[Teddi Knight]

Sep 9: FEZ Buy to close Sep-25-2015 33.50 Put @ 0.20

I’d like to roll back to the Sep-18-2015 33.50 put or roll down to the Sep-25-2015 32.50 put, but with the mixed market conditions today I have no rush.

[Teddi Knight]

Bought 20 SPY Sept 25th $190 puts at $2.25. If we continue to see the market move up today, I will add another 10 contracts, in 5 contract increments at or below $2.00.

When we get a pull back, I will sell the Sept 25th $173 puts to create a debit spread.

Tom

[Teddi Knight]

are you thinking of the UDOW. The SDOW does go down when market goes up and vice versa.

[Teddi Knight]

Here are some thoughts.

When premiums are low before a correction, an investor can buy a higher multiple of OTM put options versus ATM put options and potentially reap a greater profit after a drop.

When volatility drives up option premiums, a smaller multiple of OTM put options can be purchased relative to ATM put options of the same total cost. In this situation, the elevated cost diminishes the potential value of the OTM options relative to the ATM options.

[Teddi Knight]

Teddi did suggest this idea: “If I was particularly bearish I would buy at the money spy put options.”

[Teddi Knight]

” …why not but the 192 spy put but fewer contracts?” Should be “…why not BUY the 192 spy put but fewer contracts?

Sorry about any confusion the typo may have caused.

JB.

[Teddi Knight]

Teddi,

In reference to Teddi’s article on Sept. 6 entitiled “Protecting a Portfolio in a Correction”, since you want to protect all downward change from the current Spy 192 why not but the 192 spy put but fewer contracts?

Thanks

Best,

JB in Seattle

[Teddi Knight]

Thank you JB.

[Teddi Knight]

190-173-3.8 = 13.20. The 190 put would be $17.00 and then you deduct the cost to buy the insurance –$3.80

HTH.

If not tell us what is still confusing.

Best,

JB in Seattle

[Teddi Knight]

FEZ closed at $34.54 this Friday.

With the lower action on Friday compared to Tuesday, I’d like to roll down this put a skosh. On Friday I created a put spread for a roll and placed an order between the bid and the ask but the order expired without a fill.

[Teddi Knight]

A gap down might boost a put option premium enough to counter the premium lost on the night before expiration, but then that put would be trading closer to the money.

A benefit of one, two, or three day trades is that the market has less time to shift away from the entry conditions.

[Teddi Knight]

jdii, thanks for your work on this. One take away would be to look at the Futures before placing any short term trade. Also, with the market gap down one might have received higher premiums. I doubt anyone does one-day trades a with a significant portion of their portfolio.

Best,
JB in Seattle

[Teddi Knight]

EOD September 4
$109.27 AAPL (low $108.51)
$147.02 AMGN (low $145.75)
$129.76 BA (low $128.66) —- 130 P ITM by $0.24
$100.97 DIS (low $100.36) —- 101 P ITM by three pennies
$102.06 GILD (low $100.55)
$180.38 GS (low $179.13) —- 182.50 P ITM by $2.12

Without receiving higher premiums, the loss from selling that GS 182.50 put would consume most of the profit of selling the other puts.

Looking back at the September 3 charts, GS appeared to have the most bearish chart of these listed. This case suggests the benefit of avoiding such a stock when expecting a greater chance of market weakness.

Meanwhile today, GILD bounced back from support around $101 again. It has been rebounding from this support level since Tuesday this week.

[Teddi Knight]

Held on to the end! Figured they wouldn’t drop it under $100. Now I have the $95 strike, but with Star Wars coming up, I hope I’m safe!

Amy

[Teddi Knight]

STO WFC STRIKE $48.5, 9/18 @ .57

Amy

[Teddi Knight]

EOD September 3, DIS appears to have the least bearish chart of those listed here. Yet following Thursday’s long retreat from resistance (SPX), the market price could easily pull back to Wednesday’s range.

Given this context, these options seem useful for someone ready to scale into a particular stock at a predetermined strike.

