Jump to content

Surly #Stonks

Wally Fairway

By Wally Fairway
in Business and Markets

 Share

Recommended Posts

  • Replies 9.5k
  • Created
  • Last Reply

Top Posters In This Topic

Popular Days

Top Posters In This Topic

Popular Days

Popular Posts

Hank_Hill
Hank_Hill

Haven't mentioned it because didn't need naysayers because it is stupid, but I'm a med student doing this almost purely on my student loans while they're at zero interest. I've made +$20k since Decemb

Hank_Hill
Hank_Hill

The real treasure is the friends we make along the way

BradInATX
BradInATX

As long as 700% APR payday loans exist, you can fuck right off with "protecting people from themselves".

Posted Images

936horn

936horn 910

Posted
Posted (edited)

So my SPY 250 3/20 puts have basically doubled since I bought in. Same with 22p 3/20 CCL, I don't want to be greedy...might take some off the table before close today

 

edit: i too have become addicted to options.

Edited by 936horn
Link to comment
Share on other sites
Blotto

Blotto 23484

Posted
Posted

it is getting ridiculous. Yesterday i sold some SPY 300 puts for profits but took some of those profits and bought SPY 250 puts expiring Monday. The SPY was at around 280 when I bought those. It was a "worst case" scenario if the markets tanked over the weekend. Nope we touched 250 today, lulz. Got in at .98 and they are over $8 now. In one day, lulz. I was fairly convinced I was stupid even contemplating such a movement, but in reality,  my stupidity was only buying 10 contracts. Insanity. Fucking insanity.

The rational part of me wants to close my remaining short positions now and just bunker down with a great two week stretch, but the stonk buyer in me has me looking at 200 puts in say Aug/Sep. Its not that far out of the picture. So far the S&P is off about 25%. in 2008, the SPY fell over 50% from the high and in my opinion, we don't even have any idea yet about how many business are gonna get wrecked as this plays out.  

Link to comment
Share on other sites
Blotto

Blotto 23484

Posted
Posted

I'm pretty sure I don't want to be holding 10 contracts of ITM(or close to it) SPY puts that expire on Monday. It doesnt seem logical they would suspend trading, but I suppose it's possible. Give some bullshit excuse about closing the trading floor for safety.

Link to comment
Share on other sites
Wally Fairway

Wally Fairway 5539

Posted
  • Author
Posted

Fuck - I need to take a breath, sold some, bought some....end of the day this is where I am
and it isn't as good as this looks, as a big part of this is a hedge against the almost 10% loss on the ETF held
it certainly lessens the pain on the way down .... but options are becoming much more expensive

When I started doing this I was buying 6 month out 80% strike price puts as a hedge - the price of getting into those puts is more than 100% higher than it was 6 months ago.
What has also happened with the steep decline is that there are no cheap out of the money puts, like in SPY where the lowest strike for most dates is $199 (less than 20% below today's close) as opposed to the top end being $395 (or 60% above todays close)

All that said  - here is where I ended the day with the options held...it was quite a day in the #stonk world
I have paid to go longer than a week or two for expiration, as I think there is more downside to come but there will also be some bounces when there are attempted "fixes" to the market; which won't really work because this isn't a market driven problem (unlike the CMO/bank collapse of 2007-08)

options-03-12-20-EOD

  • Like 3
Link to comment
Share on other sites
Wally Fairway

Wally Fairway 5539

Posted
  • Author
Posted
16 hours ago, Continental Op said:

Tomorrow is going to be a glorious day for my Disney puts.

Maybe not
But today is a great example why I don't hold options to their expiration, I'll sit on my positions and see what next weeks brings. 
I'd like to see the beer virus get under control, and the banking system not fail under this economic strain - but I'm not buying into that, yet.

Link to comment
Share on other sites
Wally Fairway

Wally Fairway 5539

Posted
  • Author
Posted
2 hours ago, Wally Fairway said:

good thing I took a deep breath - these positions only opened down about $50k .... I'll hold to see if this bounce lasts into the afternoon

tl:dr - hedge is not hedging

I peeked at it just before noon, my options are now down about $5.5 k, including being up $3,800 on the 3-18 SPY $250 strikes that i bought just after open

Link to comment
Share on other sites
Blotto

Blotto 23484

Posted
Posted (edited)
1 hour ago, Anastasis said:

National emergency about to be declared. Sure the market gonna love that. 

Interesting timing on the press conference, in that he is gonna "Trump it up" one hour before the market closes. As fixated as he is on the market, perhaps he assumes that what he has to say will be a plus? Might be worth a straddle and just hope he says something that spooks the market one way or the other. 

WIth the market meandering today, I think strangles are a good bet. When QQQ was at 180, I bought 10 contracts of 175 put and 10 contracts of 184 call, each for  $1. 30 minutes later I sold the call side for $2 and now I have basically 10 free QQQ puts in case the market shits the bed at the end heading into the weekend. I could close them out now for $.50 and make a 25% return on the trade, but I'll hold for a while later and see what happens. They are pretty far out of the money right now, but market be crazy.

