We're over the $80,000 mark in our aggressive, virtual portfolio with more than 3 months to go.
That puts us right on track for our $100,000 goal for the year so let's not blow it. It's all fun and games trying to turn $10,000 into $25,000 (last year's goal) and then $25,000 into $100,000 because you know it's a long-shot and it's all fun and games but trying to turn $80,000 into $100,000 is RISKING $80,000 and that is NOT what we signed up for when we originally decided to risk $10,000. This is a classic trading mistake and not just with portfolios (virtual or otherwise) but with each individual trade – as the trade goes up in value, your risk increases and, very often, your potential additional reward decreases.
You need to understand this well enough to internalize it in order to make better trading decisions. We had the same issue last year when we were up to $35,000 in November off our $10,000 Portfolio and we decided to take the virtual money and run rather than risk going for $50,000 into the holidays. We're not at that point yet as we're still finding lots of fun things to trade but this week was substantially thinner in trading than the week before and we took our small profits quickly and were glad about it…
It is a very natural tendency to feel that, since you are up $70,000, you can afford to make bigger bets or take bigger chances – THAT IS EXACTLY THE URGE YOU MUST LEARN TO FIGHT! It's the same urge that makes you want to make a big bet to "catch up" after taking a big loss – also a bad idea. If you can usually make 10% a month with a system and one month you lose 50% (as happened to spread traders last month), the best thing to do is just go right on making 10% a month. Over the course of a year, you can still make 70% – but only if you stick with your plan!
Our last update was sent out on the 3rd, at which point we had $78,910 of realized gains, offset by $5,115 of unrealized losses. As I said at the time: "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." Since then, we've closed the following positions:
- 20 UUP Dec $21 calls at .55, out at $1.10 – up $1,100
- 10 BNO Sept $75 puts at net $3.50, out at $2.15 – down $1,350
- 20 USO Sept $34 puts at .75 out at $1.75 – up $2,000
- 10 DIA 9/30 $112 puts at $1.54, out at $4.90 – up $3,360
- 10 DIA Sept $115 puts sold for $1.80, out at $3 – down $1,200
- 5 TZA 9/9 $42/43 bull call spreads at net .05, closed at $1 – up $475
- 20 QQQ 9/9 $56 calls at .35, expired worthless – down $700
- 20 TLT Sept $110 puts at net $1.78, out at $1.20 – down $1,160
- 10 USO $34 puts at net .57, out at .65 – up $80
- 10 USO $34 puts at net .57, out at .70 – up $130
- 10 HPQ Sept $25 calls at .35, out at .30 – down $50
- 10 USO Oct $3 puts at $1.22, out at $1.45 – up $230
- 10 FAS Sept $13 calls at .80, out at .65 – down $150
- 10 QQQ 9/16 $54 calls at .55, out at .77 – up $220
- 10 QQQ 9/16 $54 calls at .55, out at .80 – up $250
Notice how, as the two-week period moved on, we ended up just grabbing quick little profits off the table as the markets got very unstable and we got more nervous! Still, it was a nice net $3,235 of additional realized gains for a grand total of $82,145 so far. Unfortunately, we do still have open positions and, last week, we were left with $5,115 of unrealized losses. Our goal is, as usual, to take each opportunity (as we did above) to minimize the damages, take the profits off the table and realize as little of those losses as we are able.
