Today the market obliged in testing my strategy by gapping up across the board. Mercifully this was on a Monday before the options had given up all their time premium, but I did learn what I set out to do, and for a bit less than I was expecting (in fact the commissions are only a few pennies off from the losses this week). Percentages were: BA 34% loss BABA 47% loss NFLX 24% loss V 18% loss SPX 122% gain MSFT 63% gain (This would have been better if I hadn't been hurrying to work) All told, I'm down less than 5% this week--had I been quicker about closing the MSFT position with BABA and BA closings, this actually would have been a winner. This is the .5% - 1% gap that presents the subjective risk to my positions that I was concerned about, and that I so regularly complain about here (and yet today I'm cheering its arrival!). The larger gaps take time premium out of the equation and leave me closing hedges, and hoping on the core positions for a 30% loss on the week. These are the moves that require subjective closing of positions to manage risk. So I learned a very important lesson pertaining to this strategy this week, namely, how I personally will handle closing the positions. And since this happened so fast, I can effectively get another "week" of trading in...this time in line with my sentiment. SPX put spread open 2430-2440 for 1.90 debit.
MU 30-31 put spread for .30 credit V 93-94 put spread for .29 credit IBM 152.50-155 pus spread for .52 debit
Oops, a little mistake I needed to correct today. I fixed my NFLX spread to what I intended to a 150-152.50 put spread for .89. Got out of the original mistake for literally $0.01 gain (on the entire position, not per share).
Out of IBM and MU. Have a limit order on BIDU close. I'll get prices and percentages when at work. Edit: turns out I'm out of BIDU and only partially out of MU...*sigh* such is mobile trading.
BIDU closed at .24 debit for a gain of 17% MU closed at .14 debit for a gain of 18% IBM, which was a hedge closed at 1.00 for a gain of 84% Still open with core positions V, PM, and AAPL, and hedges on SPX (very profitable looking), and NFLX (less so)
Out of PM for .43 debit for a 19% loss Out of V for .36 debit for a 14% loss Out of SPX hedge for 4.3 credit for a 120% gain I'll be looking for an advantageous exit to AAPL today. I may or may not close NFLX hedge depending on how much value is left in it.