Thursday, March 28, 2013
It seems nothing short of voodoo will get this market to go down! In spite of a string of US economic data coming in worse than expected, including Unemployment Claims, Chicago PMI, Pending Home Sales, New Home Sales, CB Consumer Confidence, as well as the Richmond Manufacturing Index, the Super Bulls are still in control.
I truly think things are getting a little bit out of hand... Momentum is clearly slowing down and there have been more red candles than green candles on the SPY 10-day 15-minute chart for days on end. Someone's going to be left holding the bag and it better not be me again!
In all honesty, when will the semi-bears get to have some fun - when our puts expire?!
-0.62% Roth IRA
From MarketWatch: Buy-and-hold is still dead...
Wednesday, March 27, 2013
I fully expected my portfolio to end up being a Federally Declared Disaster Zone, but interestingly, some issues of SPY ended the day with evidence of naked call sellers and put buyers partaking in a party that may be about to call it a day, possibly in the name of profit-taking?
Perhaps I let my chance to average in pass me by, but if VIX should jump now, I may be able to finally take profit on my VXX and UVXY calls.
+0.01% Roth IRA
Tuesday, March 26, 2013
Am I the only semi-bear left in the house?
The S&P is as close to its all-time high as 9FM and I are to being a financial item this year. This time, we've got only a 6-10% difference of opinion going on, but he is the seller and I'm bidding on behalf of a client who buys the equivalent of at least 5,000 to 10,000 units per month of a $70+ SKU with the potential to purchase up to 50,000 units per month if the price is right. This could translate into real money for me, but alas, 9FM is as unwavering as ever. He's got two prices: take it or leave it.
I've been begging him since December to no avail... What's a diva to do but risk financial life and limb in the options market?
One of these days, today's reluctantly increasing call prices + sharply decreasing put prices will be replaced by downtrending call prices + violently increasing put prices as the naked call sellers jump in en masse and send the bullish put sellers into hiding... Will it be before my puts expire in April or will I get played again?
-2.11% SBA (embarrassing, I know... darn SPY 154 puts... LOL)
-0.44% Roth IRA
Monday, March 25, 2013
Who could have known that a single word from Dutch Minister of Finance, Jeroen Dijsselbloem, could usurp today's market action and turn things from green to red?
I've been crying wolf for a full month now with little results, but the call sellers seem to have stepped in for the time being. Are the tides finally starting to turn or is this going to become another disappointing false alarm for the semi-bears?
SPY calls ended the day in the red whilst some SPY puts called it a day in the green...
SPY 154 is a key level and if we break below it definitively, there will be sell to pay!
During the final few minutes of trading, I stopped myself from getting into TVIX, another VIX ETF, at $3.73...
-0.68% Roth IRA
P.S. A shout out to Barry from Drexel Hamilton who was just on Fast Money... he likes the VIX!!
Friday, March 22, 2013
Don't you wish I would! But I'm going to be stubborn for a while longer even though it's not making me any money... yet! What's up with the -1.09% drop in corn? And will there be potential for a head & shoulders pattern to form on the one-year DIA or SPY? If so, I want in on this trade!
It may seem my niche is losing money by buying puts, but in my case, it ends up being riskier for me to buy stocks at a potential top than to buy puts and calls.
I've spent a whole lot of time being backstabbed, so I'm determined to turn this around by doing something I haven't done for quite some time this weekend - backtesting. Fun!
-1.13% SBA (Don't ask what the VIX can do for you... ask what your portfolio might do without the VIX!)
+0.01% Roth IRA
-0.30% SENSEXy Maharajas
Thursday, March 21, 2013
I've been missing my little subsistence farm from Belgium. Living in NYC with very little window space, it's definitely difficult to do any meaningful gardening. That's why we have to pay $4.99 for one (repeat: one) pineapple at FreshDirect!
Anyway, I planted a tiny bit of chervil in January and was finally able to do a small harvest yesterday, turning the good cup full of fresh, organic chervil into a rather yummy bowl of chervil cream soup garnished with truffle butter.