As of yesterday's close, we are left with the following open positions:
- 40 GLL Oct $17 calls at net $1.76 ($7,040), now .70 – down $4,240
- 20 RIMM Sept $26 puts sold for net $1.14 (-$2,280), now .46 – up $1,360
- 5 HPQ Sept $23 puts sold for $1.57 (-$785), now .40 – up $585
- 5 TLT Sept $115/112 bear put spreads at $2 ($1,000), now $1.73 – down $135
- 3 TLT Sept $112 calls sold for $2.05 (-$615), now $1.60 – up $135
- 50 XLF Oct $12/13 bull call spreads at net .52 ($2,600), now .55 – up $150
- 10 JPM Oct $28 puts sold for .75 (-$750), still .75 – even
- 30 XLF Oct $9 puts sold for .15 (-$450), now .05 – up $300
- 5 FAS Oct $8 puts sold for $1 (-$500), now .45 – up $275
- 10 BCS Sept $10 puts sold for .85 (-$850), now .35 – up $500
- 10 TZA Sept $48/51 bull call spreads at $1 ($1,000), now .20 – down $800
- 20 BCS Sept $8 puts sold for .45 (-$900), now .05 – up $800
- 10 USO Oct $34 puts at net $1.55 ($1,550), now $1.60 – up $50
- 20 FXI Sept $36 calls at .52 ($1,040), now .42 – down $200
Down net $1,220 – that's a huge improvement. We made more money paring back our unrealized losses (through rolling, stopping out and doubling down) than we did actually closing positons! Notice we took a big bet on the Financials bouncing and hedged it with TZA and that's working out so far with a lot of those Sept short puts looking to expire worthless. If not, we'll roll them along as we still have faith but maybe we'll add some new protection – just in case. In fact, the TZA $48 calls are still .50 and they can be rolled to the Oct $41/44 bull call spread for another .50 and that's the real cost of the insurance – .50 a month for $3 of disaster protection.
So, net of unrealized losses we have $80,925 and we have only net $7,100 of our virtual cash (less than 10%) deployed in our open positions (but using quite a bit of margin) so PLENTY of room to make adjustments. Our biggest loser, so far, is our GLL position – the short play on gold – and time is ticking on that one with 36 days to October expirations. That's another good thing about laying out your portfolio this way – it helps you identify and focus on your problem spots and we could, for example, decide to offset the trade with short puts or a bullish play on a miner here or in our main portfolio.
It's all about balance and, when we have bets on both sides of the table – whichever way the market tips we are bound to find some profits to take off the table. Even when they are small ones, like the ones above – you can see how they add up over time because profits turn to cash and cash turns to more trades and half of those trades (if balanced) make a small profit and then more cash and more trades as you balance out the open side.
We're ending this option period pretty bullish overall with expectations that gold and TLT will calm down as we head into the Fed meeting next week. Europe remains a wild-card but, as I said, we have 90% of our cash on the sidelines as we wait PATIENTLY for clarity because the last thing we want to do with a 200% gain for the year is gamble it – JUST to make another 25%!
FAS Oct $11 puts can be sold for .92 and that money pays for the Oct $12/14 bull call spread at $1.15 for net .23 on the $2 spread that’s $1.66 in the money so 10 of those in the $25KP and 20 in the Income Portfolio.
Submitted on 2011/09/15 at 10:25 am
Europe up huge with an hour to go: FTSE up 2.5%, DAX and CAC up 3.6%. Not much reaction from our markets so far and FXI $36 calls down to .40, which makes no sense to me (other than that they are expiring tomorrow, of course) but, in the $25KP, I’m more inclined to roll out to next week’s $36 calls for .40 than to roll or DD tomorrow’s so let’s make that adjustment as I’m not willing to give up on the trade.
You’re welcome Wappler! I wish I had not been greedy in the $25KP, where we were short 20 RIMM $26 puts. Silly me, at $30, I did not think a 20% drop was in the cards and they went from .35 this morning (up $1,500) to $3 this evening (down $4,000) – that really sucks! Had I been watching more closely, they were an obvious stop-out as they zoomed up to .75 at the end of the day and that’s why we have rules for these things.
Submitted on 2011/09/16 at 9:52 am
In the $25KP, if you didn’t stop out yesterday there were 20 RIMM $26 puts at $1.14, now $2.80. We ALWAYS SELL into the initial excitement so the move would be to sell 20 Oct $23 puts for $1.75, which is the LOSS on the puts and then put a stop on the $26 puts, at $3 and hopefully they get cheaper before we take them off the table today.
