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 🙂

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.

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 🙂

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.

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.