Edited by Blotto
Strangles; not straddles
Link to comment
Share on other sites
Continental Op

Continental Op 3934

Posted
Posted
Maybe not
But today is a great example why I don't hold options to their expiration, I'll sit on my positions and see what next weeks brings. 
I'd like to see the beer virus get under control, and the banking system not fail under this economic strain - but I'm not buying into that, yet.
Definitely not. 30 percent of their revenue generation facilities are sitting idle but up we go!
Link to comment
Share on other sites
Anastasis

Anastasis 23454

Posted
Posted
22 hours ago, Wally Fairway said:

FWIW, this weekend is filled with gut wrenching nervousness , due to my put position - and also a little excited to see where Monday opens

But that dopamine though.

 

BTW, did we every figure out what would happen to options contracts expiring during a market shutdown? Asking for my kids college education. 

  • Haha 1
Link to comment
Share on other sites
Blotto

Blotto 23484

Posted
Posted (edited)
5 hours ago, Anastasis said:

But that dopamine though.

 

BTW, did we every figure out what would happen to options contracts expiring during a market shutdown? Asking for my kids college education. 

I couldn't find shit online,  so I contacted my brokerage through chat. Obviously I'm not dealing with a financial luminary using Etrade's chat feature, but I did find it interesting that he wouldn't give a definitive answer. According to him, when there is a market shutdown the options clearing commission issues a directive detailing the specifics for that shutdown. Not sure that I buy that, but he directed me to theocc.com as the location for information on the topic as well as any directives that would be issued. It sounds like a bullshit answer, but the fact that I cant find any compelling information using the googletrons actually lends credibility to his "it depends" answer. If I find something definitive, I'll post it. 

Edit - that conversation was on Thursday afternoon , and I had a healthy number of Monday 250 puts that I wasn't comfortable holding without knowing the answer. As a result i dumped my short term puts leaving my remaining puts all with April expiration dates. I was awfully pleased with that decision on Friday afternoon.....now maybe not so much? 

Edited by Blotto
Link to comment
Share on other sites
Anastasis

Anastasis 23454

Posted
Posted
11 minutes ago, Blotto said:

Edit - that conversation was on Thursday afternoon , and I had a healthy number of Monday 250 puts that I wasn't comfortable holding without knowing the answer. As a result i dumped my short term puts leaving my remaining puts all with April expiration dates. I was awfully pleased with that decision on Friday afternoon.....now maybe not so much? 

Sitting on a bunch (for me) 3/27 puts, ugh. 

Link to comment
Share on other sites
Wally Fairway

Wally Fairway 5539

Posted
  • Author
Posted

For those that want to play along at home
disclosures
- I don't think doing this is a good idea for any sane person
- this is not a recommendation, it is more like a confession

Here is today's pre-opne options holdings - should jump up pretty quickly, but remember I think it was down over $50k in value on Friday

options-03-16-20-open

Link to comment
Share on other sites
Wally Fairway

Wally Fairway 5539

Posted
  • Author
Posted

90 minutes in and I've only had 1 of 3 orders clear, stupid meeting I was in at 9:30 - and my options valuation has dropped almost $40k since it opened up twice that amount.

Still holding though, and thinking that if whatever the Prez says at 3:30 boosts the market that will be a chance to sell long equity at a better price and buy puts at an even better price. Which works out pretty well, right up until the market decides enough is enough, or something happens to halt the decline, or the markets are declared closed until futher notice. 

What could really fuck me over is closing the markets and then they settle expiring options at closing indicated prices, which could impact my 2 SPY puts expiring this week.

Link to comment
Share on other sites
Blotto

Blotto 23484

Posted
Posted
On 3/13/2020 at 12:05 PM, Blotto said:

Interesting timing on the press conference, in that he is gonna "Trump it up" one hour before the market closes. As fixated as he is on the market, perhaps he assumes that what he has to say will be a plus? Might be worth a straddle and just hope he says something that spooks the market one way or the other. 

WIth the market meandering today, I think strangles are a good bet. When QQQ was at 180, I bought 10 contracts of 175 put and 10 contracts of 184 call, each for  $1. 30 minutes later I sold the call side for $2 and now I have basically 10 free QQQ puts in case the market shits the bed at the end heading into the weekend. I could close them out now for $.50 and make a 25% return on the trade, but I'll hold for a while later and see what happens. They are pretty far out of the money right now, but market be crazy.

Bumping this post from Friday. Obviously the trade I mentioned above was a net zero as the put side got destroyed in the afternoon. About 5 minutes before Trump's press conference started, the QQQ ETF was sitting at around 183. For options expiring that day ( 1hour left to trade), I bought 10 straddles at 183 for a total investment of $3 for each contract. I didnt know which way the market was going to go, but I was pretty sure there would be a movement one way or the other. Sold the call side for $6 during the speech and could have made  more if I held out to the close of market (puts again obviously expired worthless).

