Trade Log โ€“ Week ending Jan 25 2020

I personally love it when the market gets a little crazy! It’s fun to trade things up and down and make some money in the process.

Tuesday morning I was able to load up on some new positions, a 20/10 “big lizard” on NFLX for a $12.36/contract credit with no upside risk (that was a nice earnings play) as well as a few longer term iron condors on IWM, IBM and XBI.

Given the market has been on a relentless tear north, I did open a few directional debit spreads on PLNT, WDAY and DE along with a few credit spreads on CRWD, X, INTC and TSLA. The PLNT and WDAY positions I closed this week for a loser and winner respectively.

TSLA Chart

Call me crazy, but I just cannot see how TSLA (above) doesn’t just come crashing back to earth. It’s way out in front of every expected move and is jittering around like crazy over the last week or two. This appears to be the classic short squeeze chart; however the “settled” (if a 10% range is settled to you…) pricing over the last three days does give me a bit of pause as it is starting to look a touch more orderly. I’m carrying a lot of negative delta on this guy and am planning to hold through earnings if it doesn’t drop before then. I’ve got a couple weeks after earnings for the positions to come back in if I’m wrong… and IV crush to help out (I hope).

INTC Chart

Speaking of being totally wrong. I did try to get cute with INTC earnings and opened up a couple of positions – one of which I had to close for about 1/2 of max loss. I sold an IC outside of the expected move on this weeks’ weekly options (1 DTE when opened) and when INTC launched up after earnings, it was time to get out quickly before things got really ugly at expiration! I plan to ride out the remaining spreads that are in Feb and March cycles as the market moves around. I’ve got one with short strikes at 67.5 calls and 58 puts and another that is just a short the 75 calls. Hopefully the market will settle a bit at my 67.5 calls will be out of the money as we move into the month of Feb. The IV crush and slight market contraction early Friday morning was a huge help on the quickie condor – It was a 1 point wide 67/68 call 60/59 put IC for $0.29 with 1 DTE. I ended up getting out for a total of $0.69 per contract and left the long 59 put to expire worthless.

Given the little bit of market swoon we had on Friday, some open orders I had on filled and I was able to load up a few more positions in EEM, XLV, FXI and TSLA.

As the week closes, I’ve got about 19 tickers with open positions on which is not too bad of a mix. Next week I’m hoping we see some serious 2 sided action and I can start getting a few more things going – my watch list is long and ready to action on ๐Ÿ™‚

SPX Chart

While I was cranky about it last week – persistence in holding futures contracts paid off nicely this week (yes, I held the short contracts all week long). I was able to get out for a reasonable profit on Friday and then got short again just after the market closed over the weekend. Right now, that position has a nice little profit and I’m expecting with the Coronavirus concerns that we should see more market weakness into next week.

Looking at the chart of the SPX, it looks ready to just roll over. At a minimum I’d expect it to come back down to 3250, and quite frankly 3200 isn’t too far out of the question to close the gap from mid December. That’s only 3% away and with the virus concerns and maybe an earnings miss or two from the big players, it’s very possible. With AAPL on the 28th, TSLA the 29th and GOOG on the 3rd of Feb we have a couple of heavy hitters coming in soon. Not to mention V, MA, MCD, SBUX, AMD, FB, MSFT and AMZN… Yeah, it’s kind of a dense week :).

My little SPX experiment was also successful each day this week. I’m getting far more comfortable with how it’s working and plan to use the returns it is generating to scale up throughout the year. Right now I’m planning to scale with contract sizes; however I may widen out the spreads vs. more contracts and play the 2 different versions in different accounts to see the results.

Tools I like – Tastyworks Brokerage

Tastyworks has quickly become my go to brokerage. If you are an active options trader, it’s my personal opinion that you are missing out if you aren’t using Tastyworks.

Tastyworks is from the same team that started ThinkOrSwim before TD purchased it. These guys know options inside and out and have built some of the absolute best trading platforms for the retail trader over the years.

If you are interested in using Tastyworks here is my referral link. If you choose to sign up, I get a “credit” on their referral program. Unfortunately other than having a really great broker – there isn’t anything special in it for you ๐Ÿ™‚

When you first open it up, tastyworks can be a little difficult to figure out. They don’t offer paper trading or anything like that, so the learning curve can be a little awkward out of the gate – however once you get the hang of it you’ll wonder how you ever traded without this type of a setup!

