Well we have all had an unusual week or at least I have. From, oh oh to Yes!!
The up and downs have been odd for one week.
My positions are as follows. I feel good about them but next week will tell.
PCLN-425
SPY - 123
AMZN - 155
WLT - 105
LO - 65'S
So a fair amount of puts that are around 10+ points to the good side with a week to go.
The times and the things going on make me nervous but I still keep active and in the put market. But do be careful. Take less profit and sleep better.
To all the traders that are reading the blog and not members..jump in. We welcome all levels of traders and questions. We were all learning at some point and enjoy helping and pointing others to help make their trading successful. All are welcome.
Monday I am heading to Mexico for 12 days so I am leaving you guys in charge. Keep the market to the upside and lets make some money. I will have my laptop with me so will able to contribute to the blog as well as trade when necessary. I still have some maintenance available so if the mkt turns a little more positive I will get some more puts.
Good trading all, Jerry
123 comments:
This week the market played out like some day time soap opera. Hopefully this coming week turns out like a fairy tale, it is options expiration week after all!
btw, have a wonderful and safe trip down in mexico jerry!
hey Jerry - happy & safe trip - you opting for the scan or grope :)
Hey Jerry,
I see a lot of your positions have quite a bit less than 10% cushion, is this due to rolling up or are these new positions just for the final week here?
I've rolled up and changed a few of my positions and I'm looking forward to Friday expiration!
Have a nice trip!
I feel for the Japanese, but I also wonder how that will affect the market tomorrow. I guess it was shrugged off on Friday, but now we have the nuclear power plant issues.
Hi all, Yes tomorrow will tell us something, what I am not sure!
Nolan, I opened these a few days ago and then the market took its dip and brought the stocks closer to my strike than i Like but a week to go and the premiums are still hanging in there I am watching and hoping no more big drops occur.
I will put in stops for tomorrow as I will be flying most of the mkt hours.
Jerry
Jerry,
Referring to a prior post. It is more likely that you are a nice person, and nice people attract other nice people. My theory.
Dave
Has anyone had problems with charts calculating incorrectly? I have a spreadsheet that calulates the 5 day RSI, every day, back to 2002 for NFLX. My numbers were in agreement with MSN, but the MSN silverlight is not working right now. So I am using the yahoo finance chart, but the 5 day RSI is very different from my calculations. Anyone every noticed anything like that? Maybe there is more than one way to calc the RSI?
Thanks,
Dave
Jerry,
Have a safe and fun trip. We can start working on next month's list. My wlt got above 2x premium but then it dropped below. I held on.
It seems that the 2x premium is more likely to happen early in the month. Late in the month hitting the strike seems to be more of a worry. Am I close or way off?
George
It looks like there is the Welles Wilder RSI and another RSI. I thought I was using the Wilder RSI, but apparently my spreadsheet is using the other RSI. I'll have to research this a bit more. Has anyone ever used freestockcharts.com? It looks pretty cool.
Dave
I know most of you probably don't care, but the Wilder RSI uses smoothing, while the "regular" RSI does not. I am not using the smoothing component in my spreadsheet. You should check out freestockcharts.com, I really am liking it.
Dave
Hi Kite, You are probably correct. The sooner the time starts eating the premium, unless there is a significant drop in the stock price the premium either holds or continues to drop. That is one of the nice things regarding weeklys.
Tomorrow I will be having a margarita and not even thinking of you guys...lol
Jerry, I understand and yes Thursdays sell off caught me off guard as well with a few of my positions.
I think depending on what company you sold puts on this month they will be little effected from Japan's quake, especially if you haven't been greedy going into the last week here.
I currently live in Seoul, Korea and there is talk about nuclear effects on the news and in newspapers constantly here. I feel safer reading about that than war with the north but still scary times. People are saying its the biggest disaster to hit Japan since 1945. Life is precious and can change any minute!
LO's premium still high! Is there a big news release before options expiration?
suspicious...
I know nothing about LO, but is the IV up so high due to concerns over increased litigation? This may have already been addressed here.
Dave
50 volume at 57.50 on CLF Jerry was that you?
I like this one for Ap. looking at a few 100 calls to go long on also.
Ouch... it looks like the market isn't taking the news out of Japan too well. I hope the market holds until Friday *cross fingers*
Hey, looking for some nice weeklys. Anyone have any they are looking at or played/going to play?
Fulgore,
I'm long May SPX and Apr. SPY puts short weeklys, has worked very nice for a few weeks now.