The market indices, similarly, have been growing in a tiny pot since last October. Whilst Bernanke has been the ray of sunshine providing sustenance necessary for market stability, cash flowing into the market has been flatlining for some time. Is this a tempest in a teapot or will there be a drought oncoming? Is it now harvest time?
Nothing drives volatility more than uncertainty and if too many people have been buying market insurance in the form of puts, it'll be difficult to make money. I've been killed twice by attempting to swim with the big sharks - i.e., too much open interest. The big money guys who are able to sell naked calls will do so and come in to sell puts to boot when feeling especially bullish.
How will a tiny ForexDiva survive under these trading conditions? I've got to find my niche and will have to spend all weekend being agnostic with the market gods about this.
-0.34% Roth IRA
Total price of $3.40...
Wednesday, March 20, 2013
Despite FedEx earnings coming in weaker than expected, the market continued to rally as Bernanke provided fuel for the market bonfire. Everyday, new bears are hauled in, ready for spit roasting. One of these days, we'll bring in the pigs for slaughter!
My portfolio took another hit as lagging profits from my calls failed to offset losses on my puts. My VIX ETFs dropped like an atomic bomb, quickly entering graveyard territory.
Another failed coup d'etat, another market lesson learned. Had I used a different ratio, had I waited until a few minutes prior to Bernanke, things might have been different. The prospect of turning lead into gold continues to motivate me in spite of my short-term losses. Will I be able to turn my graveyard portfolio around and convert this into a sustainable money maker or will I end up with a lump of coal?
Cries of financial repatriation, dominated by table-pounding chants of 'We want our 401(k) money back,' appear to be the message conviction bulls are sending here and semi-bears beware.
+0.27% Roth IRA
He noticed it first:
"In determining the size, pace, and composition of its asset purchases, the Committee will continue to take appropriate account of the likely efficacy and costs of such purchases as well as the extent of progress toward its economic objectives."
Nearly even exchange...
I noticed puts are being sold again with losses on the put side being roughly twice as much as gains.
It looked like I needed $155 calls to counter this as 156.75 could be tested again...
Tuesday, March 19, 2013
And I haven't met my profit objective yet. I wasted quite a bit of time being a stubborn semi-bear. Will my newfound strategy lead me to a consistently profitable path? Last month, I made twice as much money in the last trading week than all my profits combined for the whole month. So it's pedal to the metal time!
Speaking of accelerating... (get it: accelerrrr rate)...
From Our Friends At the FT: More Bond Investors Bet On US Rate Rise...
I met a bit of headwind today as E*Trade placed my SBA on a 90-Day trading restriction - in part due to my margin call of yesterday. I'll be placing my trades on the Roth IRA for the next few days then!
In hindsight, if I had not sold at a small loss yesterday, that BAC position would have ended up being a profitable position today. But in all honesty, that position was too big for my appetite.
-0.07% Roth IRA
Bernanke, make us proud!
Total price = $3.88 per share...
Probably going to do one more complex options order today in anticipation of Bernanke and the whole Cypriot thing going on...
Total order = $6.24 per share
Monday, March 18, 2013
Is it support? Is it resistance? It's still unclear, but a definitive breakout in either direction will make me money. Perhaps we may even get both before 5 April 2013.
With the Cypriots in the headlines and Bernanke up on Wednesday, it's likely the next few days will continue to be volatile.
Dare I hope for beautiful profit taking in both directions?
The first relatively green day for me in a long time, but tonnes of puts expired for me on Saturday, including my XLF, XLK, and DIA puts, resulting in 100% losses. The major lesson I learned here is to aim for quicker asset reallocation. It's important for one's levels to remain in the money. With my DIA $139 puts, once $139 became support, that position was finished.
Congrats to the VIX and USD/JPY traders... major day today with +19.73% on the VIX and +1.06% on USD/JPY...
+1.58% SBA (41% cash)
-0.42% Roth IRA (68% cash)
7.6% premium for a chance to buy right before Santa arrives...
Placed this in my Roth IRA... Essentially I'm putting some money to work as this account is approximately 68% cash...
