The action isn’t good. Oil has downticked a little — but still not even down 1%. I sold my GLBS day trade for a 5% loss, sold COUP for a 9% loss and am now staring into an abyss of positions bleeding out. Do I simply wait for them to all be down 10% and stop out or sell them now?
My hedges are TLT, TMF and NUGT — but gold is acting poorly today. I have no shorts and what if, what if, what if the market goes down.
What if?
I’m still of the belief, perhaps foolishly, that is junk bonds aren’t moving, neither should my long bias. I’ve been tossed into the blender on this line of thinking before, so I’m not recalcitrant in the idea that everything has to line up perfectly before I execute a trade. I’m not fucking autistic.
For now, bleeding out with panache, Quant down 1.6% for the session.
If you enjoy the content at iBankCoin, please follow us on Twitter
Shit looked great yesterday morning…
TMF, SPY puts, FAZ taking the sting out of my SPY calls and NUGT. Down .6%.
Like I said a few days ago. Choppy AF.
The key, besides being right, is staying in the game.
Market feels rudderless.
This is the thing. Of course, in a rudderlsess ship, why not don a lifevest (Treasuries)?
That’s the conventional move. And it’s a fine position …as long as one is aware that The Ark is an inflatable – not a wooden boat.
Speaking from ignorance, I’d guess that the manipulators must eventually engineer a default …though probably a soft one.
Fly’s point about HYG is also noteworthy. People are flocking to Treasuries for safety but still holding HYG? Doesn’t make sense.
Either the Treasury move is just some algos heading for a target to bounce from, or HYG is ripe for shorting.
Just sold some calls and bought more of the long dated puts I’ve been wanting.
OK, I have about 2/3 of the Dec 2021 puts I had hoped to put off buying and added slightly to my calls. I intend to endure pain in the puts as profit may be a ways off, but as a hedge it is also worthwhile.
Do you have spread approval in your trading account? Why not sell some lower-strike puts to reduce the slow theta (time) bleed of your long puts?
For options, I’ve found that holding options with a lot of time value is usually a losing play. So I’d advise either
1) long options with < 1 month until expiration if you are trading based on Technicals (ie, charts) and expect a move soon,
2) spreads (buying one option, selling another) if you are basing your trade on Fundamentals/macroeconomics
Options are a zero-sum game. Banks and brokers sell optiosn, retail traders buy them. Who do you think is more likely to profit?
I agree, the sellers of options are at an advantage.
I have nearly a full load here, 6% of portfolio.
I do not take options trades lightly. But my trading account is an IRA. My wife and I funded our IRAs and after I retired I dumped my annuity into it. Other money went into real estate.
Kinda sucks sometimes that I can’t write options or use margin, but there are no taxes or paperwork either.
Almost every broker will allow you to write Covered Calls (assuming you meet their approval standards), even in an IRA. Most will allow you to buy calls and puts as well. Here are the option trading levels used by most brokers:
1) write covered calls
2) buy calls and puts
3) buy most spreads
4) everything
Level 3 is the highest allowed in IRAs, due to federal/SEC/FINRA regulations.
Here’s a “trick” you can use to buy trade spreads if you have Level 2 approval, but not Level 3.
terminology:
long 100 strike call, qty 1: 100c
short 100 strike put, qty 2: -2x 100p
long stock, qty 200: 2x stock
basic option profit identities:
100c = stock + 100p
100c – stock = 100p
Level 2 spread trick
verical spread (only allowed in level 3): 100c – 120c
= (stock + 100p) – 120c
= (stock – 120c) + 100p
= covererd call (allowed in level 1) + long put (allowed in level 2)
If you want a long vertical put spread: 120p – 100p
= 120p – (100c – stock)
= 120p + (stock – 100c)
= long put + covered call
The downside of this vs direct spreads is the higher cash outlays (needed to buy 100 shares of stock). In other words, the (long put + covered call) has the identical dollar profit (or loss) of the spread, but lower leverage.
Yep…most of that requires too much cash investment. I can’t do margin. What I’d like to do is sell puts. Who wouldn’t like to buy SPY at 170? I could get five bucks for the priviledge.
You can probably get your broker to upgrade your account to sell “cash-secured puts.. In other words, you could sell a $170 SPY put by putting aside $17,000. You get paid $500 for that. That’s about 3% interest.
So lets say you wanted to buy 3 spreads of SPY January 2021, 300/270 strikes
Straight spreads:
january 2021, $300 stirke put: ~$32
january 2021, $270 strike put: ~$20
Cost of 3 spreads = 3x 100*($32 – $20) = $3600
SPY stock: $280
SPY january 2021, $270 call: $30
Assumming 30% margin requirement on the stock
Cost = 0.30 * 300 * $280 – 3x (100 *$30) + 3x (100* $32) = $25,800
So both positions would have the same profit and loss, but different cash outlays (you can see in the second case how your $300 put and stock cancel each other out if SPY drops below the $270 call strike).
that is 3 long *vertical put* spreads
Down about 1% on my options presently. I need a rally and, at some point, a bear.
Why doesn’t anyone ever hedge with XLU?
IMO it goes up and down along with everything else, only slower. When I hedge I want something to pull my stupid ass out of the ditch.
It’s a useful hedge, but imperfect. If SPY goes down 20%, XLU will lose money (even when you factor in dividends). However, Treasuires, puts, and inverse ETFS will gain.
My biggest problem is NUGT at the moment. Glad I took some off a few days ago (25%) but today it is still a pain in the ass. That’s gold for ya. Should go higher, unless people are smarter than they used to be.
Just checked. Down .3%. Up 4% on NUGT. Panic? Nah.
80% of my losses today is in NUGT. But I’m still up 4% in it.
What a goofy day. New normal. I’ve seen enough. Time for a margarita.