Friday, November 20, 2015

Week Ending Nov 20

Wow, that week went fast! Heck it couldn't go fast enough.

This week was a meh, a wash basically , I was a victim of my own situation.

Strangles on DKS, TJX and TGT.

DKS and TGT were easy winners, With TJX I hit the right strike but the problem was that excess liquidity fell below 0 during intra day trading, hence had to close slowly at Ask.
Not funny but had to be done.

Next placed a GMCR strangle, 30/50 with the stock hovering at 40 at the time of trade.
Now GMCR had a IV of around 250%, pretty amazing for a coffee company, typically your FANG stocks or other info tech companies have such IVs.
Also this is a stock that till recently traded at lofty levels above 80 only to thunder down after disastrous earnings and guidance.

Interestingly guidance and earnings were positive this time around, propelling the stock +27%!
Again this could have been an easy winner but again margin came back to bite me in the back.
GMCR rose from 40 to 48 post and premarket, then dropped to 46.5 , this is when I should have sold and got out.
But I figured that 48 was probably resistance , but it was too soon, the drama was just getting started.
Suddenly GMCR rose to 50 , then 50.5 then easily crushed the 51 barrier and hit 51.5 before hitting resistance and retreating.
So the retreat commenced at 51.5 and not 48 as I had thought.

Ironically GMCR closed at around 48.75, almost exactly as I had anticipated.  Had I not had any margin issues, this would have been a blind winner.

So I had to slowly close out the positions 1 by 1 to prop up margin as and when it came close to 0.
Believe me brokerages are merciless when they liquidate, the algorithms have absolutely no mercy.

Anyways I ended by losing all the winnings of the week , i.e. around 600$.

Now in the bigger scheme of things, I think what I was able to accomplish is nothing less than spectacular, keeping margin intact, placing strategic winning bets only to be thwarted temporarily, all with just 4k left.
That temporary surge eroding the profit.

Later on Thursday I placed a firm bullish bet on WDAY.  There were lots of reasons for this, HR itself is slowly moving to the cloud, excellent earnings from CRM and other cloud offerings.
So I placed a combo trade, a strangle funding an OTM call less than the outer strike resulting in a $0.0 cost trade, unlimited downside risk (as is the case with all naked puts) and an upside max profit of  870$ on 3 contracts.

WDAY missed and loss was wider than anticipated.
Remarkably stock stayed put in regular trading hours, although it bounced around a bit during post and pre-market.
To take risk off the table I closed the short puts , and paid 45$ for that pleasure.

To end the week I placed an Iron Condor on PANW, paying around 65c per contract.
Now PANW announces Monday evening, and normally I would place this trade on Monday afternoon, but I wanted to take adv of some theta going into the week.
The trade was paying 65$ for 250$ held in margin , pretty decent if you ask me, contrast it with a naked strangle that would have taken almost 442$ while paying 63$ with unlimited risk.
As I write this I noticed the IC now pays 47c, so theta is already kicking in.

Just before close found another play with Monday earnings release in GME, so played a strangle on that.

Cash position, a precarious  4k (not including the 45$ for closing WDAY or the PANW IC trade)

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