Fulgore. GE close to 3% Yield + now has weeklys
Sold Mar 20 puts on GE .55
Also did a CC on the Mar. 20 call 19.48 debit
Hey Gary I'm confused.
You sold Mar 20 GE puts that are in the money?
Aren't you going to get the stock put to you?
What do you guys think of AAPL? They announce earnings next month, but options expire the week before that. Is AAPL still a good play?
ED
My bet is GE is above 20 on Friday. I will take the stock or roll to next week if not. (GE now has weeklies) The yield is over 2.85 as that goes up big boys will step up buying.
My account is 25-30% Crum 70% trader made really good coin on this down turn on the SPX GE is a value play at this point with that profit.
Another post asked if anyone was looking forward at anything weekly for next week
Just thought I would toss out a few things I was doing.
Sorry for any confusion defiantly not crumb method.
Sorry Jerry I will try and stay on point.
Hi Jerry & everyone,
This is my first question on this blog. I have purchased Jerry's book. It makes sense to me and would like to give it try.
Can you share your tought on how to apply the 20% min. cushion rule that Jerry has described in his book for the monthly option with the new weekly option? I tried to look at all the postings, can not seem to find it. I must be missing something because I am sure someone has to ask this question after reading the book and this blog. Is it as simply as reduce it to 10% min.cushion for the weeklies? Also, do you still use the "double premium" rule to close the position in the weekly option trading as you have in the monthly option? or do you adjust that rule as well?
Thanks,
TK
Gary no problem. Appreciate the explanation. I was just trying to understand why you chose in the money. Makes sense. Thanks.
LO option starting to behave like they should but still unusual. 4 days to go!!
The japanese market is down over 20% in 2 days, this is scary!
Hi tk - the 20%+ cushion rule should be used on options with around 4 weeks to go; for weeklys (selling on a Friday with 7 days to expiration) I try to get 10% cushion or more but actually look to see if I can get a 1% return on investment. If I can average 1% a week I am very happy :)
Well this is going to be a Tusday for the books,
I feel my cushion srinkingggggggg!!!!
Sigh
I agree Gary this is going to be a Tuesday with huge volatility.
All eyes on Japan!
The time decay is eating up the premium fast so should still be OK.
I had to close my position on MOS because it was nearing the strike price. Option sellers can't get a break, even on expiration week.
I know you all know, but days like today are PERFECT buying opportunities if you have long-term investments. I added to IGOI and JMBA at these ridiculously low levels.
Henry, good job. If a stock or option violates one of your rules and you stick to your rules, then you have done a good job. Remember, it doesn't matter if the stock now behaves properly and you would have "won" if you held on. There will always be cases like that (look at my situation where I lost on LO but those that held will more than likely win). The key is to stick to your rules and determine how well you did on a trade based on that. If you follow your system you'll do well over the long haul. If you don't, you won't. Far too many people only look at the results to determine if the decision they made was wise. That's just not how the successful traders do it. Of course, if results are bad over an extended time the rules might need to be changed, but you get my point. Again, good work on following your rules and acting accordingly.
-Mark
Mark,
Good points, I am not a pro like you, but very good points. Also, the dip is certainly a good buying opportunity.
Dave
Thanks for the input Mark! Like Jerry said, "discipline trumps convection".
Henry,
I know that is just a typo, but funny none the less. I'm sure discipline does trump convection, but this is not a cooking show.
Dave
Dave, thanks for the compliment. I don't consider myself a "pro" just somebody that does this full-time. Just remember there is no special attribute (outside of maybe keeping emotions in check) that separates the profitable from the not-so-profitable traders and investors. It's the way you view the markets. 99% of the people you talk to today would say "absolutely not" when asked if they are thinking about buying stock today. The 1% that see opportunity are those that do well. It's just how you view the markets. It's not rocket science, and I'm not a permanent bull by any stretch, but it's just how it is.
Financial media will tell you something, your friends will tell you something, gurus will tell you something, heck even I will tell you something! :-) But none of that matters. What matters is if, for long-term investing, you believe in the company's story, and the stock goes down on non-company-news, then it's a potential buying opportunity. Anyway, I'm rambling, but hope this helps.
I never liked convection ovens anyway. :-)
And I agree, a lot of Jerry's teachings are dead on. He's got a bunch of good stuff in his book and on his blog.
Thanks for pointing out the typo, I meant "conviction". Plus, the sun is still rising where I'm at so give me a break *laughs*
Mark,
If you are doing this for a living, then you are a pro to me. I pay my bills with my real job still. Very good thoughts. Thank you.
