Trading Diary: Nov 26th – Nov 30th

by Dan December 2, 2012 8:07 pm • Commentary

Here is a quick recap of all of the trades that we initiated, closed, managed or expired in the week that was Nov 26th to Nov 30th:  

Monday Nov 26th: 

Trade: AXP ($56.16) Bought Jan13 55 Put for 1.25

Dan: In early Nov I suggested that AXP could be vulnerable to late year selling possibly for a whole host of reasons, most largely to do with reverberations from the “fiscal cliff” debate.  After buying a Jan put spread, the stock quickly dropped 5% and I took the position off for a nice quick gain.  Since then the stock has rallied back to where I first entered the trade and I decided to leg back into the position by buying the Jan 55 puts outright, with an eye towards spreading on any weakness.   Read here

Anatomy of a Trade #2: $AAPL Jan 1×2 Call Spread

Enis:  The update was intended to provide the possible alternatives in managing the trade with the stock around the short strike of $580.  Of all the alternatives, I chose not to modify the trade, mainly because I expect AAPL to remain rangebound; choosing the alternatives would have implied paying more premium to increase the potential range or taking the trade off for a loss, neither of which matched my current thesis on the stock.  I don’t anticipate touching the position unless the stock gets above my pain point around $610, in which case I will revisit the potential alternatives.

Read here



Tuesday Nov 27th:

Action: Sold to Open AXP ($55.10) Jan13 52.5 Puts at .85
New Position after Spreading: Long AXP ($55.10 ) Jan13 55 / 52.50 Put Spread for .40

Dan:  With AXP down $1 in one trading day, I took the opportunity to sell the Jan 52.50 puts to create a vertical put spread.  The beauty about how this played out, was not only did the Jan 55 puts that I was long increase in value on the sell off, but so did the downside puts that I wanted to sell to create the spread at a slightly higher implied vol than the previous day.  I now own an at the money $2.50 put spread with a tad less than 2 months to expiration for less than 20% of the width of the spread.  Read here

Action: Sold to Close XLK ($28.94) Dec 28/29 Call Spread at .68 for a .39 gain.

Dan:  I initially bought the XLK Dec 28 calls to play what I felt was AAPL’s impending reversal off of its almost 30% sell off from the all time highs made in Sept.  After spreading them the previous week, and seeing AAPL’s rally peter out a bit, I decided to take the trade off for more than a double as this was merely a momentum trade.   Read here

Trade: BA ($74.30) Bought Dec / Jan13 72.5 Put Calendar for $0.69

Enis:  After the feel-good show by the politicians after the elections, we think the bickering and disagreement will come back to the forefront in December, when the actual concessions and compromises related to fiscal cliff must be decided.  The devil is in the details, as they say.  Boeing gets 50% of its sales from defense.  It also announced a new “restructuring” a couple weeks back, to which the stock reacted quite positively.  I view their “restructuring” as a simple signal that they expect to be hurt by spending cuts to defense; in other words, expect a weak 2013 from the company As the fiscal cliff headlines start to heat up, I think we’ll see weakness in BA, particularly from those traders who bought the initial “restructuring” headlines.

Read here



Wednesday Nov 28th:

Action: Sold to Close F ($11.23) Feb 11 / 12 Call Spread at $0.41 for $0.16 gain

Enis:  The Ford call spread turned into a nice winner in only a week and a half.  We’ve become more cautious on the overall market, so I preferred to take the winner on the Ford for now, and potentially revisit a bullish structure on the stock on its next selloff.  Regardless, I do see Ford as well-positioned to be a market outperformer throughout 2013.

Read here


From CC- Read here



Thursday, Nov 29th:

Trade: SPY ($142) Bought the Dec 14th 141/136 Put Spread for .95

Dan:  Since the central bank action of Sept, we have vowed to be a bit more flexible in our trading, without getting too married to anyone trade or market call.  We were well positioned on the short side heading into the Nov sell off, we covered our shorts fairly well mid month, and then got long decently.  We now have fewer positions, and with less delta risk than anytime I can remember this year.  With the recent rally getting a bit long in the tooth, I thought a near term bearish play in the SPY made sense as the rhetoric around the “fiscal cliff” was only likely to pick up in the weeks approaching the Christmas Holiday.  Near the money put spreads could be bought for less than 20% of the width, with idea situation being a re-tracement back to the lows made in mid Nov.  Read here

Action: Bought to Close BA ($74.33) Dec 72.5 put for $0.61, Leaves me long BA Jan13 72.5 put for total cost of $1.30

Enis:  The price action in the broader market, as well as what I saw as a lack of progress in the fiscal cliff negotiations, made me rethink the calendar spread on BA.  I decided that I wanted more short delta exposure on this trade for now, and will look to spread my long Jan13 72.5 puts on the next downdraft in the stock.

Read here




Friday, Nov 30th:

Trade: NKE ($97.25 ) Bought the Dec 7th weekly / Dec 22nd Regular 95 Put Spread for 1.40

Dan:  Aside from the Boehner and ‘Bam sparring daily over the lack of progress made by the other side on the “fiscal cliff”, there were a couple earnings related events that highlighted the continued risks of slowing global growth; TIF’s miss and YUM’s acknowledgment of slowing sales in China.  The most obvious read-through from TIF and YUM’s woes in Asia would be NKE and the potential for weaker than expected sales when they report on Dec 20th.  I decided to used a weekly put calendar in an effort to take advantage of the healthy premium in the 2% out of the money puts.  I will look to turn into a vertical spread on Friday once it appears I will be naked long the Dec regulars.  Read here

Action: Sold to Close ABT ($64.98) Feb 65 / Dec 67.5 call diagonal at $1.50 for flat

Enis:  I also wrote through my thought process for this trade in Friday morning’s Macro Wrap.  In short, the stock has languished at $65 even as the market has rallied, added to the fact that my short Dec 67.5 call position has lost most of its value, leaving me long the Feb 65 call with little protection.  I do think ABT is a good value stock at these levels, but its inability to bounce has me nervous about holding long premium.

Read here

 Not Trade-Preview: WFM – Stock Way Too Rich, Waiting For Trade Entry Soon

Enis:  WFM has been on our radar ever since September, when other high-flying consumer names started to get hit hard.  The stock had a weak earnings report in November, and we think its valuation is laughable given the business prospects for 2013.  No trade yet, but hope to get a bounce in the stock to get involved.

Read here