Submitted on 2011/09/16 at 11:01 am
Oil hit $87.50 on the button, USO Oct $34 puts topped out at $1.70, very disappointing with the VIX down 25% and we’re out in the $25KP.
Submitted on 2011/09/16 at 11:06 am
TBT $23 calls at .09 are a fun craps roll. 20 in the $25KP ($180).
$25KP – Done at .85 on FAS $13 calls and may as well kill the $14s at .10 and be done with it. I thought we could go higher but it’s too annoying at the moment – maybe if we get another sell-off that holds…
Wow, Greece is "fixed" again – who’d have thought?
Submitted on 2011/09/20 at 10:07 am
Submitted on 2011/09/21 at 10:17 am
QQQ is at $56.62 and we have the Friday $57 calls at .45 in the $25KP (20 of them) but, if you want to play the volatility, you can buy those AND the $56 puts (now .40) and take off whichever one gets to .80 first for a free ride on one side although, obviously, we’re willing to risk the bull only side based on my expectations of the Fed’s move this afternoon being bullish for the markets.
Submitted on 2011/09/21 at 10:32 am
Oil is being silly at $87 into inventories (/CL) is a good short off that line. USO Oct $32 puts at $1 are a good entry – 10 in the $25KP
Submitted on 2011/09/21 at 10:48 am
Damn, oil flew the other way. Out of the futures of course and let’s take the dime loss and move on in the $25KP rather than mess around.
Submitted on 2011/09/21 at 2:51 pm
Submitted on 2011/09/21 at 3:14 pm
FXI FRIDAY $34 calls at .75 are a fun overnight gamble (worked last week). 10 in the $25KP.
Submitted on 2011/09/21 at 3:19 pm
NOW TLT is done in $25KP at .40 – that sucked.
Submitted on 2011/09/21 at 3:31 pm
So we dropped $600 on TLT out of a $1,400 allocation but the point is we still have $800 to go back at the same play. Day trading is like Futures trading in that the key is to keep your loss manageable and just get out and look for a better entry. As I said above, we’ll take a crack at the next weeklies tomorrow so now we root for them to go higher to give us a better entry. We’ll allocate another $1,500 most likely and we’ll need to get $2,100 to get even (40%) which is certainly not unrealistic.
Good time to look at $25KP adjustments:
Submitted on 2011/09/22 at 10:02 am
Oops, almost forgot TLT (thanks StJ!) – 10 Next week $121/118 bear put spread can be bought for .95 and paid for with the sale of 5 next week $122 calls at $1.75 in the $25KP.
Submitted on 2011/09/22 at 2:02 pm
TLT/Ajay – The $25KP is not meant as a portfolio that is $25,000. As VERY CLEARLY stated from day one, it is the aggressive RISK portion of a $250,000+ portfolio. Taking those kinds of risks when that’s all the money someone has to play with would be nuts!
Submitted on 2011/09/22 at 3:45 pm
HPQ Oct $22/23 bull call spread for .53, 20 in $25KP.
Submitted on 2011/09/23 at 11:11 am
Speaking of the DAX – they tested 5,000 again and are back to flat for the day at 5,152 so we can have fun with EWG again in the $25KP. The Oct $16/18 bull call spread is $1.30 and we can sell the $17 puts for .90 for net .40 on the $2 spread so let’s try 10 of those.
$25KP – Sorry, that was the EWG $16/18 bull call spread, not $16/17. It’s still $1.30.
Submitted on 2011/09/26 at 10:02 am
Short trade of the morning is DIA FRIDAY $105.75 puts at $1.15, 10 in the $25KP with a stop at $.95 so risking $200 to make quite a lot if things turn ugly.
Submitted on 2011/09/26 at 11:24 am
Dow came flying back and we can watch for a rejection at 10,900 for a possible reload on DIA puts. This time we’re looking for the Dollar to bounce off 78.75 and hopefully we can pick up 10 DIA $106.75 puts for $1.15 (now $1.25) with a stop at .95 (sound familiar) for the $25KP. By taking small gains we now have less risk on another trade in an even better position and, of course, we’re hoping to either get a nice run with a big profit or have the Dow keep going up and give us a small loss which proves we’re not nuts to hold onto our bullish positions.