Yes, I'm ultra-conservative and trading like a granny!
The market will need to be pretty directional for me to make money on this, so hopefully, we'll either get a strong rally or a strong sell-off.
Essentially, one of these will need to triple or quadruple for it be worth doing this over the long haul as a double would simply mean breaking even...
Some unnecessary stupidity this morning, but what's new?
I got assigned on my BAC $12.50 calls. Somehow, I had overlooked them in my trading frenzy. I wrote in to E*Trade last Thursday asking them to place 'Do Not Exercise' requests on all expiring puts and calls. They didn't bother writing back and I ended up calling them Friday, at which point they said it was too late to do anything about them. I requested a credit for any resultant commissions, to which they agreed.
This morning, I woke up to a margin call after getting assigned at $12.57 per share on BAC. I quickly got out at $12.38, losing $0.19 per share pre-market.
Quick loss, but losses could end up being steeper judging by how Nikkei did overnight with a -2.57% drop...
Could this be the week that my SPY puts will come in handy?
Friday, March 15, 2013
Oooh yeahhhh! I got spit roasted the past two weeks, getting haircut after haircut, but it looks like the NTI and SD calls I sold might expire without assignment. Tonnes of my long puts are also expiring worthless - very disappointingly and somewhat painfully.
I vow to do better from now on... Happy Weekend, Market Buddies!
-0.68% Roth IRA
Thursday, March 14, 2013
All month, people have been buying calls and selling puts. All month, I've been buying puts and selling calls. This type of contrarian behaviour got me nowhere and my happy shiny profit taking has been stalled for far too long. I feel like the little girl in the sandbox who is the only one not on the swings and I want to play too! Swing me, market makers...
In a market where money is confidently flowing in, lack of volume and lack of clear fundamental economic drivers are no matter.
So though I may be sarcastically thinking: 'Wow, we created 236,000 jobs and lost 332,000 jobs this month. The economy must be doing really well,' other people are making money off of it.
Perception and not reality, right or wrong, is sometimes what matters most and this time, I missed out big time.
Thankfully, I've lost some money, but not my will to survive. So I'm not throwing in the towel yet...
-0.07% Roth IRA
4:1 ratio in favour of number of calls...
Loss of $0.76 on $157 puts, or 30%...
Bought $158 puts @ $2.46...
Additional $157 call executed @ $0.64...
Wednesday, March 13, 2013
I'm tired of being The Economiss! Is it time for me to get into some inverse VIX ETFs? My VXX and UVXY positions are sinking fast as I shake my head in disbelief at what trickle down economics can do to a portfolio. The calls I sold are still not profitable enough for me to close out the positions, though they do somewhat alleviate the financial pain.
What I don't get is this. Unemployment claims still greatly outnumber NFPs month after month, which means the economy is still shedding jobs on a net basis. ISM Manufacturing and Non-manufacturing PMI data was much better in 2011 than 2013 and yet, the market is still rallying like it's 2007 with consumer confidence quickly approaching pre-Lehman levels.
Volume is finally starting to pick up on the SPY just as a bearish divergence has started forming on the 10-day 15-minute chart, so will I be able to redeem myself this week?
-0.61% Roth IRA
Public Service Announcement: Fed To Change Timing of Policy Statement
Tuesday, March 12, 2013
It was so, so close! Are we on the edge of a precipitous market correction?
The DJIA closed a mere 2.77 points higher, equating to a negligible +0.02%. Meanwhile, the S&P and Nasdaq both closed in the red. Whilst trading volume is still low, S&P closing volume increased to 86.32% of its 10-day average. This is approximately 20% higher vs. daily volume over the past 3 to 4 days. Is the spike in volume prescient of an imminent market decline?
I tallied up open interest on SPY calls expiring 16 March 2013 from the 153 to 157 strike prices. 837,680 call contracts are still open, representing about 10% of outstanding SPY shares. On the put side, 380,696 contracts remain open. Will these calls get cooked over the next few days or will my fun as a semi-bear be cut 'short'? Bwahahahaha...
