LOL!'s Market Timing Newsletter

[utrecht]

utrecht, looks like we both lose today. I think Gilead will be down under $100 and your puts may get assigned to you on SPY. Not sure what payroll numbers would have made an up market..maybe none. Should have shorted Netflix

My puts wont get assigned. If SPY is below 192.5 near the close (its at 193.30 as I type this so I feel pretty good), I will buy them back. Even if I buy them back it wont be at a loss unless we sink under 191.35. Thats another 1% decline from here.

 

[Fermion]

This feels like one of those days where the market is going to either surge back green or fall off a cliff. The 3 day weekend probably means fall off a cliff. I may try to exit my position during a mid morning pop if we get one.

 

[Fermion]

Cool, sold half my position for break even, which is better than I thought I would get away with. Now to wait and see which way the worm turns.


edit: Worm is turning south, DOW down 300, almost ready to buy back the half of the position for $500 cheaper. The day could still end green but highly unlikely now.

 

[utrecht]

The market just seems to want to slowly trickle away into the abyss. My weekly 192.5 puts are teetering on break even right now with SPY at 191.70. Im still holding because there is still about $400 of time value left in the puts. We will see what the last hour and a half holds.

I just sold 10 more SPY 188 puts for $1.56 that expire next Friday.

 

[Fermion]

That is a pretty good price considering there are only 4 trading days next week. SPY should be able to hold above $188...I really don't see where money is going to go, even if bonds go up a fraction. I am holding out for $14.70 on those Gilead calls, but that would require a pretty big selloff very late in the day...about DOW -400 should cause Gilead to sell off enough to get me to $14.70.

 

[utrecht]

With 10 minutes left in the trading day the market has recovered significantly. My 192.50 weekly puts will expire worthless giving me my max$1150 profit. I also bought to close the 188 puts I just sold. I paid $1 giving me another $560 profit in about an hour.

 

[Fermion]

With 10 minutes left in the trading day the market has recovered significantly. My 192.50 weekly puts will expire worthless giving me my max$1150 profit. I also bought to close the 188 puts I just sold. I paid $1 giving me another $560 profit in about an hour.

Awesome! I also traded with Gilead calls near the spike at close and made $440 minus $14 in commission ($7 each way). Overall for the week I had $2300 in gains trading in Gilead even though it is flat or down for the week. Gotta love volatility.

 

[utrecht]

I made $1710 with bullish options trades on SPY even though it dropped 3% for the week. That's why I love these trades.

My other open positions are:
AAPL Sep/Oct 110 calendar put spread...paid $1.39. Currently worth $2.13 for 53% profit
WYNN Sep/Oct 70 calendar put spread..paid 1.37. Currently worth $1.92 for 41% profit
GOOG Sep/Oct 620 calendar call spread..paid 12.30. Worth $13.30 for 8% profit

 

[Fermion]

Calendar spreads are great. I probably have had the most success of any investing with Apple calendar spreads. Nice to see someone else using them. I also do calendar diagonals (not really the right name....poor man's covered call?). As an example, I might be long Apple Oct $100 call and short Apple Sept $110 call for a total cost of $6, with potential to make a $4 profit plus possibly some time value. I had something like that going when Apple split and ended up making $25,000 on it.

 

[IrishMoss]

Newbie here. Where do you think is the best place to learn about these more intermediate investing techniques like: shorting, puts, calls, etc? I'm a beginner as my investments have been in mutual funds, 401Ks and not in individual stocks.

 

[utrecht]

The bible of options trading is a book called "Options as a Strategic Investment".

 

[utrecht]

I doubt this rally can continue short term. When SPY was at 199.10 a few mins ago, I bought Oct 189/180 1X2 put spreads. I sold twice as many 180 puts as I bought 189 puts so basically they are 189/180 bearish put spreads but I also sold an additional batch of 180 puts. I think the market (SPY) will drop short term but not as far as 180.

The total cost of the trade is zero (not incl commissions)

 

[papadad111]

Been very quiet here. Is everyone holding breath awaiting d fed?

Either rate hike or not, buy the rumor and sell the fact. Feels like we are headed lower from here to end of the year.

2016 likely to be rough too with all the political election charades ...

Volatility will make this a traders market for sure and if it wasn't for the tax hit, need for dividend cash flow and that I finally stopped timing the market, I'd be moving to cash on up days from here on out.

After 6 years of up markets and 3+ years without a good correction, we were bound to hit a correction or bear. Perhaps this downdraft clears the decks for a while .....

Looks like the trend continues to have 25 percent sell offs and bear markets every 7 -9 years 2015-2008-2000-1991-1987-1981-1974. Etc. So the long term investor does nothing here ....

 

[utrecht]

I doubt this rally can continue short term. When SPY was at 199.10 a few mins ago, I bought Oct 189/180 1X2 put spreads. I sold twice as many 180 puts as I bought 189 puts so basically they are 189/180 bearish put spreads but I also sold an additional batch of 180 puts. I think the market (SPY) will drop short term but not as far as 180.

