Beer & Options Journal

Discussion in 'Journals' started by beerntrading, May 9, 2017.

  1. Out of MO at .38

    Rolled MU down to 27.5-28.5...said .41 credit, but on phone, need to double check that
    #21     May 17, 2017
  2. So, my phone's order status did indeed say executed at .41 credit, but execution was in fact the price I entered at .31 everywhere else I look. Can't even figure out where that .41 may have come from...the prices don't even add up to that:

    0.51 credit
    0.15 debit
    0.07 debit
    0.02 credit

    25% gain on MU
    28% gain on DAL
    23% loss on MO
    27% loss on MSFT

    Score one for hedging! I'm sitting on realized gains this week approximately equal to unrealized losses. Looking for a bullish hedge against my MU and DAL positions to keep the world in balance...not seeing a lot.
    #22     May 17, 2017
  3. Oh, found it! AAPL 150-152.50 put spred. .82 credit
    #23     May 17, 2017
  4. *sigh* and out at 1.05
    #24     May 17, 2017
  5. vanzandt


    Watch SJM on pullbacks. I picked up some last week just north of $124. This one should be a good long term play. Its got everything going for it in this environment. I also suspect the rise of M&A activity in the sector. $125.25 as I type. If you're patient you might be able to get in at $124. 55... will be much higher this time next year. Its a well run company. Their footprint is everywhere.
    #25     May 17, 2017
    beerntrading likes this.
  6. Out of MU at .49.

    AAPL was 16% loss
    MU was 25% loss
    #26     May 17, 2017
  7. Hmmm, interesting. They're not in my stable, but they do look quite impressive. Less liquidity than I'd like to see.

    Moot point anyway. I'm letting DAL and NFLX ride out the week. If I hit the DAL stop, I'll liquidate. No new positions this week as a matter of risk management. DAL and NFLX should hedge each other enough (though, wish I were further from the DAL strike, and nearer the NFLX strike).

    I'll probably be out this afternoon and pick up the pieces on Thursday or Friday to kick off next week.
    #27     May 17, 2017
  8. Out of NFLX at $2.00. Watching DAL closely. All but certain to close this one this afternoon.

    66% loss on NFLX
    #28     May 17, 2017
  9. Out of DAL at .33 for 7%
    #29     May 17, 2017
  10. Account is liquid, so it's time to dissect the week.

    I got an unfortunate early test of my new risk management strategy for systemic risk factors--and guess what, it's a winner. While I'm down modestly this week, commissions actually exceed losses. I have a hard time calling this week a loser because of that and the knowledge gained is certainly worth the commission lost.

    The hedges did exactly as planned, disciplined use of stops and cautious reentry into market saved me from worse fate. I gained market exposure at the cost of only commissions and lost on this one. Stops cut both ways (I wish I was still in MO and MU, but avoided a worse losses on NFLX, MSFT, and AAPL), so I'll silence my inner Captain Hindsight knowing I did better with the stops than without. I'll sit this out for a day or two and let the dust settle before getting back in for next week's positions, but this time armed with the knowledge that I can weather an adverse move in the market and take it in stride.

    A 2% hit to the S&P would have pushed losses up, and I've given consideration to OTM debit spreads on the SPX to hedge this. The only problem I see here is that while I'm practiced in judging my weekly market sentiment, this play needs to be done over the course of 4-8 weeks to be cost effective, and a pivot in the market (like today) renders the remaining time relatively useless. I've calculated 4-5% of account value to protect against this move for 4 weeks which would cover 70% of losses assuming a 2% move across the board, and 85% from about a 2.4% move. This does not, however, address moves of more than 0.5% but less than 1.5%, so I'll continue for the time being hedging with individual positions rather than a S&P based one. I've also considered using a debit spread as well since it would give more protection against a large move while costing more for a small one.

    I'll leaning towards a more neutral stance for next week (my positions were mildly bullish this week). I'll watch for the next day or two, and perhaps make a slow entry into the market that I can tip either way with additional positions, with a careful eye towards systemic risks.
    #30     May 17, 2017
    vanzandt likes this.