Dave
Henry,
I'll give you a break, since you made me laugh!
The big players have shown their hand for NFLX, they are buying.
Discipline I think is key, but LO was an exception, I looked everywhere for an upcoming announcement and found none so I concluded this is an exception, but did not get greedy and did the 65P-90C straddle
NFLX bucking the trend again.
LO finally decaying normally!
I love the wisdom on this blog, it helps me refrain from going for those larger/riskier returns.
Keep it up guys!
Sell SLW put strike 30 for .25. I bet sliver will go up.
I have a 67.50/65.00 put credit spread on LO. There's 4 more days to go with 14% cushion. Let's hope nothing crazy happens! *cross fingers*
A dow stock just went positive, briefly, PFE.
You know it's a bloodbath when we mention the stock or two that are green :-)
GGP, one of my long-term investments, is green as well. Worth a look for those bullish on commercial real estate. I'm bullish on the sector and have been since March 2009 as I believe the hit the industry took as "the second shoe to drop" was overblown. Still room for real estate to grow.
With that said, you'll probably see GGP down in the 14.30's or 14.40's again as a buying opportunity (currently at 14.70's). Probably won't see those prices today but it's a fairly volatile stock.
Does anyone know where to find a list of stocks that trade weekly options? Thanks.
http://www.cboe.com/micro/weeklys/introduction.aspx
The list can change, so they publish it every week.
Thank you kind sir! =)
Well, I pulled the plug on my 4 positions, 2 in Open at 70 and 72.5 and Gmcr was at 31 so there was no point in waiting and last LULU.
I do not have the stomach to wait until Friday. If radiation hits Tokyo then 20% cushion could be lost in a morning gap. Last night I was wondering why I did not clear out. This morning I wonder no more. My point is to stay in the game.
Gary, those spy puts should be rocking and rolling.
Good luck out there. I will get back in as soon as the extent of the reactor damage is known, not estimated. If I miss some gain so what? I feel it is like skipping the week of earnings announcements but ramped up 10x.
George
@ Henry (or anyone else interested) - IRT weeklys...for any that use the Think or Swim platform, they have a prefab watchlist for the weeklys. Makes it handy viewing...
Best to all!
Jim
cboe_new_weeklys_available_for_trading@cboe.com
I get an email from them on the new weeklys.
I am not sure how I signed up on the website but if you search weeklys there or cal them it can't be too difficult.
Hello, I have a couple of questions, I sold to open BGU $72, and $71 puts, today BGU closed at 75.53, I also bought to open BGU $76 puts, lets say BGU closes below $72 on FRI, I get the shares put to me at whatever price below $72, now with the $76 puts I'm holding, I can just turn around and sell them at $76, right? Do I have to inform (TradeKing) that I want to exercise these puts or will this be done automatically? Shares put to me then sold off for $76, also at first I was just going to sell to close the $76 puts, when it went to the review part of the trade it showed options requirement for this trade $$$$, my question is why would there be a options requirement for a sell to close transaction???
Thank you.
Nicky,
I'm not sure if I get you right;
You bought $76 put, then put in order to sell it - it's 'neutral' for $76 put then. Therefore your short option $72 requires certain amount of margin maintenance. You cancel the $76 sell order, the maintenance requirement disappears as you have the debit put spread.
I am not sure if TradeKing has automatic execution of options > or < than strike price. Some brokers automatically executes it i it's one cent < or > than it. Hope that helps.
LO options acting weird again!! Sold 85C stock went down but option premium increased!! 2 1/2 days to go!
Nicky,
I believe the 76 puts will automatically be exercised (but I don't trust technology). I would call TK about this, 877-495-5464, they have been very helpful to me in the past. Plus, they don't charge more for broker assisted trades.
Dave
This explains the high premiums..but the big report is on the 23rd after options expire hmmm
Lorillard (NYSE: LO) closed at $79.36. The Tobacco Products Scientific Advisory Committee (TPSAC) meeting scheduled for March 17 and 18 and its methanol report is due to the FDA on March 23.
Nolan
Actually it closed at 78.36
This is from an old article ;)
Ya, could it be short covering?
8.5%=approx 12+millions share shorted and large number of put contracts for the last few days.
Sold some 65 put 0.25 just now. Had a few 85 calls too.
Thought 0.25 was good for 2.5 days lol
Whoop....0.31/0.34 and rising.
Ya...premium offering over 5% with 2.5 days should be a warning sign!!!
