Waking up this morning and looking at the emini-SP500 futures we could see that the market was set to open higher from a ramp that began at 0245 EST. But like many other times in recent weeks, this was nothing new and it was later met with selling during the trading hours. As stated in last night’s blog post, the two positions that I did have on in $AAPL and $IBM both saw news over the weekend plus 2 days of market closure. Both positions were short the Weekly options and long the Nov options creating positive theta and benefiting from the extra days the market was closed.
I knew that I had plans to go out for some outdoor adventure today at around 1030 EST as the local river was high and flowing and I wanted to get my money’s worth out of my kayaks. So I wanted to make sure that these two positions would be setup so that any volatility would not have me wanting to check my phone while trying to dodge debris in the river…overall just wanted peace of mind.
My main concern was in $AAPL and how this would react to their news. On the open it gapped down -9.78pts (-1.62%) and continued to see selling for the first 15 minutes. That marked the bottom for the day and remained in an uptrend throughout the day ultimately putting in a doji candle near the 200 SMA, which it did undercut on the selling. My plan in pre-market was to buy a Weekly put option which would flatten my T+0 line and if we saw the whoosh under the 200 SMA then my position would be just fine and there would not be cause for concern on loss of profits or even worse, making the position a loser. Below is my Risk Graph from last night’s blog:
Below you can see my order fill for the Weekly 570 put position and how it affected the Risk Profile (screenshot taken about 30 seconds after the fill):
The main difference in the Risk Profiles is the T+0 (white) line. By buying this put for $105 I protected my downside in case $AAPL saw some furious selling while I was away from the computer. It essentially created a flat line that reduced my delta’s but also reduced my theta, so I do not benefit as much from passage of time. But this is a bullish bias position and not so much an income position so theta was not as much as a concern as direction is. Also I see the downside protection much more valuable for the $105 cost and have no problem with the fact that it does reduce my upside profits by the cost of $105. This can be see in the 2 Risk Profiles at the +5% where the first one before the Weekly put addition was +$280 and now it is +$175 (shown as +$176.78). I do plan on adjusting this and rolling the short 580 call tomorrow or Friday when the next Weekly options become available.
As for my other position in $IBM, it saw favorable upside action that also ended up with a doji-type candle and it failed to hold above the 10EMA, which I believed it would get to based on prior analysis shown here. I’m liking the action here in $IBM and will adjust the position watching it around the +-1.50pts from the 195 price level. I plan on adding another Calendar in the direction of the move as I feel it is limited to 192 on the downside and the 198-200 area on the upside.
*Today’s Adventure in Swift Water*
I did state earlier that I did leave and do some kayaking down the river. With adjustable and light positions and all the rain received from Hurricane Sandy; it was hard not to pass up the opportunity to take the kayak down the river with the high water levels and accelerated current. Smart? Probably not the smartest thing with 40-degree weather and unknowns in the river such as logs and other debris that weren’t there before, but a fun opportunity that doesn’t come often. It was a skittish at times but luckily I did make it through without dumping the kayak. I put my phone in a Pelican Case and tracked it via the MyTracks app and the stats are below (including 10 minutes walking & 5 minutes stopped):
Total Distance: 10.84mi
Total Time: 2hr 5min
Avg Speed: 5.27 mph
Max Speed: 9.02 mph
The walking and stopped times would affect the speeds, but overall the current was fast as I did not oar froward but more controlled it. I didn’t go down a populated area as I live in a farm community but many fields were washed out and many looked liked lakes. So no devastating pictures like that of the cities that were involved. But I was able to take a short video shot and some pictures even though it is hard to tell the actual water level on them. It was hard to control the vessel and take video/pictures so they aren’t the best, damn current. Needless to say it was deeper than I would have thought even up on the land that was not part of the river as I would venture out and still not be able to touch my oar to the bottom. Needless to say I am glad I didn’t tip over and have to swim (life jacket was worn). But below is a short video clip (with audio) and some pictures below for you visual folk:
