Spiders (SPY) Custom Ratio Put Spread

Tuesday, 7/5/2016 (10:12:40 am, PT)  RD For my friend ....

sell -3 August 2016  $201 puts at $2.11 (30% prob ITM)
buy +1 August 2016  $199 put at $1.77

credit received:  $4.56 x 1 x 100 = $456.00

Why did I place this trade?

• stochastics in overbought region
• 7/5/2016 was a "down" day
• 45 days 'til expiration
• high probability of success

Friday, 7/8/2016 (10:34:12 am, PT)

bought back entire spread for $2.16 (debit)

PROFIT:  $240 (in FOUR days!)

SUCCESS!

Spiders (SPY) Put Options

6/15/2016 (12:37:42 pm, PT)  FP

For my friend's mother ...

sold -8 July 2016  $194 puts at $1.01

Why did I place this trade?

• stochastics in oversold region
• FOMC announcement at 11 am (SPY rose initially, then dropped)
• 85% probability of success

6/29/2016 (9:31:15 am, PT)

buy back all 8 puts at $0.27

NET PROFIT:  $567.60

SUCCESS!

Spiders (SPY) Put Options

6/15/2016 (12:07:04 pm, PT)  RD

For my friend ...

sold -7 July 2016  $197 puts at $1.29

Why did I place this trade?

• stochastics in oversold region
• FOMC announcement at 11 am (SPY rose initially, then dropped)
• 80% probability of success

6/29/2016 (9:32:37 am, PT)

buy back all 7 puts at $0.47

NET PROFIT:  $552.64

SUCCESS!

Spiders (SPY) Put Options

6/15/2016 (11:39:04 am, PT)  FP

For my friend's mother ....

sold -10 August 2016  $180 puts at $1.05

Why did I place this trade?

• stochastics in oversold region
• FOMC announcement at 11 am (SPY initially rose, then dropped)
• 89% probability of success

6/29/2016 (9:08:53 am, PT)

buy back all 10 puts at $0.50

NET PROFIT:  $519.46 (in 2 weeks)

SUCCESS!

Spiders (SPY) Put Options

6/15/2016 (12:43:30 pm, PT)  RD

For my friend ...

sold -4 July 2016  $201 puts at $2.08

Why did I place this trade?

• stochastics in oversold region
• FOMC announcement at 11 am (SPY rose initially, then dropped)
• 70% probability of success

6/29/2016 (9:30:40 am, PT)

bought back all 4 puts at $0.95

NET PROFIT:  $439.78

SUCCESS!

Spiders (SPY) Put Options

6/15/2016 (12:02:05 pm, PT)  RD

For my friend .....

sold -4 July 2016  $202 puts at $2.12

Why did I place this trade?

• stochastics in oversold region
• FOMC announcement at 11 am (SPY rose initially, then dropped)
• 70% probability of success

6/29/2016 (9:31:51 am, PT)

buy back all 4 puts at $1.15

Why did I close this trade?

• take profits!

NET PROFIT:  $375.77

SUCCESS!

Gold (GLD) Call Options

Friday, 6/24/2016 (12:58:23 pm, PT)

sold -10 June 30, 2016  $129 calls at $0.91

Why did I place this trade?

• "BREXIT" results were announced in the middle of the night and gold jumped 5%
• when GLD rises, its implied volatility also rises which results in very attractive call premiums
• 73% probability of success
• stochastics in overbought region

Tuesday, 6/28/2016 (10:53:58 am, PT)

bought back all 10 calls at $0.19

Why did I place this trade?

• GLD dropped today (6/28)
• when GLD drops, its implied volatility also drops which results in cheaper call premiums
• TAKE PROFITS

Comments:

It's VERY tempting to hold my position for TWO more days in order to keep the max credit of $910, but it's good practice to always TAKE YOUR PROFITS

PROFIT:  $720 (in 3 trading days)

SUCCESS!

