Trade Update – WAG

Fellow Traders,

I’ve been lax lately in posting all of my trades.  Over the next several days I hope to catch you up on what I’ve been doing lately.  As volatility has picked up so has my trading.

First, I’d like to tell you about my recent trade in Walgreens (WAG).  Some readers may recall I executed a trade in WAG earlier this year.  You can read more about WAG and that trade here: https://troysmoneytree.wordpress.com/2012/01/14/new-trade-wag/.

My most recent trade in WAG was similar to my earlier one.  Specifically, on June 19th I sold to open (STO) 3 JUL $30 puts at $0.68, netting $194.25 after commissions.  At the time WAG was trading at $30.09, pretty much ATM.  For some time it appeared I might have to roll the puts or have the stock put to me at $30.  However, a few days prior to expiration Walgreens and Express Scripts announced they had inked a new multi-year agreement.  WAG jumped over 10% on the announcement.  At expiration on July 21st it was trading at $34.60.

Having netted $194.25, my cash secured puts generated a 32-day ROIC of 1.62%.  Annualized, this equates to 18.46%.

In the months ahead, if we get another sell-off, I’ll be looking to enter another trade in WAG at the $30 strike.

Regards,

Troy

 

 

Trade Update – GME

Fellow Traders,

I want to give you an update on my GME trade.  You’ll recall I originally opened this trade by selling 6 JUN $18 puts.  As JUN expiration approached I rolled half of my position out to JUL $18 and the other half down and out to the JUL $17.  Earlier this month I bought to close the $18 puts.  At JUL expiration I decided to let the stock be put to me at $17.

Today I sold to open the AUG $17 calls for $0.28.

If my stock is called away at AUG expiration I will close the position with a small net profit equal to a ROIC of 2.36%.  If the calls expire OTM I will continue to sell calls until called away.

Regards,

Troy

What Others are Trading – July 2012

Fellow Traders,

Sorry I’m late this month in getting out this post.  Please take a moment to update everyone on what you’re trading.

Regards,

Troy

 

Position Update – VXX

Fellow Traders,

My sad saga with VXX continues.  Today, I decided to roll out and down my JUL $21 puts.  I had to go all the way out to DEC to obtain a net credit at the $20 strike.  Even after rolling down I’m still $6 ITM with a lot of ground to recover.  Here’s the specific trade I executed today:

BTC 5 JUL $21 puts at $6.95

STO 5 DEC $20 puts at $7.55.

As you can see I got a net credit of $0.60/share but had to extend almost 5 1/2 months to get it.  Thus far, since entering this trade back at the end of February I have collected $1,604 in premiums and have had an average capital requirement of $10,500.  Thus, my ROIC (assuming I’ll eventually dig myself out of this hole) is over 15%.

To break-even I’ll need to BTC my existing short puts at $3.21.  Instead of waiting passively for that to occur I’m going to alter my strategy.  Going forward I am going to look for opportunities to trade in and out of the position based on the stochastics.  Right now the slow stochastic is below 10 and the fast stochastic is just above 20.  These are very bearish levels and usually indicate a turn around is imminent.  My objective will be to BTC my new DEC short puts as the stochastic increases to 80.  I’ll then sell another round once the stochastic drops back down to 20.  I’ll keep repeating this process until I’m able to dig myself out of the hole I’m in.

Then, I WILL NEVER AGAIN trade options on ETNs.  I have been burned twice now, first it was in UNG and now again in VXX.  I will not attempt a three-peat.

Regards,

Troy