 4%
TSO 4 JUL 62.50 TSO PUT (TSOSU)  $       850 6/15  $       990 6/20  $      140 17%
TSO 15 JUL 62.50 TSO PUT (TSOSU)  $    1,135 5/17  $    4,415 6/22  $   3,280 289%
TWX 20 JUL 22.50 TWX CALL (TWXGX)  $       470 5/25  $       590 6/20  $      120 26%
WTR 10 DEC 22.50 WTR CALL (WTRLX)  $    1,510 5/18  $    1,490 6/18  $       (20) -1%
X 20 JUL 120.00 X CALL (XGU)  $   10,810 6/8  $    5,190 6/20  $  (5,620) -52%
XOM 40 JUL 85.00 XOM PUT (XOMSQ)  $    7,570 6/8  $  11,390 6/20  $   3,820 51%
XOM 50 JAN 75.00 XOM PUT (XOMMO)  $    9,510 3/7  $  10,240 6/20  $      730 8%
XOM 80 JUL 80.00 XOM PUT (XOMSP)  $    2,410 6/20  $    4,790 6/21  $   2,380 99%
XOM 40 JUL 85.00 XOM PUT (XOMSQ)  $    7,570 6/8  $    9,390 6/21  $   1,820 24%
XOM 50 JAN 75.00 XOM PUT (XOMMO)  $    9,510 3/7  $  11,490 6/22  $   1,980 21%
XOM 150 JAN 80.00 XOM PUT (XOMMP)  $   42,760 6/14  $  55,490 6/23  $  12,730 30%

 

 

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