Trading Diary – Sept 16th to Sept 20th

by Enis September 22, 2013 5:36 pm • Commentary

Here is a quick recap of all of the trades that we initiated, closed, managed or expired in the week that was Sept 16th – Sept 20th:    

Monday Sept 16th:

ACTION: T ($34.68) Sell to Close Oct 34 calls at .95 for a .15 gain

Dan:  Sine buying these calls over a month ago, the stock had been under a tad of pressure, and my thesis had taken a little longer than I thought to play out.  The stocks fairly sharp bounce gave me the opportunity to get out for a small gain without taking additional risk into the Fed’s SepTaper decision.

Read here

Tuesday Sept 17th: 

TRADE: GOOG ($885) Bought Oct4th 890/860/830 Put Fly for $7.48

Enis:  GOOG has been a major laggard despite the Nasdaq’s enormous rally in the past month.  Besides its technical weakness, the company’s last earnings report displayed a clear difficulty in the traditional display ad business.  We see the potential for GOOG to struggle until at least its next earnings report resolves those concerns.  The 850-860 area is strong support, and the target for our bearish put fly.

Read here

Wednesday Sept 18th:

VIX ($14.77) Short Sept 14 Put Vs. Long Sept 17/20 Call Spread Expires for Even Money, so net flat on the trade

Enis:  The VIX structure expired for flat, which was a good result considering that the market made a new high heading into the Fed meeting.  This structure was very attractive even though the net result was no gain, so we plan on initiating more of these types of trades on the VIX in the future, particularly when there is a potential event catalyst to keep the VIX elevated.

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Action:  GE ($24.81) Oct 24 Calls sold to close at .90 for a .43 gain

Dan:   The market’s quick spike higher on the Fed’s decision not to Taper bond purchases this month gave me the opportunity to make some quick gains in a week on the naked call position with nearly a double from what I paid.  While the equity markets immediately took the no Taper news as positive it is my belief that the lack of confidence from the Fed in the health of the economic recovery poses more risks than potential benefits of continuation of QE with the SPX at all time highs.

Read here

Thursday Sept 19th:

Name That Trade (Pair Trade):
TRADE: KRE ($35.27) Sold the Oct 34 Put at $0.38
TRADE: IYR ($67.19) Bought the Oct 66 Put for $0.99

Enis:  This pair trade idea is based on the fact that interest rates are still much higher than where they were in May and June when the tapering speculation first began, but the market’s reaction this week among sectors was as if rates have reversed most of their move higher.  REITs were extremely strong on the news, while regional banks were actually lower.  Since rates did not actually move in that manner, I wanted to initiate a pair trade that took advantage of what I viewed as an over-reaction / misinterpretation by market participants.

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TRADE:  CTAS ($50.80) Buy Oct 50/47.50 Put Spread for .60

Dan:  Heading into the very economically sensitive company’s earnings it was my belief that options were at best fairly valued and possibly kind of cheap with the stock at 52 week highs.  While the options do not have great liquidity, I labeled this as a sort of “Adult Swim” trade as there was great potential for the put spread to be difficult to get out of for a modest loss if the stock was up small at minimum.

Read here

Friday Sept 20th:

TRADE: JNJ ($90) Bought Oct 90 Puts for 1.35

Dan:  As I mentioned above, the Fed’s inaction on QE caused equity markets to cheer, but rates barely budged lower.  The Fed will Taper this year because they have too, and stocks that had been in favor largely due to their yield could suffer in the near term.  JNJ sports a healthy 3% dividend yield, weak relative strength the broad market, and a very high historical valuation with the backdrop of cheap implied volatility.  For those looking to make near-term bearish bets, these are the exact sort of defined risk set ups you should be looking for.

Read here


Note:  There is a natural survivorship bias in our expiring trades.  We take all of our winners off prior to expiry since we don’t take delivery of stock, which leaves only losing trades to report on expiry.  You can see all of our trades reported on the Recent Trades page.

12:03 PM EDT – AUGUST 15, 2013 BY DAN AND ENIS

TRADE: FXI ($36.25) Bought Sept 36/34/32 Put Fly for .40

3:20 PM EDT – JULY 24, 2013 BY ENIS

TRADE: NUE ($45.69) Bought Sept 46/42 Put Spread for $1.25

10:34 AM EDT – MAY 22, 2013 BY ENIS

TRADE: FXE ($128.10) Bought the Sept 128 put for $2.60

12:38 PM EDT – MAY 17, 2013 BY ENIS

TRADE: WMT ($77.62) Bought the Sept 80 call for $1.51