My trades for the new year

Hello!  My December puts all expired worthless, and my CMG calls caused my 200 shares to get sold at $85.  My positions after expiration consisted of my 900 FUQI shares, my 500 NTES shares, and my 1800 STEC shares, along with the STEC backspread I described last time.  For January expiration I decided to continue my put-selling strategy, as well as my covered-call strategy.  I made the following trades:

Date	Time	Type	Description	Fee	Commission	Amount
21-Dec-2009	10:40:46	Trade	Sold 1 AAPL Jan10 195 PUT (APVMS) @ $4.50	0.0300	12.50	437.4700
21-Dec-2009	10:26:08	Trade	Sold 3 GOLD Jan10 75 PUT (GUDMO) @ $1.70	0.0300	12.50	497.4700
21-Dec-2009	10:22:31	Trade	Sold 7 AIXG Jan10 30 PUT (QWAMF) @ $0.65	0.0500	12.50	442.4500
21-Dec-2009	10:18:24	Trade	Sold 2 ABV Jan10 95 PUT (ABVMS) @ $2.55	0.0300	12.50	497.4700
21-Dec-2009	10:04:25	Trade	Sold 4 JOYG Jan10 50 PUT (JQYMJ) @ $1.35	0.0400	12.50	527.4600
21-Dec-2009	09:50:17	Trade	Sold 9 FUQI Jan10 24 CALL (QXFAY) @ $0.05	0.0500	12.50	32.4500
21-Dec-2009	09:47:31	Trade	Sold 5 NTES Jan10 40 CALL (NGHAH) @ $0.55	0.0300	12.50	262.4700
21-Dec-2009	09:46:58	Trade	Sold 33 HL Jan10 6 PUT (HLMR) @ $0.30	0.1600	16.50	973.3400
21-Dec-2009	09:46:19	Trade	Sold 2 AMZN Jan10 125 PUT (QZNMX) @ $2.54	0.0300	12.50	495.4700

The total premium for these short trades is $4,166.05.  Can't wait to see what happens next month!  Happy holidays!

A cool book, and an interesting "stock repair" idea

I came across a very interesting book, Options for the Beginner and Beyond by Edward Olmstead, at Borders last weekend.  Consider my position in STEC, which is currently underwater.  My overall cost basis is $22.78 per share.  I'm still feeling bullish about this stock.  Last Monday, STEC was trading around $12.49 per share.  What if I could get back to even, without having to require that STEC trade back to over $22?  And what if I could get paid to do it?  That's what Chapter 16 in Olmstead's book describes.  The idea is to sell a call ratio backspread... what's that???  It's like a vertical call spread, but we're selling the higher strike in the ratio of 2 to 1 to the lower strike.  Here's the trade I put on last Monday:

Date	Time	Type	Open or Close	Description	Fee	Commission	Amount
7-Dec-09	9:41:26	Trade	OPEN	Sold 18 STEC Jan11 17.5 CALL (ZKWAW) @ $2.25	0.18	-	4,049.82
7-Dec-09	9:41:23	Trade	OPEN	Sold 18 STEC Jan11 17.5 CALL (ZKWAW) @ $2.26	0.18	-	4,067.82
7-Dec-09	9:41:20	Trade	OPEN	Bought 18 STEC Jan11 12.5 CALL (ZKWAV) @ $3.86	0.07	27.00	(6,975.07)

Assuming no commissions, the net credit is $1,170.00, which I get to keep no matter what happens.  The maximum gain occurs at the higher strike of $17.50, where the short calls would expire worthless and the long calls would be worth $5 each.  Including the credit, my total position in STEC stock and options would be worth $41,670 in this case (1800 STEC * $17.50 + 1800 ZKWAV * $5 + $1,170), which would be just above my cost basis of $41,000.  Another way to look at this trade is as a covered call plus a bull call spread.

In order to "get back to even" I'd need STEC to rise to around $17.32 per share by the third week of January, 2011.  Much better than having to have it rise back to $22.78!

So, out of all the short put positions I had on last month, I got assigned on three: I now own 200 CMG @ $85, 900 FUQI @ $23, and 1000 (more) STEC @ $21. I also got my 1600 NDN called away from me @ $12.50, which, after commissions, lost me a total of $22.97. So, my cash flow last month (before being assigned CMG, FUQI, and STEC) was $10,806.24. Of course, I have paper losses of approximately $22,556.40 on my stock holdings!

Stock	Quantity	Price	Cost	Market	Value	Gain
CMG	200	85	17,007.50	83.33	16,666.00	(341.50)
FUQI	900	23	20,707.50	20.92	18,828.00	(1,879.50)
NTES	500	40	20,014.95	37.34	18,670.00	(1,344.95)
STEC	800	25	20,014.95	12.24	9,792.00	(10,222.95)
STEC	1000	21	21,007.50	12.24	12,240.00	(8,767.50)

STEC especially has misbehaved. I might have to wait a while for this one to come back. Anyway, this month I've done the following:

Date	Time	Type	Open or Close	Description	Fee	Commission	Amount
25-Nov-09	12:03:34	Trade	OPEN	Sold 11 VIP Dec09 17.5 PUT (VIPXW) @ $0.40	0.06	12.50	427.44
24-Nov-09	9:56:19	Trade	OPEN	Sold 4 JOYG Dec09 49 PUT (JQYXY) @ $1.60	0.04	12.50	627.46
23-Nov-09	9:42:54	Trade	OPEN	Sold 9 FUQI Dec09 24 CALL (QXFLY) @ $0.40	0.05	12.50	347.45
23-Nov-09	9:32:31	Trade	OPEN	Sold 2 CMG Dec09 85 CALL (CMGLQ) @ $2.45	0.03	12.50	477.47
23-Nov-09	9:30:16	Trade	OPEN	Sold 5 NTES Dec09 40 CALL (NGHLH) @ $1.15	0.04	12.50	562.46
23-Nov-09	9:30:16	Trade	OPEN	Sold 18 STEC Dec09 19 CALL (SQRLT) @ $0.05	0.08	12.50	77.42

Total income on these sales is $2,519.70.

Lots of activity this month. Not all of it great, but none of it very bad (yet). Three of my short put positions were assigned to me, and the rest expired worthless. The expired options netted me $3,019.73 of income last month, and I was forced to buy STEC, NTES, and NDN at prices slightly higher than market. I immediately wrote November calls against my long stock positions for a total of $3,710.88, and opened 10 short put positions for November expiration for $7,118.33. I'm hoping my stocks climb a bit to somewhere above the call strikes so I can keep the call premiums, and of course I hope the underlyings of my short put positions don't close below their corresponding strikes at November expiration. Best case scenario would net me around $10,739.51.

