Friday, November 13, 2015

Week Ending Nov 14

Started Monday off with a slew of trades, short strangles on W and RAX, skewed slightly on W. Played a Bull Put on XOM.
Next day it was clear the trades were winners, but exiting was hard.
Played 23/32 for RAX, 35/55 and 36/52 for W, which was paying fantastic premium.
Also played 81.5/80 XOM Bull put.

I was able to exit the winning sides easily, but W puts and RAX call were just not closing.
Most likely extrinsic picked up and volatility remained. Anyways Tuesday was a dull day , no premium just small buy back plays.
Finally exited all positions except XOM on Wednesday for almost max profit.

On Wednesday I entered a short strangle on VIAB, got in a bit earlier in the day as the limit order filled at 75c, later IV peaked and the combo rose to 90.
Thursday I quickly closed VIAB, which interestingly beat estimates but missed on revenues. So this is exactly the reason why long option holders cannot win consistently, there are just too many factors to consider, and even when most are met, there's still no guarantee that you'll get the direction right.
Also on Thursday I played FOSL which reports this evening. I had placed the trade early on but it never filled, looks like a routing problem with SMART. Later in the day I switched to CBOE and luckily was able to alter the strikes as FOSL was fading later in the day.
I added an extra 1$ downside protection after the M fiasco which I luckily missed.

Now the XOM vertical is clearly losing, I've closed 2/5 contracts for a combined loss of 100$. Both legs are in the money, wanted to minimize exposure either if XOM recovers tomorrow or loses further.

On Friday all hell broke lose, sad to say I had to close FOSL for almost 7$ when I sold it for only 35c, a colossal 3k loss. There was nothing much I could do, I was lucky to miss M, should have , could have and what not, but at the end of the day if anything I did think of playing a 1:1:1 play where I would play a Long Call between the Short strangle strikes. In other words -43P + 45P -58C. I didnt and here I am down 3k.

Im closing the platform for the day, just too much happening, will start again with a clear mind on Monday.
Cash position 4381$.
It took me 3 weeks to make back 3k and just 1 day to lose it.

Lesson Learned: 
On Monday I placed a short strangle limit for -0.85c. What I typically do is I place a BUY order for 5 contracts with a -ve price for short strangles.
What apparently happened is that the system saw it as a SELL order for -0.85 therefore looking for the best +ve price which in this case was the sum of the Bids i.e. 77c , thus I received a credit for 77c per contract when my limit was 85c.

The mistake I made was to SELL a strangle with a -ve price rather than BUY a strangle with a -ve price
This is what  happened:

This is what I usually do

Luckily this trade was an easy winner, but note to self, place trades the same way all the time to minimize confusion.

Sell -ve price is a Credit but at Bid.
Buy -ve price is a Credit at Limit.