It would appear that people are straddling this FDA meeting over the next few days. This position makes me nervous. My premium hasn't doubled but I don't like this gambling into news reports.....thinking of covering it.
Any thoughts Jerry?
No way LO moves 12 point in two days, I'm hangin in
Just taking a quick look, the technicals say LO is more likely to rise than fall in the near term.
bloguser, you are probably right but saying "No way LO moves 12 point in two days, I'm hangin in" are the infamous last words of many traders. Seriously. Trade scared. Always be prepared for the worst. Do this and you will do well. Again, you are probably right on this particular situation, but you are playing with fire when you start to think a position is nearly untouchable. I've seen plenty of stocks drop 30% plus in a day, especially those related to FDA news, or worse, FDA rumors.
What I'm saying is that dividend payers do not move like high flying non dividend "growth stocks" and if you go back over recent history LO has never moved 12 points in 2 days even with announcements of any kind
Bloguser, I hear ya, all I'm saying is that thinking there is no chance a stock can do something is a recipe, eventually, for disaster. Any stock can do anything at any time.
I agree with Mark, I too look at the past to see how a stock tends to behave, but you never know what will happen in the future. What if the CEO dies overnight? What if a tornado destroys the factory, etc.
You are all correct ... bad things do happen. But as smart investors, we need to be rational. If we always feared, expecting the worst, we could NEVER make a trade. Of course, LO could drop dramatically, but from a rational view, LO is the kind of stock that would very unlikely drop the 12 points overnight.
Well said, Jim.
Agreed, LO is highly unlikely to drop 12 points overnight. You do have to trade on reasonable probabilities, which is exactly why I do consider past price performance.
News reports can be biased, but there is reason the premiums are so high because the FDA report could go either way.
Good input all! Nuf said, let's see how it plays out.
I covered my LO at a loss.
I should have done more research on LO prior to investing in it so I would have known about the news release on Thurs-Fri of this week.
but I live to fight another day!
Always stick to your rules and keep your margin of safety.
Read the article yet?
http://seekingalpha.com/article/258538-why-is-lorillard-so-cheap?source=yahoo
Hmm...worry about early release of the report before weekend. It's due next Wednesday. Fingers crossed.
There will be no release Thurs-Fri only a meeting by the committee
That's good to know. The premiums are ridiculous, make you wonder if some big fund is hedging their position?
The news coming out of Japan is getting worst by the hour. The VIX just spiked up to 30. I know it's best to remain claim, but what gives?
Every DOW component is currently down.
I submit that the LO high volatility for the March expiration is an "anamoly". The same way that weekly options that expire before earnings reports will have high IV. There may be fear that LO could move quickly even before the FDA report is issued.
LO is currently trading in the green today. It seems time decay doesn't apply to LO since my premiums are still double in price with 14% cushion. Whack!
Fear , Death and Taxes r the only certainties
bloguser -
Don't forget time decay ;)
Good afternoon
LO moved up!
I have 10 $85 short calls (besides $65 puts), I'll hold till the end of the day and see how it goes...
Where is the time decay? LO is moving up, but the premiums are up too?! I believe LO would be the perfect stock to short if it didn't have the pending lawsuit.
Well we had our move but not the 12 pointer that seemed impossible 1 day to go Thank you LO
watching dow jones news wire extremely closely regarding LO. will sell a bunch of puts if menthol "not dangerous" and won't enter a trade if "restriction" or "banned." 3 reports out today already and likely more to come...
bloguser (and everybody else), if you are in LO please be extremely careful. I would HIGHLY recommend watching the Dow Jones newswire like a hawk. If menthol "banned" you will be toast. If "restricted" that's probably very bad. If "same as regular cigarettes" you're in the clear.
Where is the best place to get up to the minute info?
I have a news stream in E-Trade Pro. I don't trade via E-Trade but Pro is where I watch Level 2, charts, and news.
I got a news feed saying, "FDA Advisory Panel Says Smokers May Perceive Medicinal Benefit from Menthol Cigarettes (LO)". Interesting, the ruling is due 3/23.
Yes, it's due 3/23 but news can come out at any time. The FDA Panel today already said menthol cigarettes "disproportionately" marketed to African Americans. That's not material, but the point is that the FDA Panel has already met today and who knows if they are still meeting or will release more info today. Again, not trying to be a fear-monger here, just please be very, very cautious. There's no way on God's green earth I would have a position in this without a news feed and the ability to watch it every second of today and tomorrow. I have no position as of right now, but if it's good news I will sell as many puts as I can. If it's bad news I won't do anything. Again, I'm just a guy on a message board so do what you wish but please be careful everybody.