Execution Date	Action Description	Quantity	Symbol	Description	Price	Commission	Reg Fees	Total Cost
10/19/2009 9:33	Sell To Open	16	.NDNKV	NDN NOV 12.5 Call	$0.70	$24.00	$0.09	$1,095.91
10/19/2009 9:33	Sell To Open	8	.SQRKE	STEC NOV 25 Call	$2.15	$14.95	$0.08	$1,704.97
10/19/2009 9:30	Sell To Open	5	.NGHKH	NTES NOV 40 Call	$1.85	$14.95	$0.05	$910.00
10/18/2009 9:58	Buy To Close	16	.OFGVV	EXPIRED OFG OCT 12.5 PUT	$0.00	$0.00	$0.00	$0.00
10/18/2009 9:58	Buy To Close	13	.HGGVC	EXPIRED HGG OCT 15 PUT	$0.00	$0.00	$0.00	$0.00
10/18/2009 9:58	Buy To Close	4	.QKUVI	EXPIRED SNDA OCT 45 PUT	$0.00	$0.00	$0.00	$0.00
10/18/2009 9:58	Buy To Close	4	.DTJVR	EXPIRED DLTR OCT 45 PUT	$0.00	$0.00	$0.00	$0.00
10/18/2009 9:58	Buy To Close	9	.BCSVX	EXPIRED BCS OCT 22.5 PUT	$0.00	$0.00	$0.00	$0.00
10/18/2009 9:58	Buy To Close	33	.FVI	EXPIRED F OCT 6 PUT	$0.00	$0.00	$0.00	$0.00
10/16/2009 22:07	Buy	800	STEC	Option Assignment	$25.00	$14.95	$0.00	($20,014.95)
10/16/2009 22:07	Buy To Close	8	.SQRVE	STEC OCT 25 Put	$0.00	$0.00	$0.00	$0.00
10/16/2009 21:40	Buy To Close	5	.NGHVH	NTES OCT 40 Put	$0.00	$0.00	$0.00	$0.00
10/16/2009 21:40	Buy	500	NTES	Option Assignment	$40.00	$14.95	$0.00	($20,014.95)
10/16/2009 21:39	Buy	1600	NDN	Option Assignment	$12.50	$14.95	$0.00	($20,014.95)
10/16/2009 21:39	Buy To Close	16	.NDNVV	NDN OCT 12.5 Put	$0.00	$0.00	$0.00	$0.00
10/16/2009 9:33	Sell To Open	2	.CMGWQ	CMG NOV 85 Put	$2.35	$14.95	$0.03	$455.02
10/16/2009 9:33	Sell To Open	3	.SQMWG	SQM NOV 35 Put	$0.90	$0.00	$0.02	$269.98
10/16/2009 9:32	Sell To Open	1	.BPJWL	BIDU NOV 360 Put	$10.00	$14.95	$0.04	$985.01
10/16/2009 9:32	Sell To Open	3	.SQMWG	SQM NOV 35 Put	$0.90	$14.95	$0.02	$255.03
10/16/2009 9:31	Sell To Open	9	.QXFWN	FUQI NOV 23 Put	$1.30	$14.95	$0.07	$1,154.98
10/16/2009 9:30	Sell To Open	11	.MEDWW	MED NOV 17.5 Put	$0.45	$16.50	$0.06	$478.44
10/16/2009 9:30	Sell To Open	6	.QMBWG	MELI NOV 35 Put	$0.70	$14.95	$0.03	$405.02
10/16/2009 9:30	Sell To Open	6	.NGHWG	NTES NOV 35 Put	$1.10	$14.95	$0.04	$645.01
10/16/2009 9:30	Sell To Open	20	.CARWB	CAR NOV 10 Put	$0.45	$30.00	$0.11	$869.89
10/16/2009 9:30	Sell To Open	10	.SQRWN	STEC NOV 21 Put	$1.00	$15.00	$0.07	$984.93
10/16/2009 9:30	Sell To Open	3	.QGMWM	GMCR NOV 65 Put	$2.10	$14.95	$0.03	$615.02

Hey everyone. Had another awesome month. The market has been really awesome lately... but that could change at any moment. Hopefully the uptrend will last another 4 weeks at least! At September expiration my SNDA shares were called away. Let's do a bit of analysis on whether I made any money on my SNDA stock and options trades, despite being assigned the stock and having it called away subsequently. Here are the relevant trades:

Execution Date Action Description Quantity Symbol Description Price Commission Reg Fees Total Cost 7/20/2009 9:30 Sell To Open 4 .QKUTJ SNDA AUG 50 Put $2.00 $14.95 $0.04 $785.01 8/21/2009 8:04 Buy 400 SNDA Option Assignment $50.00 $14.95 $0.00 ($20,014.95) 8/21/2009 8:04 Buy To Close 4 .QKUTJ SNDA AUG 50 Put $0.00 $0.00 $0.00 $0.00 8/25/2009 9:33 Sell To Open 4 .QKUIJ SNDA SEP 50 Call $2.60 $14.95 $0.05 $1,025.00 9/18/2009 8:09 Sell 400 SNDA Option Assignment $50.00 $14.95 $0.52 $19,984.53 9/18/2009 8:09 Buy To Close 4 .QKUIJ SNDA SEP 50 Call $0.00 $0.00 $0.00 $0.00