DIA/$25KP, Jerconn – Of course, the stop was at .95 and I said I expected a rally into the close. Also the Dollar failed to hold 79 – all on our list of reasons to stop out.
Submitted on 2011/09/27 at 2:29 am
Cash is king Rev, we just need to keep an eye on the Big Chart to see if we’re in a series of weakening bounces (which becomes consolidation on the break-down line) or forming a better bottom. Obviously, today’s little move was nice but not impressive unless we string together a few of them. A good rule of thumb is putting 20% of those paper gains into downside protection on the way up – just little things like what we did with DIA puts today in the $25KP – we won $100 and then lost $200 so our cost of insurance to protect a 277-point gain on the Dow was $100. The value of that was we were not inclined to cash out our bullish positions as we jerked around during the day because we had some nice downside protection. Spending $100 to help hold onto $8,000 worth of upside plays is a good idea…
Submitted on 2011/09/27 at 10:13 am
Submitted on 2011/09/27 at 10:46 am
Past 10:30 without breaking 10,300 and the Dollar over 78.20 so over 78.25 is a good reason to tap the DXD hedge or grab the DIA FRIDAY $111 puts, now .98 so let’s watch that VERY CAREFULLY although it could just be a bit of profit taking into the EU close with the DAX up 12% since Friday morning. A pullback to 10% is very much expected here and EWG naked calls can come off the table for now until they prove they can break $20.
In the $25KP, our EWG $16/18 bull call spread is $1.60 out of $2 but the short $17 puts are still .40 for net $1.20 out of $2 possible so, although we’re up 200%, there’s another 200% we can capture and we’re feeling pretty good about holding $18 for the month at the moment. We’re not risking 300% to make 200%, we’re risking 100% (stopping at net .80) to make 200%.
Submitted on 2011/09/27 at 12:54 pm
CMG/Mr. M – It’s all about their new Chop House idea. If that puts up good numbers and they announce a roll-out plan, they can get a nice kick (which would be a good short) but if they have any kind of disappointment in their pilot (DC), they could drop 10% very fast. Also, last Q was not a good one for food or labor costs for them (immigration issues) so they do make a fun short with the caveat that you have to be prepared for good spin from Chop House.
Earnings are on the 20th, the day before expirations so I like the volatility crush of selling 5 $340 calls for $9 ($4,500) and buying 3 Dec $350s for $15 ($4,500) for a free spread. No matter what CMG does, $4,500 of premium will be gone from the callers on Oct 21st, then the Nov whatevers can be sold, hopefully for another $4,500 in premium or perhaps we can just pull the trade so let’s do one set in the $25KP and see how it goes.
VXX/$25KP, Etrad – I think the VIX should continue trending lower. While a bit disappointing so far, we are on track with an hour to the close and we would be thrilled with our progress if Europe hadn’t done so well today. The $52 short calls are still .20 with VXX at $45 and the $51/48 bear spread is $2.40 so net $2.20 out of $3 from a net .30 entry means we’re up 633% with 900% max so we have 270% more to gain in 3 days – it’s not something we need to throw away unless we get nervous and an up 2.5% day is not a reason to be nervous. This is a very cool trade for the $25KP that can net $1,500 off a $30 cash investment from last Thursday! Keep in mind we’re playing aggressive with a very small pecentage of the portfolio at risk on this trade – if you have serious money on it – of course take the money and run with 2/3 of max gained already or, when in doubt – sell half!
DIA $112 puts in $25KP out at $1.65, of course (I hope I don’t have to say those things with a 50% gain in an hour!).
Good morning!
Dollar back down to 78 and all is well in the futures, heading back to yesterday’s highs.