-0.01% Roth IRA
Monday, March 11, 2013
Boy I got my timing wrong, but though it may appear that my put buying killed me, in reality, it is actually my foray into VXX and UVXY that is doing the most damage to my portfolio. Thankfully, I sold some calls to hedge these positions and these calls are now slightly in the green. I will be looking to take profit on these over the next few days, but this will require the VIX to further knife downwards.
Whilst I had thoroughly enjoyed a week of beautiful profit-taking when the market was caught unaware, I'm now suffering the financial pain of selling too soon and buying too much insurance. Yet, there must be a way for me to have my cake and eat it too!
Thus far, it looks like the bulls are quickly slicing into my portfolio and I reckon they are finding it quite yummy...
On the verge of expiring worthless:
DIA Mar 16 '13 $139 Puts
XLF Mar 16 '13 $17 Puts
XLK Mar 16 '13 $29 Puts
Most Likely To Get Called:
NTI Mar 16 '13 $30 Calls
SD Mar 16 '13 $6 Calls
I cut my losses on an issue of $152 SPY puts, albeit a little too late - allocating the remaining capital to an above-the-market $157 SPY call + put complex options trade. I also got into some MS $23 calls and puts expiring at the end of the week. Will the market continue to knife upwards? Put sellers who got stuck with buying the SPY when the market topped out before Lehman must be laughing all the way to the bank right now just as I am getting the bandaids ready...
-1.95% SBA (47.25% cash)
+0.02% Roth IRA (54.87% cash)
I used a ratio of 1 call for every 2 puts on this trade, essentially investing 50% of allocated capital in each direction.
US banks are expected to announce dividend increases, share buybacks, and other return of capital to shareholder measures this week, so there should be plenty of price volatility following these announcements.
I thought about doing another DIA trade, but in comparison, MS calls and puts are a lot less expensive. Open interest in both calls and puts on the $23 strike price remains high, so the secondary market is active enough to ensure liquidity... Don't want to be trading against the market makers!
I used a ratio of 3 calls to 1 put, so if the market goes up some more, this will help to offset the losses from the puts.
I got out of the SPY $152 puts to reallocate the capital to this trade, which will hopefully give me a better chance of profiting.
P.S. SPY is trading at around 155.67, so the $157 strike is above current market pricing. Any puts that I've done below market pricing this month have fallen big time, so I'm switching gears to see if I will fare better with these higher strike prices.
Friday, March 8, 2013
This week, I fought tooth and nail for profits and had it not been for stringent money management, I could have lost my skirt days ago.
Something new I learned was to use calls to ride the upside after selling shares, thereby reducing capital allocation costs significantly.
Somehow, I ended the week with just a small dent to my full portfolio even though NFPs hit it out of the park and came out much better than expectations. Even as the market continues to hit fresh highs, I survived the week as a semi-bear and vow to redeem myself next week, albeit in some pain!
Almost all the puts I purchased are now worth just pennies on the dollar, but this diva is still not a believer that the rally is here to stay... No sireeee!
I want to experiment with putting half my money to work on the bull side and half my money to work on the bear side over the long term and will spend all weekend thinking about how to go about this.
-1.37% SBA (47.7% cash)
-0.34% Roth IRA (56.6% cash)
Happy weekend, bulls and bears!
Thursday, March 7, 2013
My trading might be bordering on schizophrenic, but I've got to position myself for future profits... I've only been able to bank about 20% of what I banked last week, so I added some inexpensive calls and some puts that are due to expire later in the month. I quite like being both long and short the market at once - unconventional as it may be.
Closing volumes continue to be anaemic, so with less and less money flowing into the market, it would be a challenge to sustain these levels:
SPY closing volume @ 53% of 10-day average
DIA closing volume @ 50% of 10-day average
The Dow Jones Transportation Index, often referred to as a leading indicator more bullishness ahead, closed in the red once again. WTI closed higher whilst Brent closed lower, indicating resistance.
It's anyone's guess whether I'm sounding the alarm too early, but straddling the market is oh so fun for now!
