The above were autofilled, closing out successful positions.
GG
-5 Sep 39 Calls @ .70
-5 Sep 35 Puts @ .77
FAX
+500 Shares @ 7.898
Fax was added to the dividend portfolio and pays a monthly dividend of .035, about 5% annually. This gives us additional exposure to the Australian economy and currency. These positions are legged into and we will be adding more shares as opportunities present.
GOLD
Instead of recycling all that trade surplus into US Treasuries as they have in the past, China continues to do one thing. BUY. Now we find out that China has bought non-US gold…68 Tons from Hong Kong, in the month of June. That makes 383 tons year to date. In 6 months, China has imported more gold than the official gold reserves of most countries, or combinations of countries. Year-to-date imports make it the 14th largest holder of gold in the world…more than even the International Monetary Fund who claim 2814 tons.
China never has given the world an accurate official update of their gold stash.
If they ever do, say goodbye to gold at $1500 an ounce.
Mostly rolled Weekly expiring options forward, or in some cases forward and up (or down). Closed out some spreads (MMM and TZA) because those positions were originally predicated on discerning a trend. We were absolutely correct, they were trending …in the opposite direction than we anticipated.
Rolled out and up. We now have the Cost per Share from 57.98 down to 54.36, via 36 option transactions. While it is good to show a profit, that is a lot of action to produce about $1,000, and $334.55 in commissions (Oh Happy Day in the Brokerage House).
It is sometimes tempting to let the shares be called at our call strike of $59, and book the nominal profit. However, another option is to roll the options forward and up. For example, today (if the markets were open) we could buy back the call option for .82, only slightly above what we received for it, and sell the Sep 60 call for 1.33. We gain $1 in strike and .51 in premium credits. If we were to also roll the 4 Weekly(7) 59 puts forward and down, we would have a debit of .51 and a credit of 1.32 = .81. That moves the goal posts and our CPS down to 52.23.
The reason it takes so many transactions to move the CPS is because volatility has dried up as has the premium. When volatility gets so low, it is sometimes more profitable to buy options than sell them.
Yet, if we bat the ball back and forth enough times to drive the Cost per Share down significantly, eventually we will reach meaningful dollars.
We rolled the calls forward and up one strike to 30 at a cost of .98. It looks like we will have to do that again next week as the stock closed at 31.91. In the meantime, we were not filled on the put side, so we are working the calls with no offset. We will use the nuclear defense next week to balance this one out.
TZA
+10 Weekly(2) 19 Puts @ 2.25
This closes out all positions in this ETF.
We continue to make progress by a number of metrics. The easiest is to look at the trading account Net Worth. As long as that moves upward progress is had.
We use what we have dubbed “Autofills”, which is the triggering of pre-set GTC orders to buy the options back when the majority of the premium is earned. We set those orders on all positions at the time we establish the position.
That way, any matured positions are automatically closed out at a profitable level.
The rest of the action was mostly re-positioning and rolling out and up (or down), trading increased time and strikes for premium. Put another way, we moved ourselves out of the way and off the track of speeding express trains.
Adjustments, or option repair strategies, always cost money. The fewer we have to do the better.
With only a few days to go until Gold expiration it is tempting to wait until expiration to collect ALL the premium, but that is the trader’s siren song we wrote about some postings ago. It is far better to cover the position at small and bag the vast majority of the premium AND WRITE ANOTHER STRANGLE, than to shoulder the risk over those last few more volatile days until expiration. Consequently, we are planning on gold going down on Monday…no ORDERING Gold to go down on Monday (Ha..how likely is that?)., which will trigger our Buy to Cover order and we will be out of this strangle a few days before expiration with a nice profit.
Then we will do it again. Practice makes perfect they say.
We didn’t like how the market was beginning to feel so we closed out some positions at a small loss, some at a profit, rolled some forward and improved the strike prices of others. In summary, we improved the portfolios risk parameters but, of course, gave up some premium collection.
GTLS
-4 Oct 60 Puts @ 1.30
TNA
+5 Sep 57 Puts @ 3.90
This takes us out of this ETF.