The $25KP is very aggressive and, at the moment, it’s aggressively bullish but even an aggressively bullish portfolio can be steered very quickly to a more neutral stance if you follow the rules and maintain a balance of bullish and bearish positions at all times – that’s what makes what seems to be a quick, little adjustment so effective. I’ll be updating that portfolio this evening and we’re almost at our $100,000 goal so we’ll be getting back to all cash and making a fresh start again with a $10/100KP, where our goal for next year will be to turn our virtual $100,000 into $500,000 or, for those looking for smaller trades, to turn $10,000 to $50,000.
It’s been a wild 2 years since we started the $10,000 Portfolio last year and we hit our goals with room to spare and, of course, we will continue to maintain our much more conservative (and very boring) Income Portfolio, which was so dull and balanced that we didn’t even have anything to update this month as there was nothing to change – despite the 20% drop (we did make some adjustments during Member Chat, as usual).
So that’s my plan for next year, even though it’s not even Q4 yet so plenty of time for suggestions if you have any.
Thanks L4! Keep in mind that my system is all about taking a balanced group of trades and cashing out the winners and working out the losers while JRW’s system is VERY directional and short-term. The two can be used together the same way I favor having the bulk of our assets in well-hedged positions like our Income Portfolio and using a small portion for short-term gambling like our $25KP. Over the course of a year, we expect the $500K Income Portfolio to make 10-20% so even getting wiped out of the $25KP only dings us slightly but making $75K on the $25KP still adds 15% more to the overall portfolio so we risk losing 5% to make 15% and 15% is A LOT when you add it to a long-term strategy and reinvest it SENSIBLY over time.
Thanks L4! Keep in mind that my system is all about taking a balanced group of trades and cashing out the winners and working out the losers while JRW’s system is VERY directional and short-term. The two can be used together the same way I favor having the bulk of our assets in well-hedged positions like our Income Portfolio and using a small portion for short-term gambling like our $25KP. Over the course of a year, we expect the $500K Income Portfolio to make 10-20% so even getting wiped out of the $25KP only dings us slightly but making $75K on the $25KP still adds 15% more to the overall portfolio so we risk losing 5% to make 15% and 15% is A LOT when you add it to a long-term strategy and reinvest it SENSIBLY over time.
Submitted on 2011/09/28 at 10:30 am
Dollar getting rejected again at 78.25 – that’s good if it sticks. We’ll see what oil says in a few mintutes but maybe we pull the DIA play even in the $25KP if the Dollar doesn’t go over 78.25 – still at $1.02.
Oil UP 1.9Mb, gasoline up 800K, distillates up 100K so decent demand but build in oil not expected – that won’t give them a pop so it’s all up to the Dollar now, which is over 78.25 and that will now be our stop line for the DIA puts in the $25KP (at about the $1 mark) and we’ll just see how far it goes now.
I have no interest in shorting oil without them going higher first but good time to take bullish oil profits off the table if not well-hedged spreads.
Submitted on 2011/09/28 at 10:44 am
DIA $111 puts at $1.20, let’s take a $200 gain on 1/2 (10) in the $25KP and set a stop even at $1 on the rest.
Submitted on 2011/09/28 at 2:19 pm
So speaking of ridiculous panic. DIA $110 puts just topped out at $1.20 and now $1.05 but I’m not feeling it so let’s cash out in the $25KP and at least get our commissions back.
Submitted on 2011/09/28 at 3:38 pm
Things have been getting worse as I’ve been writing. I’ve changed my mind on the USO calls and we can kill them at .71 in the $25KP – too much premium now with too little time left to risk it.
$25,000 Portfolio Update
Just a quick update of positions closed over the past 2 weeks and list of open positions in our virtual portfolio. As of the 15th, we had $82,145 of realized gains against $1,220 of unrealized losses for a net of $80,925 as month 8 draws to close – just $19,075 to go for our $100,000 goal for the year. We had just $7,100 of our cash committed to open positions, which allowed us to make a few aggressive moves but it’s been an insane couple of weeks.
