CLOSE: HON Put Calendar + 11.1%

I closed this put calendar today for a credit of $2.00. I started this trade on 2/19 for a debit of $1.80. I could have kept this going since it was going in my direction, but I am choosing to get out and move on.

So my ROI is $2.00-1.80/1.80= 11.1% in 10 days!

CLOSE: WFC Call Calendar +11.8%

I opened this trade on 2/14/08 for a debit of $1.70.

Today I closed out the trade for $1.90 credit.

(1.90-1.70)/1.70=11.8% in 15 days

CLOSE: DECK Short Straddle +17.8%

Yesterday, I sold the Mar 125 Call and Put for a total credit of $19.40.
Today, we got a very quick volatility crush, so I got out at 12:33pm for a debit of $14.95.

This gives me an ROI of 19.40-14.95/25.00 risk (credit plus margin)= 17.8% in 1 DAY!

CLOSE: MER Call Calendar +202%

Today MER has bounced down off of the 55 line which I marked as the middle of my trading range between 50 and 60 and it had a huge black bearish candle.

So I decided it was time to close out this trade and move on.

I opened the trade on 1/31/08 for a debit of $2.48, then I rolled this trade on 2/5/08 for a credit of $2.00 and got a new cost basis of $0.48. Today I closed it out for a $1.45 credit.

(1.45-0.48)/0.48= 202% in 1 month!

CLOSE: MORN Short Straddle + 17.4%

On 2/21/08 I sold the Mar 70 Call & Put for a total credit of $6.65. This gives me a yield of 6.65/10.00 risk (credit & margin)= 66.5 % in 1 week!

Today, volatility has squeezed out of this straddle also, so I got out completely for a debit of $4.91.

6.65-4.91 profit/ 10.00 risk= 17.4% in 7 days!

OPEN: DECK Short Straddle Mar 125 Call/Put

TraderNate and GMoney were looking at this straddle so I placed it too because I agreed with the analysis. The credit was also very sweet on top of the higher probability of this trade too so we weren't complaining!

I sold the Mar 125 Call and Put for a total credit of $19.40.

19.40/19.40+5.60 (margin)= 77.6% yield in 1 week

The one thing I did wrong on this was place this trade as a GTC from last night to fill after 10:30am and not after 3:30pm. Had I waited until the afternoon, I would have gotten a higher credit as the other 2 got. This is why it's important to initiate the trade at the last possible minute for straddles since the stock can shift dramatically in those last few hours before announcement or market close before the announcement.

CLOSE: GFIG Short Straddle +8.2%

After the volatility crush, I decided to close out this straddle and got a debit of $10.60.

I opened this straddle on 2/21/08 for credit of $13.15. So my net profit is 13.15-10.60= $2.55
My risk was $13.15 credit + $18.00 margin (20% of 90 strike)

2.55/(13.15+18.00) = 8.2% in 8 days

CLOSE: SWIM Short Straddle +24.8%

On 2/21/08, I sold the Mar 12.5 Call & Put for a total credit of $2.37.

Today, volatility has finally been squeezed out and is starting to slightly uptrend, so I closed the trade for a debit of $1.13.

$2.37-1.13 profit/5.00 risk (credit plus margin)= 24.8% in 6 days!

CLOSE: HBC BRCS -17.3%

On 2/20/08 HBC, I sold Mar 80 for $0.82 credit and bought Mar 85 Call for $0.20 debit giving me a total credit of $0.62.

HBC has gone against me so I pulled out today for a debit of $1.38.

0.62-1.38= -0.76/5-0.62 risk= -17.3 % loss

ADJUST: UAUA BLPS to Iron Condor

On 2/7/08 , Entrered-UAUA Bull Put Spread (BLPS), I sold Mar 30 put & Bought Mar 25 put for credit of 0.85.

Today we added a bear call spread to hedge ourselves by selling the Mar 40 call for $1.17 and buying the Mar 45 Call for $0.40 giving me a total credit of $0.77. Here we have essentially created an iron condor. This gives you an extra credit and helps reduce the risk of a single vertical going against you.

0.85 (original credit) + 0.77 (today's credit)= $1.62 credit

OPEN: MORN Straddle Mar 70 Call/Put

Looking at earnings.com last night, I saw that MORN was about to announce earnings today. Volatility was high and the probabilities looked great.

The 70 gives me a trading range between 62.75 & 77.25...plenty of downside protection as I believe this will head down.

I sold the Mar 70 Call & Put for a total credit of $6.65. This gives me a yield of 6.65/10.00 risk (credit & margin)= 66.5 % in 1 week!

OPEN: XLE Put Calendar Mar/Apr 75

Following Mojo's trade at InsaneMoney, I got into XLE put Calendar by buying the Apr 75 for $4.08 debit and selling the Mar 75 for $3.05 credit giving me a total debit of $1.03.

This gives me a yield of 3.05/4.08=74.7% in 1 month

OPEN: SWIM Short Straddle Mar 12.5 Call/Put

Also found another straddle opportunity on SWIM. Being a former Investools student, I occasionally check SWIM to see how it's doing. Last night, I found that earnings was today and the volatility and probability were high enough for this straddle to work. Mojo at InsaneMoney found a naked call opportunity, but I prefer the straddle since I am more familiar with them. Not ready to go naked yet! :)

So GMoney and I went in and sold the Mar 12.5 Call & Put for a total credit of $2.37.

This gives us a yield of $2.37/5.00 risk (credit plus margin)= 47.4% in 1 week

Average time to stay in a straddle is 7-10 days, basically, until volatility crushes and you get out by buying it back much cheaper than you sold it!

Take a look at the probability screens below. I chose the 12.5 (top screen) over the 15 (bottom screen) because I had an 84.84 % chance with the 12.5 versus the 70.34% chance with the 15 that the stock would land in my breakeven (B/E) range after the news event. So even though I got a lesser credit of $2.30 versus the $2.70 on the 15, since my probability is much higher, "I'd rather be right than rich" as Mojo like to say!

OPEN: GFIG Short Straddle Mar 90 Call/Put

Here's a 3rd straddle for the day! This one came from OptionsMonkey from our meeting last night.

We Sold the Mar 90 Call & Put for a total credit of $13.15. The Mar 90 had a better trading range and probability than the 85.

All three straddles today were placed after 3:30pm. This is the best time during the trading day to get into the short straddle so you have little time for the stock to go against you at the last minute BEFORE the news comes out. This can happen a lot since people freak out before the news.

CLOSE: NTRI Short Straddle -22%

NTRI earnings came out last night and the stock has gapped down well below the breakeven trading range of $18.62- $ 31.38 from my probability analysis on 2/19/08.

It opened this morning at 18 and now it's sitting on support at 17, so if support holds we may get a bounce up. If not then I'll exit the short put and close the trade completely.

So at 11:58am, I closed my short Mar 25 call for a debit of -.13 and set a stop loss on the short Mar 25 put. Near close at 3:40pm, I went ahead and bought back the Mar 25 put for a debit of $8.45 because it kept heading down. This gives me a total debit of $8.58. I got into this trade by selling the 2 options for a credit of $6.42 so I now have a 22% loss ($2.16 loss/$10.00 risk).

I would definitely do this trade again, however next time, I will go with my gut and stick with the direction I think the trade is going. Luckily though, I sized this trade correctly so I didn't lose my shirt! :)

OPEN: HBC Mar 80/85 BRCS & CAT Mar 70 Put Calendar

My trading group and I are doing HBC and CAT today...

HBC:
Stock has been below the 30, 50 & 200 day moving averages since Nov. and today it looks like it is testing the 30 again as well as today it opened and remained below yesterday's open and close and it's still heading back down, so we are putting on a bear call (vertical) spread.

Sold Mar 80 for $0.82 credit and bought Mar 85 Call for $0.20 debit giving me a total credit of $0.62.

This gives me a yield of 0.62/5-0.62 risk= 14.2% in 1 month!

CAT:

We saw that CAT was trading in a channel between 70 & 80 since August, so we put on a put calendar by buying the Mar 70 put for $3.65 and selling the May 70 put for $1.76 for a total debit of $1.89.

1.76 credit/3.65 debit = 48% yield in 1 month! WOW!