As you can see, it all started when back in July I sold the Aug 50 puts (for $785.01), which ended up in the money at expiration. I was assigned 400 shares of SNDA stock on August 21, which cost me $20,014.95. I promptly sold September calls against the shares on August 25, netting a cool $1,025.00. SNDA's price then shot straight up, causing the forced sale of my shares at $50, for proceeds of $19,984.53. If you add up all the numbers, you're left with a total profit of $1,779.59. Not bad, considering the volatility. As a comparison, let's see what might have happened had I not been using options. Considering that I was bullish back on July 20, I might have bought 400 shares of SNDA straight-up. The low of the day was $54.65, but, I probably wouldn't have gotten so lucky (the high of the day was $60.23!), but let's just say that I was the luckiest guy in the market and bought all 400 shares at the low. If I had held on until September 18 and sold at the high of the day ($55.38) I would have made a whopping $0.73 per share, for a total of $292.00 before commissions! Yeah, I think I'll stick with options :)

All my other September options (puts) expired out of the money, allowing me to keep their full premiums totaling $2,952.42. I started a bit early this month, selling my October puts last week even before the Septembers officially expired. Here are the goods for this month:

Execution Date	Action Description	Quantity	Symbol	Description	Price	Commission	Reg Fees	Total Cost
9/18/2009 15:24	Sell To Open	33	.FVI	F OCT 6 Put	$0.11	$49.50	$0.14	$313.36
9/17/2009 12:12	Sell To Open	9	.BCSVX	BCS OCT 22.5 Put	$0.50	$14.95	$0.06	$434.99
9/17/2009 11:38	Sell To Open	4	.DTJVR	DLTR OCT 45 Put	$0.60	$14.95	$0.03	$225.02
9/17/2009 11:29	Sell To Open	16	.NDNVV	NDN OCT 12.5 Put	$0.20	$24.00	$0.07	$295.93
9/17/2009 11:05	Sell To Open	5	.NGHVH	NTES OCT 40 Put	$0.60	$14.95	$0.03	$285.02
9/17/2009 11:04	Sell To Open	4	.QKUVI	SNDA OCT 45 Put	$0.70	$14.95	$0.03	$265.02
9/17/2009 10:46	Sell To Open	13	.HGGVC	HGG OCT 15 Put	$0.85	$19.50	$0.08	$1,085.42
9/17/2009 10:07	Sell To Open	16	.OFGVV	OFG OCT 12.5 Put	$0.45	$24.00	$0.08	$695.92
9/17/2009 10:02	Sell To Open	8	.SQRVE	STEC OCT 25 Put	$0.45	$14.95	$0.04	$345.01

Grand total: $3,945.69. Let's see how much of it I end up keeping in October!

I broke down and sold some more options the other day:

Execution Date	Action Description	Quantity	Symbol	Description	Price	Commission	Reg Fees	Total Cost
9/8/2009 11:44	Sell To Open	12	.CFQUW	CAKE SEP 17.5 Put	$0.15	$18.00	$0.06	$161.94
9/8/2009 9:35	Sell To Open	7	.SEUUF	SHOO SEP 30 Put	$0.25	$14.95	$0.04	$160.01
9/8/2009 9:30	Sell To Open	4	.QGMUK	GMCR SEP 55 Put	$0.90	$14.95	$0.03	$345.02

I suppose I was greedy :) There were only about 7 trading days left when I sold the options, and the premiums looked good. Seems like this might be a great month after all! Total premium sold for September expiration (so far): $2,952.42.

The streak is broken... or is it?