I’ve used ThinkOrSwim for a long time and as soon as Tastyworks charting gets up to the capabilities I have in TOS, it’s very possible I’ll be closing those accounts down and moving everything to Tastyworks.

So, when it comes to a brokerage – let’s talk brass tacks.

Fees: Tastyworks has been a low price leader for a long time. Tom Sosnoff and Scott Sheridan have been at this active options trading thing for a long time and they understand it. In fact, they offer max commissions for larger lot traders which is basically awesome. All of the details are available on the Tastyworks site: https://tastyworks.com/pricing.

Price Improvement

Fills: Well, let’s just say I see price improvement consistently. Here is a quick little example on a spread I put in the market for EXPE last week. I was filled for a $0.03 larger credit than my limit. Fills are quick and the commission structure of $0 fees (for the most part) to close is really awesome.

Tech: The platform is really, really good. I’m going to put a couple of screenshots up from my platform. It’s developed for options traders, and it really shines when trading options! It’s kind of awkward for stocks and the active trader setup for futures is only so/so today. I’m confident the team will continue to only improve it!

Tastyworks overview

Tastyworks is really setup to be in 3 “fixed” panes. The pane on the left is your watch lists – it’s always there. The middle “bigger” pane is where the action is, and the right side is where you have lots of options for analysis, activity and all the good stuff.

That middle panel is where things get fun! (I’m not actually going to do this trade, it’s an awful example but easy to show why the platform is so cool)

By simply clicking on the Jan 31 2020 weekly option chain, the chain just opens up.

Trade table view - tastyworks

Then you can ether really simply just click on the bid and asks to put up a spread or complex position, or use the little “strategy selector” to put on a trade. The legs can be dragged and dropped and it’s super intuitive.

If you want to see what the risk looks like, then just click the “curve” button up top and then you see something like this.

Trade curve view - tastyworks

I love this view! (I hate trading from it, but love to look at) This butterfly makes money if TSLA flies off the handle in either direction after earnings. Looking at the chart it’s totally obvious that it makes some money below ~552.5 and above ~567.5, you start to loose a bunch more as you come closer to the long puts at 560. I’ve got a bunch of extra lines turned on to show profit potential and delta positions over time – it’s crazy powerful!

I’ll likely do some more posts on how to trade with Tastyworks over time. Needless to say – I’m a huge fan and canโ€™t recommend it enough. If you donโ€™t have a great brokerage โ€“ Sign up with Tastyworks from my link. If you donโ€™t want to use that link โ€“ no problem โ€“ go to http://www.tastyworks.com and simply check it out!

Trade Log – Week ending Jan 18 2020

SPX Chart
SPY’s on a tear

What a crazy week! The market continues to simply melt upwards with very little downward pressure. The S&P 500 found basically zero resistance this week and has found fresh new highs.

The 6 month chart of the SPX to the right shows that it’s stubbornly holding that channel and rocketing higher. I’ve been (and remain) short /ES many times week – these trades have very clearly reminded me of the unrelenting pressure to the upside. (These have been my downfall this week. Costing me roughly 1/3 of the profits I took in on other trades)

Trading action this week is looking more and more like a top to me. I don’t know if it’ll all fizzle out in 2-3 weeks, or 2-3 years give the current macro economic climate (unemployment, interest rates, fed accommodations etc…) however it can’t go on forever.

TSLA Chart

Speaking of things that can’t go on forever… How about TSLA this week? Wow! It has been on a parabolic move to the upside, a classic short squeeze. This was a great candidate for a very profitable put credit spread, and now I’m short a call spread to pull some more profit out as it settles somewhere lower before earnings.

TSLA wasn’t the only parabolic mover in this FOMO frenzy. I also took some nice profits in BYND this week with a debit call spread and then selling some premium on very short dated options prior to earnings. Both of those turned out nicely!

I was able to clear some positions up this week as well. The TLRY puts from last week came in for a 50% profit, so did the XLE Iron control I put on. I’ll look for chances to reload both of those next week if possible. It was fun to have my watch buzz over and over throughout the day as orders filled for profits – not all weeks are like that :).