Market volatility is very low. Since we sell volatility in the form of fattened time premium finding good options to sell is difficult.
We use a software program that looks at the differential between Implied Volatility and Statistical Volatility, in all optioned US, European and Australian stocks, listing out the greatest differences and hence likely candidates for selling options. These days we only get a dozen or so candidates, many of which are basket cases and not suitable for our purposes, or which are rejected for other reasons.
We also use other proprietary algorithms designed to find over priced options as candidates to load into the option machine which, through Sister Theta, feeds on premium.
During these periods of low volatility we have to go out quite far to get the premium we want, as we can see above when we went out as far as December.
Traveling this week so will get into more detail next week.
GOLD
-5 Oct 1750 Calls @ 3.50
-5 Oct 1580 Puts @ 4.00
Total Credit $3,750
ROI: 14%
Initial Net Margin Required: $26,644
Maintenance Margin: $19,823
Days to Go: 28
Probability: 86.6%
Annual Yield: 184%
Daily Theta: $248.78
We closed the Gold strangle established Aug 7, on Aug 23rd, and kept $1,540 in premium.
Seven days ago, Front Month Gold broke out of its 1635 channel to the upside, but then started to settle back toward the 1650 level. Has resistance at 1635 now become support? Time will tell, but in the meantime, while Gold makes up its wandering mind, we established the 1580/1750 naked strangle.
Whenever a market doesn’t seem to want to go anyplace in particular, it is perfect for selling premium, as we did today.
FCX, EEM, SSO, FAX, GG
FROM THE LOG: Wednesday, August 15, 2012
FCX
+10 Wekly(3) 37 Calls @ .05
EEM
+5 Weekly(3) 41 Calls @ .05
SSO
+5 Weekly(3) 56 Puts @ .05
The above were autofilled, closing out successful positions.
GG
-5 Sep 39 Calls @ .70
-5 Sep 35 Puts @ .77
FAX
+500 Shares @ 7.898
Fax was added to the dividend portfolio and pays a monthly dividend of .035, about 5% annually. This gives us additional exposure to the Australian economy and currency. These positions are legged into and we will be adding more shares as opportunities present.
GOLD
Instead of recycling all that trade surplus into US Treasuries as they have in the past, China continues to do one thing. BUY. Now we find out that China has bought non-US gold…68 Tons from Hong Kong, in the month of June. That makes 383 tons year to date. In 6 months, China has imported more gold than the official gold reserves of most countries, or combinations of countries. Year-to-date imports make it the 14th largest holder of gold in the world…more than even the International Monetary Fund who claim 2814 tons.
China never has given the world an accurate official update of their gold stash.
If they ever do, say goodbye to gold at $1500 an ounce.
BE BLESSED
CHK, EEM, EWZ, FCX, JPM, SSO, SLW, TZA, TNA, MMM, AIG, CAT, XLE, SO
FROM THE LOG: Friday, August 17, 2012
Mostly rolled Weekly expiring options forward, or in some cases forward and up (or down). Closed out some spreads (MMM and TZA) because those positions were originally predicated on discerning a trend. We were absolutely correct, they were trending …in the opposite direction than we anticipated.
CHK
+10 Weekly(2) 19 Calls @.22
-10 Weekly(9) 19 Calls @ .44
+5 Weekly(2) 19 Calls @ .20
-5 Weekly(9) 19 Calls @ .50
-5 Weekly(8) 19 Calls @ .41
Difficult getting fills even at the bid. None of our put orders were filled
EEM
+5 Weekly(2) 40 Puts @ .04
Autofill
EWZ
+10 Weekly(2) 53 Calls @ 2.04
-10 Weekly(9) 55 Calls @ .74
-10 Weekly(8) 54 Puts @ .27
FCX
+10 Weekly(2) 36 Puts @ .68
-10 Weekly(9) 35 Puts @ .40
-10 Weekly(9) 35 Puts @ .31
JPM
+10 Weekly(2) 37 Calls @.29
-10 Weekly(9) 37 Calls @ .51
-10 Weekly(9) 37 Puts @ .43
SSO
+2 Weekly(2) 57 Calls @ 2.08
-2 Weekly(9) 59 Calls @ .75
-4 Weekly(8) 59 Puts @ .60
Rolled out and up. We now have the Cost per Share from 57.98 down to 54.36, via 36 option transactions. While it is good to show a profit, that is a lot of action to produce about $1,000, and $334.55 in commissions (Oh Happy Day in the Brokerage House).
