Archives for October 2017
Full Time Profits, October 30th, 2017 – BIDU, MSFT
Last week, I said:
“I’ve still got 2540 as my “failed breakout” indicator that would tell us short term weakness is setting up. And the recent highs, well, odds are we’ll just grind higher into that anyways.”
So far, that prediction has come true. Good earnings coming out of many large cap stocks have helped the S&P 500 break to new highs… until we see something to the contrary, we need to assume trend is higher.
This market also has the highest dispersion we’ve seen in 20 years. That means the performance on different stocks and sectors are extremely “disperse.” What that means is, even if the market is a bore, there’s lots of excitement underneath the surface.
Trade #1: BIDU
This is a combination of a few setups. Basically, the stock is gapping down on earnings into previous support levels. Any secondary move lower is going to be a good setup to fade.
Trade Setup
Expected Price: 235
Sell to Open BIDU Dec 210/205 Put Spread
Tier 1: Enter at 0.65, Exit at 0.15
Tier 2: Enter at 0.95, Exit at 0.45
Tier 3: Enter at 1.25, Exit at 0.75
Trade #2: MSFT
MSFT had a huge gap up but is fading hard after a good day’s worth of trading. A push into a half gap fill makes for a good entry for a long.
Trade Setup
Expected Price: 82.50
Sell to Open MSFT Dec 80/77.50 Put Spread
Tier 1: Enter at 0.50, Exit at 0.10
Tier 2: Enter at 0.65, Exit at 0.35
No Tier 3, Save Dry Powder to roll down and out to Jan options
[CLOSED] – Oversold IBB Trade – Put Spreads
Full Time Profits, October 26th, 2017 – IBB, GS
We’re finally starting to see some two-side action in this market. After a month-long seller’s strike, markets are catching a little heat to the downside.
I’ve still got 2540 as my “failed breakout” indicator that would tell us short term weakness is setting up. And the recent highs, well, odds are we’ll just grind higher into that anyways.
Sector rotation is definitely coming into play. Biotech is getting walloped from some bad earnings events, drugstores getting hit from AMZN coming into their space, and a handful of large-cap stock earnings are keeping the whole ship afloat.
Trade #1: IBB
IBB is the biotech sector ETF. It’s seeing a pretty healthy gap down… CELG had a nasty earnings event, AMGN also gapped down into earnings, and a handful of other names are starting to see weakness.
So we’re oversold. Imagine that… a market that actually got oversold!
We’re going to avoid the single-stock risk and just play the sector ETF.
Trade Setup
Expected Price: 313
Sell to Open IBB Dec 285/280 Put Spread
Tier 1: Enter at 0.60, Exit at 0.10
Tier 2: Enter at 0.90, Exit at 0.30
Tier 3: Enter at 1.20, Exit at 0.60
Trade #2: GS
Simple setup– we’re looking for a pb2bo (pullback to breakout) at the previous range high.
Trade Setup
Expected Price: 233
Sell to Open GS Dec 220/215 Put Spread
Tier 1: Enter at 0.70, Exit at 0.20
Tier 2: Enter at 1.00, Exit at 0.40
Tier 3: Enter at 1.30, Exit at 0.70
“BathWater” Trade in GE (Put Sales)
Update – 10/27/17
That did not take long… the spread value now sitting at 0.43, so time to enter second round.
Update – December 18th, 2017
Long stock assigned after December options expiration. The plan now is to collect the dividend and convert the long stock into a covered strangle.
Update – February 27th, 2018
Stock assigned, basis 17.80.
0.12 dividend, basis down to 17.68. Current stock price 14.69. Waiting for next spike to sell calls into.
Update – June 23rd, 2018
Still taking heat. 0.12 dividend, basis down to 17.56. Still waiting for a proper spike to sell calls int. Big resistance is 15.3, above that and we should see a good move. Just got removed from the Dow.
[CLOSED] – SPX 29Dec17 ICRally
Update: November 24th, 2017
Take profits on the put side.
Update: December 1st, 2017
Rolling call spread higher and adding put spreads.
Delta: From -30 to -33
Theta: From 15 to 65
Update: December 5th, 2017
Cutting upside risk in case the market doesn’t actually selloff here…
Update: December 18th, 2017
Closing out the hedge and removing 20% of our short calls to cut our risk down for the weekk.
Update: December 26th, 2017
Closing out the rest of the trade for a loss.