Here are my September-expiring option trades:

Execution Date	Action Description	Quantity	Symbol	Description	Price	Commission	Reg Fees	Total Cost
8/25/2009 11:41	Sell To Open	13	.CXQUC	CYBS SEP 15 Put	$0.25	$19.50	$0.06	$305.44
8/25/2009 9:33	Sell To Open	4	.QKUIJ	SNDA SEP 50 Call	$2.60	$14.95	$0.05	$1,025.00
8/24/2009 13:25	Sell To Open	9	.TJQUX	TSRA SEP 22.5 Put	$0.65	$14.95	$0.06	$569.99
8/24/2009 9:52	Sell To Open	2	.UADUH	UFPI SEP 40 Put	$0.80	$14.95	$0.02	$145.03
8/24/2009 9:52	Sell To Open	3	.UADUH	UFPI SEP 40 Put	$0.80	$0.00	$0.01	$239.99

Total premium this month is $2,285.45. You'll note that I'm selling some call options this month. That's because I was assigned in August on my SNDA 50 puts, leaving me with a nice set of 400 shares of SNDA in my account. It's the first time I've been assigned since I've been selling puts regularly. Net cost for those was $48, less commisions, so even if they get called away at $50 this month, I'll still make $2 on each share, plus the $2.60 per share call premium, for a total of $4.80 per share. Not too bad. If the shares tank, I may be in a bit of a pickle though. So far they're holding up above $48 pretty well, so if I don't get them called away this month, I'll probably just sell some more calls against them next month. The shares are still rated a strong buy by Navallier's PorfolioGrader Pro.

Till next time.

Another fully expired month! Can the streak continue?

Once again, all my short puts expired out of the money this month, netting me $3,446.01. Here's my batch for August expiration:

Execution Date	Action Description	Quantity	Symbol	Description	Price	Commission	Reg Fees	Total Cost
7/21/2009 10:02	Sell To Open	4	.QCRTJ	QSII AUG 50 Put	$1.45	$14.95	$0.04	$565.01
7/20/2009 12:53	Sell To Open	16	.UGFTV	GSIC AUG 12.5 Put	$0.30	$24.00	$0.12	$455.88
7/20/2009 10:04	Sell To Open	27	.WQUTU	WATG AUG 7.5 Put	$0.20	$40.50	$0.18	$499.32
7/20/2009 9:33	Sell To Open	9	.TQUTX	THOR AUG 22.5 Put	$0.45	$14.95	$0.06	$389.99
7/20/2009 9:31	Sell To Open	16	.CXQTV	CYBS AUG 12.5 Put	$0.30	$24.00	$0.12	$455.88
7/20/2009 9:31	Sell To Open	8	.NQZTE	TNDM AUG 25 Put	$0.65	$14.95	$0.07	$504.98
7/20/2009 9:30	Sell To Open	4	.QKUTJ	SNDA AUG 50 Put	$2.00	$14.95	$0.04	$785.01
6/30/2009 9:30	Sell To Open	2	.QXFTV	FUQI AUG 12.5 Put	$0.40	$3.00	$0.01	$76.99
6/30/2009 9:30	Sell To Open	10	.QXFTV	FUQI AUG 12.5 Put	$0.45	$15.00	$0.07	$434.93

You'll notice that I sold the FUQI puts a bit early... I couldn't help myself! The premium was just so juicy! Hopefully once again all these guys'll expire out of the money and net me $4,167.99.

On the day-trading front, I've been checking out High Probability Trading Strategies by Robert Miner. Chapter 3 is my favorite. It talks about a simple wave analysis technique (based on Elliott Wave) to figure out whether you're probably in a trend or a correction, and what stage of the lifecycle of the trend or correction you're likely in. Sounds like very useful ($) information, doesn't it? I hope I can apply the information to formulate an objective trading system, but it seems a bit tricky to programmatically identify the wave patterns. I'll keep you posted.

At some point I want to figure out what my last 3 monthly returns are. Just a nice to have.

Till next month. See ya.