Trading Diary – Sept 30th to Oct 4th

by Enis October 6, 2013 4:33 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 30th – Oct 4th:    


Monday Sept 30th:

Name That Trade – HYPOTHETICAL TRADE:  CL ($59.35) Buy Nov 60/55 Put Spread for 1.65

Dan:  My View: Earnings won’t be out for another 3 weeks in CL, and to be frank the stock hangs in there despite the negative news from UN, but with hours before we get some sort of resolution on the Govt Shutdown, I see no real compelling reason to add a new directional position.  If I were inclined to press this short, I would look to an in the money put spread as the implied vol is not high enough yet to make short premium trades that attractive.

Read here

Tuesday Oct 1st: 

TRADE: XOM ($86.25) Bought the Nov 85/90/95 Call Fly for $1.64

Enis:  85 continues to be crucial long-term support for XOM.  With the stock approaching that area, we initiated a new trade with the view that any bounce is unlikely to get much above 90.  However, we also traded the call fly because it is at less risk of losing substantial premium if XOM does end up breaking the all-important 85 level.  In that case, we plan to take the loss on the position, that would be smaller than if we had done a simple long call spread structure.

Read here

Thursday Oct 3rd:

Name That Trade: YUM ($70.80) Sell the Nov 67.5 / 65 Put Spread, Buy the Nov 75 Call, Even Money

Enis:  YUM is one of the rare names in the current market that seems reasonably priced with lower-than-normal expectations given its problems in China in the first half of 2013.  However, the stock’s earnings report on Oct 8th should give much more clarity on whether the issues in China were a one-off event related to the poultry-scare and avian flu.  Moreover, the technical situation in YUM suggests a decent risk/reward long position in the 69-70 area.  The stock quickly rallied on Friday from near 70, but we’ll likely get involved if it moves back near 70 prior to earnings.

Read here

ACTION: GOOG ($873.50) Sold to close the Oct4th 890/860/830 Put Fly at $14.70 for a $7.22 gain

Enis:  We had been offering this put fly around $15.00 on several occasions in the past week, and finally got out near that price on Thursday’s morning selloff.  This trade worked out well in the end because GOOG’s recent realized volatility has actually been quite low, and the 860 puts gradually decayed over the last week as the 890 put held its intrinsic value.  The 50 day moving average in GOOG around 881 is crucial going forward.

Read here

Action: Sold to Close half of GM ($35.40 ) Oct 37/33 Put Spread at 1.61 for a gain 36c gain. Leave half

Dan:  Well last week the Govt did state their intent to continue to sell down their stake, which should remain an overhang in the stock, and this week’s Sept data should also keep the stock at least range bound.  But the stock doesn’t doesn’t want to tank so I am going to close half of this position for a small gain and wait on the balance if things get ugly.

Read here

Action: Sold to Close half of GM ($35.37 ) Oct 37/33 Put Spread at 1.64 for a gain 39c gain. (average gain on entire position 37.5c)

Dan:  With GM not breaking, we’re going to close this position entirely and look for another entry in the thesis down the road.

Read here

ACTION – Sold half of the VIX October Spread at 70c (70c gain), leave half

Enis:  The VIX was bid higher on Thursday as the political gridlock continued.  We took the opportunity to lock in some partial profits on the long VIX structure, with the intention of holding the second half of the trade in case VIX makes a move to near 20 in the coming 10 days.

Read here


Friday Oct 4th:

TRADE: JPM ($52.24) Bought Oct25th 52.5 / Oct11th 51.5 Put Diagonal for $0.82

Enis:  This is a trade structure designed to take advantage of both the technical and fundamental setup ahead of JPM earnings.  JPM’s earnings are likely to be a beat of the low-ball estimates, but the overall business trends for JPM are much less favorable today than they were 6 months ago.  With that in mind, we expect to see weakness after earnings, and the diagonal put spread will especially benefit if JPM holds up into earnings and sells off afterwards.

Read here