Gold (GLD) Call Options

Friday, 6/24/2016 (7:16:24 am, PT)

sold (to open) -10 June 24, 2016  $126.50 calls at $0.22

Why did I place this trade?

• GLD shot up over 5% this morning after the "BREXIT" results were announced in the middle of the night (i.e., after 11:59 pm of Thursday, June 23)
• when GLD shoots up like this, its "implied volatility" (IV) also goes up
• a higher IV means higher call premiums (OPPORTUNITY to make some quick $$$)
• 76% probability of success

Comments:

• GLD was extremely "choppy" all day long on 6/24, so my call's premium remained high throughout the day (even though it was expiration Friday)
• GLD hovered below my strike price of $126.50 all day long (good thing!)
• I placed a limit order to buy back my short calls at $0.01 and waited and waited ....
• at 12:58 pm (with 2 minutes left), the bid was $0.01 and the ask was $0.07 even though my short calls were OTM (those darn market makers!)
• at 1:00 pm (closing bell), the ask was still at $0.05, so my limit order never filled!  I couldn't believe it!
• GLD closed at $126, so my short calls expired "worthless"

PROFIT:  $220 (in 6 hours)

SUCCESS!

Gold (GLD) June Call Option

5/11/2016 (11:44:47 am, PT)  (RD)

sold -1 June 2016  $127 call at $1.11

Why did I place this trade?

• stochastics in overbought region
• 75.63% probability of success

5/20/2016 (9:20:24 am, PT)

buy back call option at $0.35 (68% of max credit)

PROFIT:  $76 (in 9 days)

SUCCESS!

Facebook (FB) Call Options

5/12/2016 (9:43:24 am, PT)  (FP)

sell -2 June 24, 2016  $127 calls at $1.18

Why did I place this trade?

• stochastics in overbought region
• 80% probability of success
• 43 days 'til expiration (DTE)

5/18/2016 (7:08:49 am, PT)

buy back both calls at $0.60

NET PROFIT:  $116
Return on capital:  3.15% in 6 days

SUCCESS!

Consumer Discretionary ETF (XLY) Call Options

Friday, 4/29/2016 (11:20:39 am, PT)

sold -10 May 20, 2016  $79.50 calls at $0.83

Why did I place this trade?

• stochastics in overbought region
• 60% probability of success

Friday, 5/6/2016 (7:37:01 am, PT)

buy back all 10 calls at $0.50

Why did I place this trade?

• stochastics near oversold region
• I was aiming for a $330 profit

PROFIT:  $330 (in 1 week)

SUCCESS!

Note:  Walt Disney Company (DIS) is one of the holdings in XLY

Tesla (TSLA) Post-earnings play

Thursday, 5/5/2016 (11:18:43 am, PT)

sold -1 May 6, 2016  $205 put at $0.91

Why did I place this trade?

• earnings were announced after the close on 5/4/2016
• the stock dropped on 5/5, so implied volatility was still high
• quick, 1-day trade to take advantage of the inflated IV
• 79% probability of success
• Robyn at Tasty Trade sold the May 6 $210 put (thanks, Robyn!)

Friday, 5/6/2016 (9:36:42 am, PT)

buy back put at $0.05

PROFIT:  $86 (in ONE day!)

SUCCESS!

Comments:

• My put option hit $0.04 at 6:34 am this morning (5/6), but I had forgotten to set a "buy to close order at $0.05" last night, so I missed it this morning.
• Between 6:34 am and 9:36 am, TSLA dropped, so the put price rose again.
• The market makers made me suffer for 3 hours before finally accepting my bid of $0.05.

The moral of the story:

ALWAYS have your closing orders in place!!!

Energy Sector (XLE) Call Options

Friday, 4/29/2016 (10:33:59 am, PT) (FP)

sell -10 May 2016  $70 calls at $0.51

Why did I place this trade?

• stochastics in overbought region
• 78.60% probability of success

Tuesday, 5/3/2016 (7:35:23 am, PT)

buy to close calls at $0.21

Why did I place this trade?