+0.45% Roth IRA
Exhaustion is becoming evident as volume takes a major dip and everyone seems to be cautiously bullish, yet perhaps too greedy to take profits.
Beware of betting the farm... the market can still twist some arms!
Wednesday, March 6, 2013
One would expect my portfolio to continue to get pummeled since I'm decidedly a semi-bear, but I've been having a sublime time today as both my SBA and my Roth IRA reversed course and started trending higher even as I took profits on my UVXY calls and my BAC shares. Closing volume continues to be extremely low: 60% of the 10-day average on the SPY and 57% of the 10-day average on the DIA. Topping it off, we've got the oft-cited Dow Jones Transportation Index closing in negative territory at -0.42%. Are we setting ourselves up for a made-for-television edition of Paper View: All Time Lies?
Before the conviction bulls jump on me, the market can admittedly tilt either way and I'm more or less positioned for action in either direction. Still, gains aren't real until you take profit, so relying on the paper view does no one any good. One of these days, profit-taking will prevail again, but I hope to the Good Lord that it'll be before my puts expire. Since I'm not yet a Level IV trader, I'm watching the options chains for signs of the more experienced naked call sellers to jump onboard.
US Trade Balance
US Unemployment Claims
US Bank Stress Test Results
US Non-Farm Payrolls
US Unemployment Rate
+0.76% Roth IRA
What I intend to do is play the volatility on the VIX a little better... I will keep this covered call on the back burner and should my UVXY shares allow me to take profit in the interim, I will do so and then buy back on the pullbacks...
The higher strike price provides me with a good margin of error...
Converted my long-standing BAC shares into cash and got into BAC calls at a fraction of the capital outlay...
Will decide what to do with this cash now...
Tuesday, March 5, 2013
My two-timing ways finally caught up to me and now my portfolios bear the embarrassing shame of the scarlet letter.
It looked so promising, but I apparently chose the wrong time to be a semi-bear as the DJIA soared to ecstatic new historic highs and closed firmly in the green...
I sold some VXX calls and bought some BAC calls, but my UVXY and VXX positions are still weighing my portfolio down.
Am I over-prepared for a correction that will never happen?
Don't box my portfolio in as a walking corpse just yet! BAC, JPM, MS, GS, BK, BRK.B, and many more from the financial sector all closed below their 50% daily Fib levels. Is price exhaustion right around the corner?
For now, a very shameful, mediocre, disastrous:
-0.38% Roth IRA
Monday, March 4, 2013
Trading SPY puts has recently become my favourite trade, but volume dried up on the $151 strike puts expiring on 16 March 2013, closing the day with literally zero volume. I had to look at other ETFs to trade and finally settled on the DIA. The setup wasn't perfect, but what I'm experimenting with is a play on what has killed me twice in the options market coupled with an observation that the upwards price push was a fait accompli with very little volume. Ask blocks were consistently larger than bid blocks on both DIA and SPY. Closing volume on DIA was 49% of its 10-day average whilst closing volume on SPY was 60% of its 10-day average. Are we pushing up against the wall of resistance?
I won't put on any more bearish bets as I've got enough hedges going on. If I continue, I'll soon be making hedges on your behalf. If the market turns against me, I still won't get gutted, but boy will I be disappointed!
The surprise of the day was NTI, which I have a covered call on. NTI spiked +7.97% today.
Unfortunately for my SBA:
+0.96% Roth IRA
You know puts are cheap when you can put on a hedge for your hedge at $0.10 per share...
Just in case...
Friday, March 1, 2013
... to buy SPY puts again after some beautiful profit-taking numerous times this week.
However, the main thing stopping me was that there was a lot more volume today with blocks of bidding at a time. Plus, SPY did manage to close above its daily 50% Fib level, which gave me pause. The market dynamics look a little bit different this time around.
I also still have the VXX short puts and the UVXY covered call going on with a bunch of XLF puts on the back burner.
Let's see if I get assigned on the VXX...
For now, I'm happy that I'll be able to sleep this weekend knowing that I've still got the bi-directionality going for me:
-0.21% Roth IRA