Yahoo finance seems to be up to date on the breaking news.
Why are you guys messing with LO? It's almost as bat as a Bio-Tech stock..
I sold March4 SPX 1175 puts today 2.30 .038%
Off crumb long Apr 205 NFLX puts sold week 4 215's
Did a over wright (short 2x's what I'm long) on SPY now long Apr 131 puts
short Mar 126
Short MAR4 126 and 127
90% of LO's sales come from Newport cigs, which is the leading menthol cigarette. If menthol is banned, well, imagine what would happen to Burger King if beef was banned. OK, I've said my piece. Wish everybody well!
Gary, I'm keeping a close eye on it because it will be very easy money IF it gets good news. I'll take advantage of the fact that I can enter my sell order quicker than the other guy can cancel his buy order. That's a perk of doing this stuff full-time.
Gary,
The big news for LO is expected next week. We will be out of LO tomorrow. Yes, there is risk today and tomorrow due to the meetings, but nothing substantial has come out yet.
Mark,
You really think Chairman MoBama is going to let Menthol be baned? Think Cool's
Oops I some how slipped over to the Political Pub Blog. Sorry
I am hooked up to the webcast, and will post updates here immediately.
Gary, I don't pretend to know what anybody is going to do at anytime. But I'm sure as heck going to try to be as prepared as possible to take advantage of whatever happens.
It just started.
recommendations will be given at the end of the meeting. I presume this means at 5:00pm ET on Friday.
no greater mortality rate for menthol smokers
new smokers start with menthol more often than non-menthol. cessation rates are about the same for both.
Dr. Mendez is saying that more deaths will occur due to menthol, but it appears he is assuming that some people won't start smoking if menthol is taken away. I doubt if people start smoking just to get the menthol!
This Dr. Mendez guy sounds like he's getting pay to say such ridiculous things!
The audience is starting to pick Mendez apart, including saying the sample is not statistically significant.
A higher percentage of menthol experimenters become establihsed smokers, compared to non-menthol experimenters who become established smokers. Mendez is the FDA scientist. Much of the audience is from the Tobacco industry, including LO.
The draft summary from TPSAC, the committe now meeting, gives the following recommendations to the FDS:
The data leads to the conclusion that the evidence is suggestive of no causal relationship between:
1. Menthol and any disproportionate impact on the public compared to nonmenthol
2. Smoking is declining, nonmenthol are preferred by most, menthal are preferred by some groups
3. Menthol does not change the risk of smoking
4. Menthol are not smoked more intensely
5. smoke is not chemically changed by menthol
6. menthol does not influence smoking initiation
7. no impact on cessation
8. no impact on nicotine dependence
9. Hypotheses set forth by TPSAC are speculative and not to be used for regulatory policy
10. A BAN ON MENTHOL WILL RESULT IN SIGNIFICANT COUNTERVAILING EFFECTS.
My conclusion: menthol vs. nonmenthol is a non issue, smoking is just as bad either way
Every time the Committee makes a strong statement, they back down quickly when challenged. For instance, "menthol is perceived as safer". LO asked where they got that info. Committee said, there has been much education and people do know about the risks of smoking.
Did they announce a final decision?
I believe they will hear everybody out today until 5:00pm ET. And tommorrow 8:00 - 5:00pm ET. The recommendation appears to be most likely to come out in the 4:00-5:00pm hour tommorrow.
henngiss, where are you accessing the webcast? FDALive.com?
Thanks,
Mark
It was a little hard to find.
http://www.capitolconnection.net/capcon/fda/fda031711_launch.htm
http://www.fda.gov/AdvisoryCommittees/CommitteesMeetingMaterials/TobaccoProductsScientificAdvisoryCommittee/ucm237359.htm
One of those should get you there. They are on break until 3:00pm et
Excellent, thanks Hengiss! Even better than a news feed. :-)
Representative from American Wholesale Marketers Association (they like menthol) said that banning menthol would create a black market where the product would be sold illegally. Was basically saying it would be the FDA's fault if that happened.
Yes, and the TPSAC's own draft summary says the exact same thing. I think you can find the summary on one of my previous links.
Dave
My impression of LO,
The hearing today seems to be much ado about nothing. I believe the LO April options are way over priced, if they stay above 50% IV, and serious consideration should be made regarding selling them. Am I missing something?
Dave
Post a Comment