When I open a trade, I also ensure that a profit taking GTC order is placed. Given that I can’t sit at my computer screen and trade all day, I use these to ensure that if the market moves while I’m at work (which is most of the trading day) I don’t miss the opportunity to take profits.

I did have a couple of losers (both I tried to play on the bearish side). Over the weekend I thought I saw a couple of nice setup’s in TWTR and MSFT for downside moves. TWTR started the week out nicely moving down, and then simply turn around and I closed out for a loser. MSFT was pretty much just a bad read; going back to look at the charts today I’m not even sure what I saw… Oh well, closed for a loss. MSFT was opened at $0.57 a contract and closed for a loss at $0.46; TWTR was opened at $0.33 and closed for a loss at $0.25.

On trades like MSFT and TWTR, I’ll get my GTC order placed and let the trades work themselves out. Every night, I take a quick look to see if things are moving as I would expect. If something doesn’t do what I’m hoping on a short term debit spread like these, I’m quick to cut my losses short and exit the next morning; usually an hour or so into the trading day. This lets the market settle down a touch and then I can manage an exit.

The rest of the week was full of good guys or trades that are working. I opened new credit spreads in TLT, EEM, GLD, IWM, SMH, XLV and FXI. Most of those appear to be working nicely for now. I’ll take them all off with around 50% profit; hopefully in the next couple of weeks. With volatility so low, it’s slim picking on these trades. I’ve been doing 16ish delta iron condors with the long wings at an appropriate risk level. I just can’t bring myself do straddles or iron fly’s with the premium so low right now.

For individual equities I’m playing BA, EXPE, GM, IBM, ROKU and TSLA this weekend into the earnings season. Most of these are roughly delta neutral positions except TSLA – that’s a flat out bearish play ๐Ÿ™‚

I do have one long credit spread on in GDX right now; I opened it this morning and may take if off in the next 2 weeks if it doesn’t pan out.

This week was somewhere around 2.5% in total portfolio gains which wasn’t too shabby given that I’m currently short delta in all accounts while the market melts up.

The SPX selling strategy I’m testing this year was also nicely profitable this week. Funny enough, I didn’t sell the put sides of the strategy which cost me some premium this week because of my downside bias… and the only sides that ever had anything even approach was the call side. Follow the plan Ryan, follow the plan.

Stay safe in this market! It’s going to get crazy soon. I keep buying more VIX hedges, with another May spread this week. VIX volatility is starting to creep up, hopefully that means we get some real movements shortly.

Tools I Like – YNAB

You Need a Budget, better known as YNAB is my family’s go to budget application. My wife and I use YNAB for all of our daily spend management and basic management of financial events.

If you don’t have a budget today, I cannot stress enough the importance of having one. It is one of the most basic and fundamental things that you need for your financial well being.

If you are interested in using YNAB here is my referral link. If you choose to sign up, you will get a free month, and so do I. It’s $60 a year if you pay annually and in my opinion worth every penny of it.

My wife and I have lived on a budget for the better part of the last decade. We’ve done the cash only envelope method, we’ve done the Excel method, we’ve tried other tools and finally landed on YNAB and the great system that it uses for budgeting.

My experience with a budget tells me one this – it’ll change. The ability to response quickly is the massive strength of YNAB – you have total flexility and control.

In the corporate world, we typically set annual budgets and work to achieve them throughout the year. While we typically don’t change the budget, we almost always adapt during the year based upon changes in our business. At home – the exact same thing happens… unfortunately I don’t have a finance department to help me out in managing all the risks/opportunities, gaps to plan, year to date and year-to-go math ๐Ÿ™‚

YNAB does all that without needing an MBA or finance degree and makes it super simple to track what you actually have, and where you plan to use it. YNAB isn’t a wonderful planning tool – it is a wonderful manage what you have and live within your means tool.

The whole principal of the thing is that you budget what you have in the bank. You don’t budget what you think you will get. This is a simple transition for those that have been working with envelopes and cash, but a total mind blown moment for those that have never thought this way.

