I’ve been very busy the past few days so I’ve had little time to post. My apologies. I plan to start reviewing the weeks trading activity every Saturday, but it takes an enormous amount of time to go back and pull transaction history. This is especially true for a busy trading week like the one we just went through. On Monday I stated I would not be doing that much since it was the first week of Spring, but that turned out to be inaccurate considering the massive amount of trades executed on Thursday.
Also, I wrote a great article on what to do if you think you’re going to be assigned (exercised) on expiration day. You can find it here.
Trading Like a Mad Man
Thursday I had twenty-seven (27) orders filled (executed) as well as many, many cancelled or modified orders throughout the day. The first was selling the JUNE 23 CALL options on the VIX [stock_quote symbol=vix] for a massive gain of 16.22% and $24,000.00. That set the mood for what would be a romantic courting of the market for the entire single session.
Next came McDonald’s [stock_quote symbol=mcd] and boy was it a good day for this one! I was riding the APRIL 115 PUT as well as the APRIL 125 CALL up and down most of the day ultimately ending $4,282.00 ahead and completely out of everything at the closing bell. This could not have been more perfect. How did I do it? As I have said before I would buy 100 contracts of the PUT, ride it down to 10-20% gain and sell all but 1 contract. I would then buy 100 contracts of the CALL and ride it back up to the same 10-20% gain and sell all but 1 and buy 99 of the PUT’s again. Back and forth to a total of over 4k profit…
Other Thursday Trades
Nordic American Tanker [stock_quote symbol=nat] – This is a PRIME example as why I love a good dip in the market. Wow! I originally SOLD 100 contracts of the APRIL 13 PUT @ .20 cents per contract on March 21st. I SOLD 100 additional contracts of the same APRIL 13 PUT @ .30 cents per contract Thursday. This increased my total premium from $2,000.00 to $5,000.00 with just three (3) weeks until expiration!! NAT then turned around and started back up which is perfect. I should have no problems expiring above the strike and I shall keep the entire $5,000.00! This does require $260,000.00 in cash as collateral against the trade. Yes, you can do it with less, but how many times do I have to tell you – never trade NAKED!
Even if I’m exercised, with NAT’s dividend I would gladly accept the 20,000 shares at $13.00 per share. The dividend yield is $1.72 per share or 13.2% at the $13.00 strike. For 20,000 shares @ $13.00 per share that would equal an astounding $2,800.00 per month in dividend income ($34,400.00 annually for you math challenged folks). I can live with that…
Chevron [stock_quote symbol=cvx] – I purchased (buyer) 50 contracts of the APRIL 2016 95 CALL at 9:52 AM for $1.55 per contract. I sold them all 11 minutes later for $1.71 per contract. Total profit was $800.00 or 10.32%.
I was sitting at my parents kitchen table watching CNBC with my dad when I made this trade and I looked at him and said, “well, I just made 10% in 11 minutes I suppose I should sell it”. We laughed and I sold them. Just a few hours later that same option was worth $2.10 per contract or $2,750.00 profit or 35.48% gain. I sold it just a little too quick…but damn, 10% in 11 minutes? Who could resist!
Ford [stock_quote symbol=f] – Too much to list. I purchased (buyer) APRIL 11.75 CALL’s and APRIL 12.75 CALL’s as well as SELLING (seller) 100 contracts of the APRIL 12.75 PUT. So far so good.
Denbury Resources [stock_quote symbol=dnr] – this one was just funny. I bought 5,000 shares during early session for $2.05 per share and sold all 5,000 shares for $2.30 in afterhours trading right after the closing bell. PERFEEEECCT!! This resulted in a 12.5% gain and $1,250.00 profit on this trade alone and it was STOCK not options! I also SOLD 200 additional contracts of the APRIL 2016 2 PUT (cash-secured put) for .25 cents per contract – total premium $5,000.00 with just three (3) weeks remaining until expiration! I also doubled-down on the APRIL 2016 2.5 PUT @ .60 cents per contract. I now have 200 contracts on both the APRIL 2 and 2.5 strike PUT options.
The week was long after all. I should have known it would be wild given the short trading schedule. I realize I am somewhat all over the place with my posts this week and I’m trying to keep a standardized approach (or find one). I’m finding it difficult to get everything in my head on paper quickly and efficiently so I may sound like I’m rambling sometimes and for that I apologize.
Total gain for the week: $30,828.86
Total gain for March to-date: $8,536.78
Why is March so low given the amazing week? Well, some of you may remember the 400 contracts of the Ford APRIL 12.75 PUT I sold several weeks ago. I got nervous when Ford was hovering around $13.80 and I did not really want to lose 40,000 shares so I bought them back at a significant $32,000 loss (plus commissions).
This hurt badly – more my ego than my wallet. It goes to show you that emotion can still get the best of even the most experienced traders. However, it really worked out great because I almost made it all back this week. Thank you VIX! I’m actually glad I did sell them because even in the market dip this week Ford did not dip below the $12.75 strike. I was sure to get exercised in a few weeks unless Ford takes a nose dive shortly which I don’t really see happening.
Now, yes, I should have or could have waited just a hair longer and bought them back yesterday saving a significant amount of money, but I cannot predict the future no matter how hard I try. I did what I had to do with the information I had at the time even though it cost me big. Never get mad at yourself for doing what you think is right in the heat of the moment. Do the best you can and let the chips fall…
In the end…I’m still up for the month! February saw a $54,000 gain and so far March will see an $8,500.00 gain. Not too shabby…even with a $32,000 loss!!