• take profits at 50% of max credit

PROFIT:  $300 (in 3 trading days!)

SUCCESS!

Costco (COST) May Put Options

Friday, 4/22/2016 (11:33:10 am, PT)

sell -4 May 2016  $144 puts at $1.13

Why did I place this trade?

• stochastics in oversold region
• 75% probability of success

Tuesday, 4/26/2016 (8:26:57 am, PT)

buy back all puts at $0.50

Why did I place this trade?

• I've collected more than 50% of the max in just 3 trading days
• take profits!

PROFIT:  $252

SUCCESS!

Visa (V) April earnings play

4/21/2016 (12:50:48 pm, PT)

sell -3 April 22, 2016  $78 puts at $0.36

Why did I place this trade?

• Visa was reporting earnings after the close on 4/21
• implied volatility was relatively high
• I was more bullish than bearish
• 80% probability of success
• expected move =  plus/minus $2.63

4/22/2016 (6:39:05 am, PT)  [expiration]

buy back all 3 puts at $0.05

PROFIT:  $93 (ONE day!)

 

SUCCESS!

Comments:

• I was REALLY lucky that the market makers let me buy back my short puts at $0.05 because that was lower than the "mid" price.  Thank you, market makers!
• I'm REALLY happy that I closed my trade at $0.05 because exactly one hour later Visa dropped to $77.28.
• Notice that I made money even though I was wrong "directionally."  This is due to post-earnings "volatility crush."

Netflix (NFLX) post-earnings play

4/19/2016 (9:55:01 am, PT)

sell -2 April 22, 2016  $99.50 calls at $0.71

Why did I place this trade?

• earnings were released on 4/18
• stock dropped on 4/19
• I was bearish (short-term) on NFLX
• 76% probability of success

4/21/2016 (12:58:51 pm, PT)

buy back calls at $0.05

PROFIT:  $132 (in 3 days)

Comments:
The high implied volatility of NFLX kept this call premium at $0.11 most of the day even though the stock was over $4.00 OTM with just 1 day remaining until expiration. 
The call premium finally dropped to 5 cents with just 1 minute left in the trading session.

SUCCESS!

Gold (GLD) Call Options

4/13/2016 (6:46:15 am, PT)

sell -10 April 22, 2016 (wk 4)  $122 calls at $0.45

Why did I place this trade?

• stochastics in overbought region
• 78.50% probability of success

4/14/2016 (7:52:14 am, PT)

buy back calls at $0.16

PROFIT:  $290 (in ONE day!)

SUCCESS!

Spiders (SPY) Call Options

4/14/2016 (9:44:14 am, PT)

sell -10 May 2016  $213 calls at $0.95

Why did I place this trade?

• stochastics in overbought region
• 77% probability of success

4/15/2016 (11:14:15 am, PT)

buy back all 10 puts at $0.71

PROFIT:  $240 (in ONE day!)

SUCCESS!

Whole Foods (WFM) Put Options

4/7/2016 (9:48:08 am, PT)

sell -4 April 29, 2016 (wk 5)  $29.50 puts at $0.39

Why did I place this trade?

• stochastics in oversold region
• 69% probability of success

4/18/2016 (7:48:17 am, PT)

buy to close puts at $0.14

PROFIT:  $100

SUCCESS!

Celgene (CELG) Call Options

4/14/2016 (10:52:10 am, PT) (FP)

sell -2 April 22, 2016 (wk 4)  $111 calls at $0.43

Why did I place this trade?

• stochastics in overbought region
• 83.50% probability of success
• CELG does not pay dividends (important when selling calls)

4/21/2016 (6:36:05 am, PT) 

buy to close calls at $0.05

PROFIT:  $76.00

SUCCESS!

COMMENTS:

Even though there's only one day left until expiration, it's always a good idea to buy back your short options at $0.05 (or less) to remove the risk.

It's a good thing I did that on 4/21 because exactly two hours later CELG jumped to $109.82.  And who knows what will happen the next day, right?