We closed the following positions, many on the 20th, when I made my general call to take the money and run ahead of the Fed in our morning Alert to Members:
We were incredibly fortunate to have turned bearish on the Fed, even though we were bullish going into it, our early morning attitude to take the money and run on the spike and our very fortunate QQQ and AMZN short plays made for one of our best weeks of the year – actually THE best if you consider that last time we did the review, our GLL calls were DOWN $4,240! What a difference 2 weeks can make. That trade is a great example of rolling, doubling down and generally sticking with a trade based on conviction.
Overall, we netted a very nice profit of $16,335 on our closed positions and that pushes our realized gains up to $98,480! Now all we have to do is find $1,520 more gains to close and try to get rid of the rest even and we’re at our $100,000 goal – just in time to hit Vegas….
Our open (unrealized) positions were down $1,220 on the 15th and GLL was killing us with the $4,240 loss. While we closed many positions since then, we opened many more as the market danced up and down (but still within our range):
As of yesterday’s close, we are left with the following open positions:
Curse you RUT! If not for that whopping $4,250 paper loss, we’d have hit our goal! Oh well, the net of this mess is a loss of $1,080, leaving us at net $97,400 overall. Our $4,250 paper loss on the RUT becomes a $2,550 realized gain on Friday if the Russell can manage to hold 645 for 2 days. If not, the Oct $550s are $6 so another 20% down before we even have to think about capitulating (and those are a great current sale!).
That means, for all intents and purposes, we can expect to close out our 8th month with over $100,000 if we don’t screw it up so I’m going to be into taking profits off the table, starting with my now-once-again-beloved GLL.
We do have heavy EDZ and DXD downside protection and CMG is a bearish play too but, on the whole, I’d rather see the EU pass their bailout package and have the VIX calm down and make our money on the bull side because, on the whole – it’s more fun to spend your money when the rest of the World isn’t bursting into flames!
I don’t want to jinx it but congrats to all the $10KP players who became $25KP players and are now going to be $100KP players. As I mentioned on Thursday, my plan is to start again next year with a 10/100 portfolio and we’ll keep the Income Portfolio going because that’s what you should be doing with $100,000 – not gambling it on aggressive plays! Ideally, if you have $100K, you can carve out $10K for an aggressive portfolio and if, like this one, it goes to $100K in two years – even if you made "just" 15% a year on your conservative $90K, that’s going to wind you up with about $220,000 – that’s not a bad outcome – and you don’t have to risk your whole $100K to get it.
We’ll talk more about that when we close this portfolio out and start the next one properly. Hopefully I was right to ignore the BS sell-off yesterday and the markets shake off the Euro worries for a nice couple of window-dressing sessions as we close out the Quarter!
Futures looking better, which is good as our $25KP is VERY close to goal at $100K (see update) with that goal riding on whether we hold over 645 on the RUT through Friday!
Good morning!
Submitted on 2011/09/29 at 11:16 am
QQQ TOMORROW $53s at $1.45 have just .20 in premium – 10 in the $25KP and a stop at $1.30
I was looking to see if we should stop out of the VXX in the $25KP (it actually should have stopped out at 100% per earlier discussions but I never officially called it) and I just noticed the VIX is DOWN today. That is VERY strange.
Submitted on 2011/09/29 at 1:40 pm
Woops, broke the lows so game on for the DIA puts in $25KP, of course and the Qs died already.
Oh, it’s only 2:30, I thought it was later.
Submitted on 2011/09/29 at 3:19 pm
Let’s see if we can top JRW’s 11% with the IWM tomorrow $64/65 bull call spread at .60 and we’re going to get there in the $25KP by rolling the 20 $65/66 bull call spreads, now .42 (down .23) to 30 of the $64/65 spreads for an average entry of .68 and a 50% upside if TNA gets over $65 at tomorrow’s close. That puts us in for $2,040.