The total cost of the trade is zero (not incl commissions)

I'm still holding the above trade. Cost basis is Zero and its now worth $0.26. No way to figure a percentage gain. SPY was at 199.10 when I posted the above quote. Its 196 now

Also,

AAPL Sept/Oct 110 Put Calendar...-4%
WYNN Sept/Oct 70 Put calendar...+69%
GOOG Sept/Oct 620 call calendar...+29%

The first leg of all 3 trades expire on Friday ad I will close them then. Max profit is when the stock is exactly at the strike price. AAPL is at 115.31. WYNN is at 68.47. GOOG is at 623.24. I will make more money as the week goes on as long as the prices dont move away from the strike.

I also opened a new trade yesterday.

XLU Bullish call spread. Oct 44/42 bought for $0.52. I stole this one from the guys on Options Action.

 

[LOL!]

I had some spare cash and saw that BND dropped about 0.5% today, so I bought a few hundred shares a moment ago and have a limit order in for more (update: just executed). This is total US bond index fund. Bond funds like this are not supposed to move 0.5% in one day.

I was going to wait for the Fed news, but I like the idea that there will be a relief rally in everything when the news is out (no matter what the news is) and I already have enough equities.

But that doesn't mean that I won't sell these BND shares if it goes up 0.5% or more in the next day or so.

I guess put me on record as disagreeing with everything that papadad111 just posted.

 

[LOL!]

Yesterday's BND purchase is holding on by a thin thread and not a loss.

Did anybody else buy bonds in the past 2 weeks?

 

[audreyh1]

Looks like an anticipatory rally already happened in the stock markets. I usually expect the opposite once the news finally comes out, but you never know.

 

[LOL!]

This waiting kind of reminds me of the times that hurricane eye walls came right over the house: One prepares ahead a time and watches the news reports, then there is really nothing to do until it hits the fan. For hurricanes, you've got the cars gassed up, the boards on the windows, the water, ice, all phones charged, the solar chargers, wind-up lights & radios. For the FOMC announcement, you've made all the trades you are going to make and set up your asset allocation the way you think will withstand any announcement.

Then you wait.

While I do not expect any big drops tomorrow afternoon, if things do drop by more than about 3.5%, then I will very likely be buying whatever drops the most. And if things go up like I expect, I will be very happy.

 

[utrecht]

This waiting kind of reminds me of the times that hurricane eye walls came right over the house: One prepares ahead a time and watches the news reports, then there is really nothing to do until it hits the fan. For hurricanes, you've got the cars gassed up, the boards on the windows, the water, ice, all phones charged, the solar chargers, wind-up lights & radios. For the FOMC announcement, you've made all the trades you are going to make and set up your asset allocation the way you think will withstand any announcement.

Then you wait.

While I do not expect any big drops tomorrow afternoon, if things do drop by more than about 3.5%, then I will very likely be buying whatever drops the most. And if things go up like I expect, I will be very happy.

If you are quick enough you can make a lot of money every time theres a big announcement like this. All you have to do is go against the grain. Almost every time theres a big announcement, the market makes a huge move one way or the other and within a few minutes is right back where it started.

 

[LOL!]

If you are quick enough you can make a lot of money every time theres a big announcement like this. All you have to do is go against the grain. Almost every time theres a big announcement, the market makes a huge move one way or the other and within a few minutes is right back where it started.

I don't have the guts. Do you?

The winds of hurricane eye are strong and go in opposite directions on the opposite side of the center. So one might get 80+ mph winds in one direction, then 30 to 60 minutes later after a little calm, 80+ mph in the other direction. One has to be prepared for all possibilities.

 

[utrecht]

I don't have the guts. Do you?

The winds of hurricane eye are strong and go in opposite directions on the opposite side of the center. So one might get 80+ mph winds in one direction, then 30 to 60 minutes later after a little calm, 80+ mph in the other direction. One has to be prepared for all possibilities.

I do it all the time, but only after the market makes a swift move in one direction. You cant really get hurt too bad if your timing is good. If the market moves up 1% or more in 3 minutes and you short something, the odds are much better that the market will fall back 1% than it is that the market will climb another 1%. Especially after Ive seen it again and again.

What I never do is try to pick which way the market will move in advance of a big announcement like this because nobody knows, especially me.

 

[Fermion]

I agree with utrecht. Wait for the reaction, hopefully an overreaction, and then pounce for the rebound or fall.

I do have a lot harder time shorting than going long though. I tend to get nervous with shorting while when long I have a lot more confidence. This means I usually only play for the rebounds.

 

[utrecht]

Normally you only have minutes to make a move, sometimes seconds, so you have to already know what stock or index you are going to trade. You cant wait for the big move and then start looking at what stock you might want to trade because by that time its too late. The market usually over reacts and bounces back within 5-10 minutes.

 

[utrecht]

I have 3 calendar spreads that I need to close out by close of business tomorrow. All 3 will profit from drops in the stocks (AAPL, WYNN and GOOG). I'm going to attemtp to close them quickly if / when the market drops at any point after the announcement.

My max profit is at
AAPL...110 (currently 115.40)
GOOG..620 (currently 638)
WYNN..70 (currently 72)

I also have a bull call spread on XLU thats up 50% in 3 days. It expires in Oct but I may close it today if I get a further spike up.

 

[LOL!]

Uh-oh, BND popped a little bit early: