I don’t usually talk very much about “my book”, so I’d like to take this opportunity to delve into what I am currently trading with a quick rundown of my portfolio and provide some thoughts afterward.  Positions are from largest to smallest:

Cash: 44%

Stock: NTAP 11%, BBT 8%, CHRW 8%, PSTI 5%, FSL 4%

Options: MNST Jan 52.5 Call 7%, VHC Jan (2014) 50 Call 5%, LCC Jan 12.5 Call 4%, SD Mar 6 Call 4%, SWHC Dec 11 Call 0%

I caught a bit of seemingly fortuitous news as I was sitting in traffic this afternoon when I read that the “homosexuals” over at SD were busy selling off their Permian Basin oil assets for a cool 2.6 Billion.  Afterhours trading saw the price of the underlying spike to well above 7 before settling at 7 even.

I bought the stock because I liked the chart…sometimes you get lucky.  Hopefully the euphoria carries over into ‘regular trading’.

That reminds me…in over a decade of trading, only once have I been lucky enough to own shares of stock in a company that gets acquired for a premium.

Fun fact: It was the summer of 2010, August to be exact.  I was long an egregious amount of MFE…yeah, that’s right, McAfee.  It was over 30% of my portfolio…it was beaten down and I thought it was way overdone.  I was starting to get fed up with the stock and decided to liquidate 1/2 of my position for a small loss.

I was living out west at the time, so I usually rolled out of bed right as the market was opening.  As I pull up my usual early morning menu of websites I notice that MFE was printing a really strange price…$48/share…what the fuck?  My cost basis was in the low 30′s.  I sold the entire lot almost immediately.

In retrospect, the order entry was more a thing of: “holy shit, the bid is suddenly $15/share over my cost basis, and this cannot be real so I’m going to enter a limit order at the bid and we’ll see what happens.”

Order filled.

Thank you John McAfee.

For a long time I pondered that other 15% I sold off.  Anyway, it’s always nice when unexpectedly good shit happens to stocks that you own right out of the blue.

Back to my portfolio, I have made a few purchases this week, namely NTAP, PSTI, FSL, MNST, and SD.  I took off 1/3 of my FSL position this morning to lock in a nice 2 day profit.  The rest of the lot are all being closely monitored.

I have owned a varying amount of the LCC Jan 12.5 calls since August 15th.  Building a position, selling off part, lowering cost basis, buying more, selling off some, lowering cost basis further…I have repeated this process 4 different times.  The result is a trade that is currently sitting with pure profit (even if the contracts I hold expire worthless).

Today I sold off a few contracts into the huge rally, but still have enough of a position where my overall P&L is still strongly affected by a day like today.  Free money.

Lastly, I’m sitting on those VHC calls come hell or high water.  They will either blow through the roof or expire worthless.  It’s a small enough position that I’m willing to take the gamble…and it’s already up 25% from my basis with the underlying still well below $50…I’m content in waiting it out.

My best to you all.

-EM