Submitted on 2011/09/30 at 9:57 am
Our technicals are turning very ugly, of course but we only care about the 10% lines on the Dow, S&P and Nas – if they hold, then we’re still not in worse shape than we were in August. The Nas has the farthest to fall still and we’ll watch that -5% line very closely to see if they can take it back (2,473) while the RUT has the most to gain and we took an aggressive IWM spread into yesterday’s close in addition to the short RUT puts in the $25KP so it will very much suck to be wrong about 645 holding up (now 655).
All I can say is thank goodness those RUT puts expired this morning! We finished at 644 on the RUT but the short puts expired worthless. That should put the $25KP over the top.
Submitted on 2011/10/03 at 10:05 am
Oil (/CL) is a good bullish play off the $77.50 line with VERY tight stops. USO Oct $28 puts can be sold for .75 and that pays for most of the Oct $29/31 bull call spread ($1.08) for net .33 on the $2 spread as a bet oil gets back over $80 by expiration day (19th). Let’s do 10 in the $25KP.
Submitted on 2011/10/03 at 11:41 am
TLT/Mampcs – Yes, thanks for pointing that out! Weekly $122 calls can be sold for $1.65 and that pays for the $124/121 bear put spread at $1.70 for net .05 on the $3 spread. 5 in the $25KP!
Submitted on 2011/10/04 at 11:21 am
USO/$25KP, Champ – The $30s are down to .51 and I wish we had caught the DD at .41 but c’est la vie. 10 more at .51 averages just over .70 and we look to take 1/2 off the table at .70 or better to leave us with 10 at a lower basis.
Submitted on 2011/10/05 at 12:23 pm
USO/Jerconn – I thought we’d cross $79.25 oil with a $79.25 Dollar and we’re on track but if the Dollar doesn’t fall below $79.50 then oil probably won’t go over $79 so watch this area carefully.
Submitted on 2011/10/06 at 10:07 am
The same hedges we liked yesterday are good today, of course. I do like going long on Dow futures (/YM) off the 10,800 line with tight stops and that should also be 650 on the RUT (/TF) and for the non-fut
Submitted on 2011/10/06 at 10:07 am
The same hedges we liked yesterday are good today, of course. I do like going long on Dow futures (/YM) off the 10,800 line with tight stops and that should also be 650 on the RUT (/TF) and for the non-futures crowd, the IWM tomorrow $65/66 bull call spread at .55 has very little premium so 20 in the $25KP with a stop at .50 (say below RUT 650) has a chance of doubling $1,000 tomorrow on a small move up against a $100 risk.
SPY weekly $121 calls at .75 – 10 in the $25KP with a stop at .60.
Submitted on 2011/10/11 at 3:22 pm
I don’t see Nas 2,600 going quietly so that puts a 0.5% cap on an upside move – still a very good time to hedge SDS and now TZA because RUT 700 has been a rock-hard barrier that’s easy to set stops on. The TZA Oct $38/39 bull call spread is $2.60 in the money at net .45 so you know I love it and more so if we buy 20 in the $25KP ($900) and sell 10 of the Oct $35 puts, which are $7.50 (21%) out of the money at .80 ($800) for net $100 on the $2,000 spread that pays of if the RUT is not over 715 and doesn’t get in trouble until the RUT is up 7% (about 725). This was wildly successful last month when we shorted the actual RUT puts but this way is much margin cheaper.
Submitted on 2011/10/12 at 10:40 am
We have our downside trades already mapped out from yesterday and Monday so now, most of us should be looking for a quick bull trade. XLF is, of course, my favorite (now $12.63) if the ESFS passes but it’s the RUT that has a lot of ground to make up if we’re really coming back and the TNA Oct $40/43 bull call spread at $1.30 is a nice way to play bullish with a natural return of 130% and you can offset that with any of the following short puts:
MO Jan $26 puts at .80
FAS Jan $8 puts at $1.12
JPM Nov $30 puts at $1.16
AA 2013 $7.50 puts at $1.17
GS Oct $90 puts at $1.60
GS Nov $75 puts at $1.80 (shows you how worried people are about GS).