No stop loss is needed since it would be below $1.00.

OPEN: HON Put Calendar

Thanks to my home dog GMoney, he brought up HON Mar/Jun 57.5 put calendar for a total debit of $1.80.

My yield is $2.30 credit for Mar 57.5/$4.10 debit for Jun 57.5= 56% in 1 month! I will look to roll this for April or close this out if it starts going against me.

I don't need to set up a stop since the debit is under $2.00.

OPEN: NTRI Short Straddle Mar 25

With my trading group, we have begun to dig deeper with analysis of probabilities with each trade using the Think or Swim (TOS) platform.

NTRI:
I was looking at either the Mar 22.5 or the 25 to do a short straddle, so below are the probability screens from TOS that I used to determine which strike to pick.
Trading the 25 strike gives me a probability of 52% that the stock will land somewhere in the breakeven range of 18.62 and 31.38.
Trading the 22.5 gives me a probability of 55.91% that the stock will land anywhere in the range between 16.50 and 28.49.

Now I am mostly neutral to bearish on my position, but I have decided to go with the 25 strike since the rest of my trading group is.
Here is the order screen that helps you determine how to size the straddle trade. You take the credit you're receiving and adding the Buying Power Effect (B/P Effect) or margin required, and this becomes your total risk in the beginning. Now, I am sizing straddles conservatively at 1% of my portfolio, but I highly recommend that you do 1 contract until you get used to straddles and the volatility swings.


So I get a credit of $6.40 with a risk of $10.00.

CLOSE: BIDU Short Straddle= +27.5% ROI

I started this short straddle on 2/13 for BIDU.

Today, the volatility has finally crushed completely, meaning days after earnings has been announced, volatility has stopped dropping and is now starting to turn upward. So, I bought back the Mar 250 Call & Put for a total debit of $39.25.

When I opened this trade, I made $54.15 credit, so that gives me an ROI of $14.90/54.15= 27.5%
in 6 days!

Adjust: ZMH Call Calendar- Mar 80 to Mar 75

Seeing that the chart started heading down slightly but tested the moving average today, I adjusted my March 80 call to March 75 call for a total credit of $1.95. My last cost basis when I opened this trade was $12.75 so my adjusted cost basis is now $10.80.

Feb Monthly Returns +6.7%

This month, even with a 1 win: 2 loss ratio, I am up 6.7% because of my remaining open trades as seen in the chart above.

I have started to incorporate some calendars, a butterfly, and a short straddle this month to learn some of the different non-speculative (except for the straddle) trades. Non-spec. trades such as butterflies, diagonals and calendars are what should be building the majority of a portfolio. Speculative ones such as verticals, and straddles should be used for less than 20% of the portfolio.

CLOSE: DRYS BRCS -60.1%, GOOG Vulture -11.49%, & RUT BWB +53%

RUT Broken Wing Butterfly (BWB):
On 2/7, I closed 10 contracts & booked a profit of $6,780 ($5.65 X 12 contracts) plus $124 ($0.62 X 2 contracts), leaving 2 contracts
Max risk on 2 remaining contracts= $2,870 ($14.35 X 2 contracts)
6.27/14.35= +44% ROI

Today I fully closed out of the trade:
Sold 1 Feb 670 Call
Bought 2 690 Call
Sold 1 Feb 730 Call
For a total credit of $1.32
1.32/14.35= +9.2% ROI

Total ROI= 53.2% profit


DRYS Bear Call Spread (BRCS):
Bought back Feb 80 Call and sold back the Feb 85 Call for a total debit of $3.20. I sold this trade for an original credit of $0.49.
Closed out trade for a loss of $2.71. 2.71/(5.00-0.49)= 60.1% loss

GOOG Vulture:
Bought back Feb 540 Call & Sold Feb 550 Call for total debit of $2.30
1.30-2.30= $1.00 loss
1.00/(10.00-1.30)= 11.49% loss

OPEN: WFC Call.Calendar

Looking at the chart, I see the trading range between 26 & 34 since Oct. Volatility has been neutral since then as well. The stock is right now near 30 currently.