If Trump and his corona virus task force keep having conferences 1 hour before the market close, I suspect there will continue to be additional  opportunities here. If (big if) the market settles down a bit today and volatility comes down a bit, it might be worth another shot.  It will have to be the SPY this go around, as there aren't a lot of choices for Monday expiration. Nobody on the planet is as fixated on the market right now as Trump,so if he insists on updating the country before the market close, I gotta believe he thinks he what he has to say will be positively received by the markets. Its not even confirmed Trump will make an appearance, but it seems like something he won't be able to turn down after all the criticism of his handling of the situation. It just invites the possibility he will go peak Trump and move markets (good or bad). Something to keep an eye on anyway. 

Link to comment
Share on other sites
Wally Fairway

Wally Fairway 5539

Posted
  • Author
Posted (edited)

A Wally Fairway confession

I felt the need to look back and see what got me to where I am today (overly "invested" in puts, and almost an idiot out of my mind)

Background - almost all of my investing activities are in a rollover IRA, my 401k is in 3 funds (and I haven't looked since 2/29)
I started looking at options after being stop lossed out of some of my positions in the early 2018 rebound, where I missed out on a decent amount of the rebound as it happened very fast. I'm pretty sure someone on Surly made a comment about options being a better instrument then stops as far as controlling the risk and timing. So I started to look at them for a while, and early summer of 2018 I put in my request to be approved for options trading. I'm a high flying finance guy, with Level 1 authority {sarcasm - that is the lowest level}. After dabbling late summer and losing small amounts of money & learning what theta was, I bought some additional options in Oct/Nov and those were worth some decent money into mid-late December but I was greedy, added more into the "gains" and then watch it all disappear as the end of December early January 2018/19 bounce took away all my profits. And there I sat with another lesson in the value that theta loves to eat.
At this point I would guesstimate my over all options losses at $15-25k, but the bounce in the market covered up the cost.
Entering 2019, I put in some longer term puts (6-9 months) as the market seemed to be unrealistically and unsustainably increaseing - through all of 2019 I ate the losses on those, and entered 2020 with a small hedge position 5 SPY 11-20-20 $310 puts, and 5 SPY 1-17-20 $299 puts, the 1-17 puts expired worthless, but I stuck to my guns and went longer and bought some (expensive, for me) 3-19-21 $295 puts. At this point my cost basis in those 2 open positions was $13.7k and I was 35-40% hedged for the rest of the year.
And that brings me to February - seeing the market continue to rise, and on Friday 2/21 I bought 2 $326 3/02, 3/ $326 3/23, and 5 $332 3/02 puts for a total of $3.2k - and I started selling them on 2/24 (2 of the 3/23 $3/26) for about 2.5x the cost,and from there I started taking my gains and basically have parlayed the money, and my sanity, into where I am today.

I have realized that I need to take reap more of my gains and not leave this much money on that table, maybe take the gains on anything expiring in the next 10 day (which is about $20k) and reduce my longer term positions by 25-40%. Because nobody ever went broke taking gains (especially in a tax-deferred account). 
Then take a big breath, reevaluate where the market is; as prices of options have gone up quite a lot (meaning it is even more expensive to guess wrong), and then see if this shit levels out at SPY 220, 200, 175? (there really isn't any floor is sight - and I don't believe in "technical" support level in this type of an environment)

I have decided that once the market starts to turn I will primarily be invested in SPY, and look to sell covered calls to reap some returns above market rates.

Lessons learned
theta is a cost eating bitch
ride the wave, but try to jump out before it crash into shore (take some profits along the way, worst case get your investment back and let the gains ride)
know your options market - I used to have IJT, VOO and SPY (and a few other smaller positions) from an options standpoint - IJT and VOO a thinly traded so the market is not nearly as effective as SPY
My "investment" in options now is my 2nd largest position, to my SPY long equity (cost basis) - which is way out of whack, but most of it is from gains. 

I'll likely post my opening position tomorrow morning - but, on paper I made about $50k today, including my losses in core equity long positions, and that seems off on a day those holdings went down >11-15%.

 

To put a cap on this  - what does it all mean, and this is the first time I've looked at it like this, since the close of February my rollover IRA account is up just over 1%. 

Edited by Wally Fairway
grammer
Link to comment
Share on other sites
BTW

BTW 370

Posted
Posted

I've been wanting to get into this game for years.  Just bought a book for newbs on the space and am slowly working through it.  I'll open a paper account for now to make sure I know what I'm doing before putting any actual money at risk.  Who do you guys like to use for trading?  My current broker doesn't appear to have any derivatives trading options.  

Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

×
 Share
Go to topic listing


Football ... Basketball ... Baseball ... Other Sports ... Futbol ... 🤫995🤫 ... Gambling ... Movies & TV ... Music ... Hobbies ... Lulz ... Food & Travel ... Daily Texan ... Business and Markets ... Cloak Room ... Help ... For Sale ... Board Discussion ... Subscribe!... Donate!... Advertise... COOKIE MONSTER!

×
×
  • Create New...