If we fail 666 on the RUT we can kill this trade (both ends if you don’t REALLY want the offset so let’s do 20 in the $25KP, selling 10 of the GS Oct $90 puts for $1.60 and we don’t REALLY want to own GS in the $25KP, nor do we want to roll it and be stuck for another month so it’s a stop at $2 ($400 loss) if things go the wrong way and we’ll simply find another way to fund the trade (if the RUT ends up holding 666 despite a GS pullback that blows our stops).
Submitted on 2011/10/13 at 10:40 am
Another long idea of the moment is USO ahead of inventories. The Oct $33 calls (was our old put line) are .60 so 10 of those in the $25KP and we’ll see how it goes but if we’re up .20 or more ahead of inventory – we don’t risk it and take the money and run.
Submitted on 2011/10/13 at 11:12 am
Speaking of USO – we topped out at .65 and now back to .60 in the $25KP but the markets are improving and the net draw was very large so I think stick with it until/unless we see more weakness ($84 line should hold).
Submitted on 2011/10/13 at 12:56 pm
AMZN/NF – Running into earnings you don’t even have 10% leeway. Carrefour numbers should be a big concern on AMZN earnings so I would not play them bullish through that day.
Submitted on 2011/10/14 at 9:44 am
Another fun GOOG play is the TODAY $590 puts for $1.10 – let’s get 10 of those in the $25KP just for fun as it’s the kind of fun that can make us $10,000 on a nice pullback (doubtful but fun).
Submitted on 2011/10/17 at 3:01 pm
Bearish/Rustle – I’m not bearish, I’m rangeish! My bearish call was based simply on the fact that there wasn’t enough bullish data to break the range so down we go. Now it’s up to the bears to prove their case and defeat S&P 1,200 going the other way along with Nas 2,600. Testing those levels today on a Dollar 1% rally with low volumes of trading makes anything that happens today suspect. While I certainly hope no one is bullish – bearish doesn’t feel right yet.
DIA $115 calls at .95 – 10 in the $25KP, stop if Dow fails to hold 11,400 (probably a dime loss).
Submitted on 2011/10/18 at 10:10 am
I still like those DIA $115 calls, now .50 so we didn’t miss anything by stopping out yesterday. Let’s do 20 in the $25KP and see what happens.
We expected a sell-off to put in a bottom this morning and we’re looking for Thursday’s lows to hold on the majors, which is roughly 11,375 on the Dow (blown), 1,190 on the S&P, 2,585 on the Nas, 7,140 on the NYSE (blown) and 688 on the RUT (blown). So 3 of 5 down already and if we lose the Nas and S&P, then a bit more bearish we shall get but then we’ll be looking for 1,175 to hold on the S&P.
Submitted on 2011/10/18 at 11:00 am
By the way, I don’t know if I was clear enough above but we already discussed it earlier this morning – the plan was to cash out the bear bets into the morning dip and get bullish until we have reason not to be.
Speaking of patience – See how we watched and waited yesterday and took a little poke at the DIA calls in the $25KP yesterday and lost $100 and got out and now we get back in for 2x at a lower price and already we’re up $300 – that’s what I mean by patience – if you sit back and wait for things to resolve themselves – an opportunity usually comes along. If you insist on trading all the time, whether there’s a clear direction or not – then you can’t see the forest through the trees…
Submitted on 2011/10/19 at 10:00 am
Obviously, 11,500 is a good line to short Dow Futures (/YM) with a tight stop there.
Submitted on 2011/10/19 at 3:10 pm
Damn – 77.45 on the Dollar – I thought it would stop by now. Over 77.50 and it’s time to flip to DIA $114 puts at $1 (now .95) with the same .85 stop on 20 in the $25KP in case we have an anti-stick finish but volume is still light and this could just be a shake-off ahead of the real EU fix so I do not WANT to cover more.
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