So I Bought the Jul 30 Calls for $3.65 & Sold Mar 30 Calls for $1.95 for a total debit of $1.70.

If not called out:
1.95/3.65= 53.4% yield in 1 month

No stop Loss set because it's under $1.00.

OPEN: BIDU Short Straddle

A short straddle is a great strategy traded very close to an earnings announcement. A short straddle consists of selling a call and selling a put at the same strike. This gives you theta (time) and vega (volatility) on your side since you are selling both legs. You normally open the trade the day of the announcement when volatility is at its highest. It is high because the upcoming news typically elicits fear in the market and among shareholders. This is why you can capitalize on this by selling instead of doing a long straddle by buying a call and buying a put.

You then exit the short straddle by buying back both legs a few days after the announcement when the fear is no longer there because the news is out. Just like when news gets old, so does volatility. So, the market maker deflates it back to a normal level. This allows you to buy back the legs much cheaper than what you sold it for.

So, as you can see on BIDU's chart, earnings is tonight at 8:00pm. The stock has pushed up dramatically today causing volatility and option value to be high. So I placed this trade around 3:30pm.

Therefore I sold the Mar 250 Call for $31.00 credit & sold the Mar 250 Put for $23.15 credit giving me a total credit of $54.15! Notice how I sold the Mar options instead of Feb. Since we are right near options expiration day for Feb (2/15), I wanted to give myself a few more days in case it takes longer for volatility to drop.

My breakeven (B/E) is 250 + 54.15=294.15 & 250-54.15= 195.85 so now I have a wide range for this trade to close at in order for me to keep my credit.

OPEN: ZMH Bull Diag., WMT Put Cal., & GOOG BRCS Vulture

ZMH Bull Diagonal:
Saw support near 65 and resistance since August at around 80.
Bought Jun 65 Call for $14.75 and Sold Mar 80 Call for $2.00 for a total debit of $12.75.
If not called out I make, 2.00/14.75= 13.5% yield in 1 month
If called out I make, 15-12.75/12.75= 17.6% ROI in 1 month
Stop loss set at 20%= $10.19

WMT Put Calendar:
I did this exact trade yesterday but sized my trade accidentally at 1 contract instead of 80. So I placed a limit order to fill at the exact debit of $1.20 that I had yesterday. Luckily, since the option value had not changed much at all today, I got filled as soon as I placed the order so now I have 80 contracts total of the Jun/Mar 47.5 puts for $1.20 debit.
1.50/2.70=55.5% yield in 1 month
No stop loss set since 50% would be set below $1.00. If it were set there would be too much risk of getting stopped out at the slightest move of the option.

GOOG BRCS Vulture:
A vulture is a vertical spread that is done very close to expiration, typically within the last week.
The risk with vultures is that because this is a directional trade and you have limited time, this must either be neutral or in your direction within that time for you to keep your credit. If not the risk is the difference between the strikes minus the credit. Do not trade this as a beginner. If you do, PLEASE trade this on paper only.
My friend OptionsMonkey brought this trade up so I thought I would try it out and size this trade for max loss with only using 1% of my portfolio.
Therefore we did a BRCS: I sold Feb 540 Call for $2.30 and bought the Feb 550 Call for $1.00 giving me a total credit of $1.30.
Max Profit= $1.30
Max Risk/Loss= $10-$1.30= $8.70
1.30/8.70= 14.9% in 1 week
No stop set on verticals.

Adjust: RUT Broken Wing Butterfly Feb 670/690/730

On 1/25, I opened a broken wing butterfly. Today, I did something funky for probability, with the help of Mojo at InsaneMoney.com. Here's how I understand it...