To get started, you simple put in your actual balances from your bank accounts and credit cards. You can link them and pull transactions if you’d like – personally that’s how I do it.

Once you’ve got your actual cash and debt loaded into the tool you budget what is left over and actually available. You have to make a choice – are you going to carry credit card float (ie: pay less that the statement balance)? Or, are you going to get your finance house in order and pay those things off ASAP.

When you budget what you have, you very quickly find out where your money has been going that you didn’t realize. It’s funny to me how much we spend when we aren’t watching where it really is going….

Ultimately with YNAB, you should find yourself getting to at least one month in advance for your budget. For our house, we have a bunch of “sinking funds” that carry balances for major purchases or emergency funds or what not. When I get paid each month, the cash that hits my bank account goes into the next months budget.

That means, that at the start of every month all of the dollars we plan to spend that month are already sitting in our bank accounts. We may purchase on a credit card and then pay it off, but the cash is in the bank. This method of managing allows you to neatly plan for any type of event: Christmas (put aside some money each month), for a new car, vacation, home improvement project – whatever! When you budget those dollars into the month, you start to build up balances over time that can be used when needed and planned.

YNAB claims that “On average, new budgeters save $600 by month two and more than $6,000 their first year” and I believe it. Having visibility to our spending has helped my family tremendously, and I’ve helped many friends and family get setup on YNAB with great results!

Anyhow – I can’t recommend it enough. If you don’t have a budget – YOU NEED A BUDGET! So why not get started today and here is my referral link. If you don’t want to use that link – no problem – go to http://youneedabudget.com and simply check it out!

Trade Log – Week ending Jan 11 2020

What a week this has been! The massive change of events and apparent de-escalation with Iran is great news! The market is continues to just chug ahead higher relentlessly. Friday’s action at least gave back a little bit, but wow – it’s been almost straight up for 3 months now in the SPX . They chart below is how I’ve been looking at it, mostly respecting this little channel and following the predicted vols pretty darn nicely.

SPX Chart

This week I traded mostly SPX options and have been short the futures. My Monday SPX trade was a train wreck – due to user error. I posted the order for the wrong strikes and the market got away from me very quickly before I noticed the error; that one resulted in a unnecessary $1.02/contract loss. Even with that foolish mistake, I’m up about 60% in the past 45 days playing this strategy. I’ll keep using it for the rest of the year and see how it pans out; backtesting has been positive so it’s time to test future with real money.

I was hoping to get into some earnings calendars and maybe a few directional plays this week however the week got away from me. Being back in the office after the Christmas break brought a fairly busy week. The time I had hoped to trade in the mornings right after the open was scooped up with some work obligations.

This weekend I plan to see what may be out there that is interesting, and hopefully get into the of these positions starting next week. The market doesn’t seem much different (although higher) today than it did on Monday ๐Ÿ™‚

I was looking at SNAP, MSFT, UBER, GM, AAPL, ROKU and BA as possible targets this week. Let’s see what the weekend hunting brings.

Tools I Like – Upcoming Series

I’m going to do a few posts on tools that I use on a daily basis for different financial parts of our life. I’ll talk about why I like them, and why you may be interested in using them as well. Before you decide – I’d strongly suggest you do your own due diligence.

I’ll include a referral link for each of these and make it clear how we both may benefit if you use my referral link. If you choose not to use my link, no problem at all.

My current plan is to have the series focus on the following 4 tools:

  • YNAB – a great budgeting tool
  • Sofi Money – a great checking/savings hybrid account
  • Sofi Invest – passive low/no-fee and active stock management
  • Tastyworks – one of the main trading platforms I use; amazing for options trading

Each of these are tools that I use just about every day in my personal finances and trading. These tools are likely not for everyone; so please don’t just take my word for it.

If you happen to stumble across this series and have a great financial planning tool suggestion, I’d love to hear it. I use a host of different ones on and off again, however I’ve not yet found one I truly find “sticky” for me… other than Excel.

Anyhow – I’ll get started on these posts over the next few days and hope to have all of them posted by the end of this month.

Who, what and why?

As we kick off another new year, I’ve been thinking about things that I should tweak about my life. One of the things that has been missing for a while is a simple discipline of journaling and sharing some of those thoughts.