[Teddi Knight]

I was only playing around with the format. I did not hit the “Submit” button. Posted anyway. Strange.
Fat Annual Percentage – highly speculative.
Best,
JB

[Teddi Knight]

Hi Amy,

Thanks for responding. This won’t work when the market opens with a gap up but you can put the order in as a Good till Canceled and it may get filled. The idea is get the most “bang-for-your-buck” and as you correctly point out the time decay value increases exponentially as time moves closer expiration. Accordingly, the ROI is very good however the nominal dollars earned is not so much unless one takes an unusually large position. Still, profit is profit and small amounts do add up.

As you probably noticed I tried to improve on the format – a work in progress. As of now, it appears the better formating can be achieved by presenting only:

>Stock underlying price
>Option description
>Avg of the bid-ask price
>percentage return

e.g.
Stk $.|. Options……….……………|B-A….||..ann%

Best

[Teddi Knight]

The problem I see with that, is when you post on Wed., the time decay until Friday is huge, so getting that premium unless there is a super down opening, is slim.

Nice idea though…lots of work you put in!

Amy

[Teddi Knight]

Stk $|. Options……….…………….…|B-A|…||..ann%
64.24|. WMT 09/04/2015 63.50 P.|$ 0.25||71.9%
74.86|. SLB 09/04/2015 72.50 P.|$ 0.30||75.5%
55.39|. QCOM 09/04/2015 54.50 P.|$ 0.28||93.8%

Stk $|. Options……….……………|B-A….||..ann%
64.24|. WMT 09/04/2015 63.50 P.|$ 0.25||71.9%
74.86|. SLB 09/04/2015 72.50 P.|$ 0.30||75.5%
55.39|. QCOM 09/04/2015 54.50 P.|$ 0.28||93.8%

[Teddi Knight]

Better format

Stk.. |Options………………………|B-A|….ann%
64.24|WMT 09/04/2015 63.50 P|0.25|71.9%
74.86|SLB 09/04/2015 72.50 P|0.3|75.5%
55.39|QCOM 09/04/2015 54.50 P|0.28|93.8%
109.75|NKE 09/04/2015 106.00 P|0.34|58.5%
70.92|MDT 09/04/2015 70.00 P|0.94|245.1%
70.92|MDT 09/04/2015 69.50 P|0.67|175.9%
140.14|MMM 09/04/2015 138.00 P|0.99|130.9%
115.43|HD 09/04/2015 114.00 P|0.56|89.6%
115.43|HD 09/04/2015 113.00 P|0.31|50.1%
37.95|HAL 09/04/2015 37.00 P|0.34|167.7%
102.84|GILD 09/04/2015 98.50 P|0.29|53.7%
102.84|GILD 09/04/2015 101.00 P|0.66|119.3%
102.84|GILD 09/04/2015 99.00 P|0.36|66.4%
102.84|GILD 09/04/2015 100.00 P|0.52|94.9%
77.12|EOG 09/04/2015 75.00 P|0.57|138.7%
77.12|EOG 09/04/2015 76.00 P|0.81|194.5%
100.8|DIS 09/04/2015 96.50 P|0.31|58.6%
100.8|DIS 09/04/2015 99.00 P|0.45|83.0%
100.8|DIS 09/04/2015 97.00 P|0.34|64.0%
71.78|DG 09/04/2015 70.00 P|0.4|104.3%
51.25|C 09/04/2015 50.50 P|0.37|133.7%
51.25|C 09/04/2015 50.00 P|0.25|91.3%
53.3|SNDK 09/04/2015 51.50 P|0.35|124.0%
110.79|AAPL 09/04/2015 107.00 P|0.42|71.6%
110.79|AAPL 09/04/2015 106.00 P|0.28|48.2%
110.79|AAPL 09/04/2015 108.00 P|0.6|101.4%
110.79|AAPL 09/04/2015 109.00 P|0.8|133.9%

[Teddi Knight]

..

[Teddi Knight]

…..

[Teddi Knight]

Sandler O’Neill buys the dip in Wells Fargo (NYSE:WFC) after a 13% decline over the past few weeks has put the stock modestly in the red for 2015.
The price target of $59 is 15% higher than last night’s close of $51.03.
Shares +2% premarket to $52.05.

Nice call Teddi!

Amy

[Teddi Knight]

Exiting at the open for a profit after a steep drop and entering again after an anticipated bounce seems quite reasonable. :)

Occasionally there won’t be a bounce so there’s that pesky trade-off between protecting existing gains and missing future gains.

[Author]

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