It is sometimes tempting to let the shares be called at our call strike of $59, and book the nominal profit. However, another option is to roll the options forward and up. For example, today (if the markets were open) we could buy back the call option for .82, only slightly above what we received for it, and sell the Sep 60 call for 1.33. We gain $1 in strike and .51 in premium credits. If we were to also roll the 4 Weekly(7) 59 puts forward and down, we would have a debit of .51 and a credit of 1.32 = .81. That moves the goal posts and our CPS down to 52.23.
The reason it takes so many transactions to move the CPS is because volatility has dried up as has the premium. When volatility gets so low, it is sometimes more profitable to buy options than sell them.
Yet, if we bat the ball back and forth enough times to drive the Cost per Share down significantly, eventually we will reach meaningful dollars.
SLW
+9 Weekly(2) 29 Calls @ 2.58
-9 Weekly(9) 30 Calls @ 1.60
We rolled the calls forward and up one strike to 30 at a cost of .98. It looks like we will have to do that again next week as the stock closed at 31.91. In the meantime, we were not filled on the put side, so we are working the calls with no offset. We will use the nuclear defense next week to balance this one out.
TZA
+10 Weekly(2) 19 Puts @ 2.25
This closes out all positions in this ETF.
TNA
+5 Weekly(2) 52 Calls @ 2.84
-5 Weekly(9) 53 Calls @ 2.54
+5 Weekly(2) 51 Puts @ .10
-5 Weekly(9) 50 Puts @ .30
We adjusted both upward and downward in this ETF. If it will only stand still for a little while so we can get positioned to profit.
MMM
+20 Sep 92.5 Calls @ 1.51
-20 Sep 95 Calls @ .49
+20 Sep 85 Puts @ .21
-20 Sep 82.5 Puts @ .12
AIG
+5 Weekly(2) 32 Calls @ 2.66
-5 Weekly(9) 35 Calls @ .46
-10 Weekly(9) 34 Puts @ .35
CAT
+1 Weekly(2) 85 Calls @ 3.09
-1 Weekly 87.5 Calls @ 1.49
XLE
+5 Sep 70 Calls @ 3.50
SO
+10 Sep 48 Calls @ .05
Autofill
We continue to make progress by a number of metrics. The easiest is to look at the trading account Net Worth. As long as that moves upward progress is had.
BE BLESSED
ETP, SLW, TNA, FCX, CAT, JPM
FROM THE LOG: Tuesday, August 21, 2012
ETP
+4 Sep 45 Calls @ .15
SLW
+9 Weekly(5) 30 calls @ 2.65
TNA
+5 Weekly(4) 53 Calls @ 6.11
-5 Sep 57 Puts @ 2.56
+5 Aug 50 Puts @ .05 Autofill
FCX
+10 Weekly(4) 36 Calls @ 1.17
-8 Sep 37 Calls @ 1.21
CAT
+1 Weekly(4) 87.5 Call @ 4.52
-1 Sep 90 Call @ 3.43
JPM
+10 Aug 37 Puts @ .05 Autofill
We use what we have dubbed “Autofills”, which is the triggering of pre-set GTC orders to buy the options back when the majority of the premium is earned. We set those orders on all positions at the time we establish the position.
That way, any matured positions are automatically closed out at a profitable level.
The rest of the action was mostly re-positioning and rolling out and up (or down), trading increased time and strikes for premium. Put another way, we moved ourselves out of the way and off the track of speeding express trains.
Adjustments, or option repair strategies, always cost money. The fewer we have to do the better.