I started with a butterfly of:
6 Feb 670 Calls
12Feb 690 Calls
6Feb 730 Calls
For a credit of $5.65

Today, I closed out of:
5 Feb 670 Calls
10 Feb 690 Calls
5 Feb 730 Calls
For a credit of $0.62

Max reward= original12 contracts of $5.65
Max reward on remaining 2 contracts after closing 10= $6.27 ($5.65 + $0.62)
Max risk= $20-$5.65= $14.35

Max profit:
So today I closed 10 contracts & booked a profit of $6,780 ($5.65 X 12 contracts) plus $124 ($0.62 X 2 contracts), leaving 2 contracts
Max risk on 2 remaining contracts= $2,870 ($14.35 X 2 contracts)

6.27/14.35= +44% ROI

If the stock expires right around 690 on exp. day, then I have the shot at making a full $25.65 ($20 diff of top 2 strikes plus original credit of $5.65).
If the stock expires below 710 (which was my embedded butterfly strike), then I keep $5.65.
My Breakeven (B/E) is $715.65 (710 strike plus 5.65)

By sizing down in this manner, this still gives a chance to see if I can make the full $25.65 profit by expry, without exposing the whole 1% of my portfolio to it.

This is a highly advanced and confusing trade so I would not recommend it to beginners.

OPEN: ISRG BRCS, UAUA BLPS, WMT Put Cal. & JPM Put Cal.

Here were some good trades from my trade meeting that I got into today...

ISRG Bear Call Spread (BRCS):

Resistance at 350 and stock has been neutral for a few months. There's current consolidation around 300.
Sold Feb 340 Call & Bought Feb 350 Call for a credit of 0.30.
Mx Profit= 0.30
Max Risk= 10-.30= 9.70
0.30/9.70= 3% in 1 week


UAUA Bull Put Spread (BLPS):

Nice test up off the moving average
Sold Mar 30 put & Bought Mar 25 put for credit of 0.85.
Max Profit= 0.85
Max Risk=5-0.85=4.15
0.85/4.15= 20.5% ROI in 1 month


WMT Put Calendar:

Stock's trading range is between 45 & 50 all year. Did put instead of call cal. because debit was less than for the call calendar.
Sold Mar 47.5 Put for $1.65 and Bought Jun 47.5 put for $2.85 for a total debit of $1.20.
1.65/2.85=57.9% yield in 1 month!


JPM Put Calendar:

Stock's trade range is between 40 & 50.
Sold Mar 45 put for $ 2.87 and Bought the Jun 45 put for $4.65 for a total debit of $1.78.
2.87/4.65=61.7% yield in 1 month!

ROLL: MER Call Calendar Apr 55/Feb 55 to Mar 55

With calendars, since the highest premium is at-the-money (ATM) I got a signal today to roll because it was right on our strike at 55 this morning. So I put in a high bid to see if it would get filled and it did.

Bought back Feb 55 and sold Mar 55 Call for $2.00 credit

New cost basis= $2.48- $2.00= $0.48

I will add more to this post soon after my trade meeting...

OPEN: MER Call Calendar, AMZN Put Diag, GDX Put Cal., DRYS Bear Call Vert

So I placed 4 GTC trades last night that all got filled this morning within the first 1/2 hour.

MER- Call Calendar
Nice neutral channel between 50 and 60 for the past 3 months...
Call Calendar Sold Feb 55/Bought Apr 55 Call for debit of $2.48
Yield= $2.72 credit from selling Feb 55/ $5.20 debit from buying Apr 55= 52% in 3 weeks
Stop Loss @ $1.24 (50% loss for calendars)

GDX-Put Calendar
Neutral channel between 45.00 & 52.50 on stock
BOT +42 CALENDAR GDX JUN 08/Sold MAR 08 51 PUT @ $2.15 debit
GDX MARK 49.94
Yield= $4.00/$6.15= 65% in 6 weeks
Stop set for $1.07 (50% loss on calendars)

DRYS- Bear Call Spread
SOLD -21 VERTICAL DRYS FEB 08 80/Bought 85 CALL @ $0.49 credit
DRYS MARK 67.44
Profit= $0.49
Risk= $5.00-0.49=$4.51
ROI= 10.9% in 3 weeks
No stop loss on Verticals needed- sized for max loss

AMZN- Put Diagonal
Open: Bought +1 DIAGONAL AMZN APR 80 Put/Sold FEB 08 60 PUT @ $12.02 debit, AMZN MARK 69.34
Stop set for $9.62 (20%)
Stopped out at 12:48 pm: SOLD -1 DIAGONAL AMZN APR 80/Bought FEB 60 PUT @9.60, AMZN MARK 74.80
$2.42 loss= 20% loss