I don’t have any major or grandiose plans for this website; rather I plan to share about things I find interesting and hopefully learn in the process of it all.

I expect to write on topics relating to current events, personal finance, markets, religion, politics, parenting and other things that are important to me. Hopefully if you happen to stumble across this little blog, you’ll find the commentary interesting.

It’s very likely that not everyone will agree my my views or opinions; and that’s perfectly fine – in fact the world would be a super boring place if everyone was just like me and had all the same opinions, beliefs and passions.

Anyhow; I hope you find the content that starts to get published interesting. I’m not planning to spend a ton of time everyday on the blog, or managing comments – so please forgive me if my updates are not very timely.

Weekly Trade Log – Week ending Jan 4 2020

Given the holiday week, there were not a ton of trades to get into this week. The markets seemed to generally continue their relentless move upwards from 2019 with Friday providing a tiny bit of downward pressure.

It’ll be interesting to see what impact, if any, the current issues in Iraq/Iran have on the markets. Oil was up a bit; however general sentiment seems very bullish still.

Tom Preston over at Tastytrade has a really nice piece he published on Jan 2nd talking about implied volatility and the market ranges from mid 2019 to today; then showing where the current IV suggests we may be by June of 2020.

Quoting his post for possible pricing of 5 major ETF’s in six months (June 2020) based upon current market volatility and pricing:

SPY     68% prob landing between $294 and $347

QQQ    68% prob landing between $186 and $239

IWM    68% prob landing between $147 and $186

TLT     68% prob landing between $123 and $147

VIX      68% prob landing above $10.75

It’ll be interesting to see where this all plays out this year. I’d love to see some serious volatility expansion as it’s felt like thin pickings for trades recently.

Speaking of trades… this week I opened up a few positions specifically in SPX, XBI, TLT, XLE, EEM and TLRY, XOP all for the February options cycle.

These are all pretty much the same type of trade. Reasonable volatility in the underlying, respectable (in today’s markets) IV rank 20-40ish for most of these.

All but the TLRY and XOP positions are delta neutral positions, mostly built using iron condors; generally around the 33-16 delta strikes. I’m targeting a 50% profit target on initial credit for each of them – they are all defined risk positions.

TLRY is a very simple put credit spread – a generally bullish position. I am short the 12.5 put and long the 10’s for a credit of 0.36 per contract. With TLRY trading around 16, this is basically a short 16 delta put spread that has an approximately 78% probability of profit and 86% probability of hitting 50% target. If this plays out as I am anticipating, it’ll return a tidy 16% return on capital in a matter of a couple of weeks. Risk on each contract is very small at $216/contract.

XOP is exactly the flip of TLRY. It’s a simple call credit spread – a bearish position. Given the Iraq/Iran situation, I’m taking a bearish position for the next few weeks. It’s pretty far away as a 16 delta short strike with a >90% probability at 50%. I didn’t take in a huge credit on this one @ 0.16/contract for a $2 wide spread. I may put the put side on if volatility increases over the next week or so.

All of my SPX trades have been VERY short term lately; I expect this will continue for a while. If I chose to play the broad US equities for a normal position it’ll likely happen in SPY.

Anyhow, I closed a few things for profits this week and sold off some loser stocks from 2019 to realize some taxable losses… I’m still kicking myself for buying BYND at 85 and not selling when it got north of 200 – pigs get slaughtered. I also bought WORK right after the IPO, both of those had some sizable losses I can use to offset some gains for 2019.

Welcome!

Welcome to my little corner of the Internet. I appreciate that you’ve taken the time to come here and read the ramblings that are posted.

Covered is a blog that I’ve been playing with on and off for the last 2 decades or so. ย It’s been a wedding photo log, a trading journal and a few other things. ย Honestly, for the last 6-7 years I’ve let it sort of sit stagnant as life has taken my focus in may other directions. ย In mid 2018, the old stuff was backed up; going forward the blog will take a new direction.

The intent of this blog is to share many of the things I’ve learned over the years as a business and technology executive as well as to share thoughts on current topics/events/technology.

If you happen to stumble across my little corner of the internet and would like my thoughts on a topic, please let me know. ย I’d love to have a dialog and learn from each other.