BE BLESSED
GOLD, GTLS, TNA, KO, AIG, GG, CHR, JPM, SSO, EWZ, ETP, SO, CLNE
FROM THE LOG: August 24, 2012
GOLD
Front Month
+5 Sep(7) 1525 Puts @ .10
Autofill.
With only a few days to go until Gold expiration it is tempting to wait until expiration to collect ALL the premium, but that is the trader’s siren song we wrote about some postings ago. It is far better to cover the position at small and bag the vast majority of the premium AND WRITE ANOTHER STRANGLE, than to shoulder the risk over those last few more volatile days until expiration. Consequently, we are planning on gold going down on Monday…no ORDERING Gold to go down on Monday (Ha..how likely is that?)., which will trigger our Buy to Cover order and we will be out of this strangle a few days before expiration with a nice profit.
Then we will do it again. Practice makes perfect they say.
We didn’t like how the market was beginning to feel so we closed out some positions at a small loss, some at a profit, rolled some forward and improved the strike prices of others. In summary, we improved the portfolios risk parameters but, of course, gave up some premium collection.
GTLS
-4 Oct 60 Puts @ 1.30
TNA
+5 Sep 57 Puts @ 3.90
This takes us out of this ETF.
KO
+5 Sep 38.75 Puts @ .70
AIG
+10 Weekly(2) 34 Puts @ .60
GG
+5 Sep 35 Puts @ .05
Autofill
+5 Sep 39 Calls @ 2.46
-5 Oct 38 Puts @ 1.06
CHR
+10 Weekly(2) 19 Calls @ .38
-JPM
+10 Weekly(2) 37 Calls @ .47
SSO
+2 Weekly(20 59 Calls @ .11
-2 Oct(58) 60 Calls @ 1.78
+4 Weekly(2) 59 Puts @ .84
EWZ
+10 Weekly(2) 55 Calls @ .09
+10 Weekly(2) 54 Puts @ .23
ETP
+10 Sep(30) 42.5 Puts @ .78
-10 Dec(121) 40 Puts @ 1.03
SO
+10 Sep(30)46 Puts @ .78
CLNE
+3 Sep(30) 15 Calls @ .10
Autofill
Market volatility is very low. Since we sell volatility in the form of fattened time premium finding good options to sell is difficult.
We use a software program that looks at the differential between Implied Volatility and Statistical Volatility, in all optioned US, European and Australian stocks, listing out the greatest differences and hence likely candidates for selling options. These days we only get a dozen or so candidates, many of which are basket cases and not suitable for our purposes, or which are rejected for other reasons.
We also use other proprietary algorithms designed to find over priced options as candidates to load into the option machine which, through Sister Theta, feeds on premium.
During these periods of low volatility we have to go out quite far to get the premium we want, as we can see above when we went out as far as December.
Traveling this week so will get into more detail next week.
BE BLESSED
MMR, SLW, KMP, GOLD
FROM THE LOG: Wednesday, August 29, 2012
Monday was a travel day. No transactions
MMR
+10 Sep 17 Calls @ .05
Autofill
SLW
-5 Oct 32 Puts @ 1.23
KMP
-3 Oct 80 Puts @ 1.00
GOLD
-5 Oct 1750 Calls @ 3.50
-5 Oct 1580 Puts @ 4.00
Total Credit $3,750
ROI: 14%
Initial Net Margin Required: $26,644
Maintenance Margin: $19,823
Days to Go: 28
Probability: 86.6%
Annual Yield: 184%
Daily Theta: $248.78
We closed the Gold strangle established Aug 7, on Aug 23rd, and kept $1,540 in premium.
Seven days ago, Front Month Gold broke out of its 1635 channel to the upside, but then started to settle back toward the 1650 level. Has resistance at 1635 now become support? Time will tell, but in the meantime, while Gold makes up its wandering mind, we established the 1580/1750 naked strangle.
Whenever a market doesn’t seem to want to go anyplace in particular, it is perfect for selling premium, as we did today.
BE BLESSED
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