I’m long 100 shares of JOYG from an assigned naked put and also have two JOYG naked puts at the November 40 strike.  If all stays even I’ll have 300 shares in a month.  With that in mind and JOYG trading down at $34.05, I sold three JOYG October 40 naked calls (JQYJH) for $1.00 and received $287.75 after commissions.

If something changes in the markets and JOYG rallies, I’ll make more on the run up of my 100 long shares and the in the money puts I have than the three naked calls will lose.

My Delta for JOYG is now +141 (at 2pm).  That’s still more bullish than I probably should be which accounts for that chance of a rate cut any day this week. 

+100 for the long shares
+120.40 for the two naked puts
-1.10 for the October 55 call I started with
-79.30 for the new calls

I wrote this around 2:00, but hadn’t had a chance to post until after the market closed.  JOYG closed up slightly at $37.24.  That’s a big recovery from where I got in with these naked calls, so I’ll have to be careful if it recovers much more.

I did this morning what I should have done months ago.  I bought puts for downside protection.  It’s not like many of you haven’t advised it during the past 18 months of my blog’s life.  Finally, down big already, I wised up (a little).  I started off this morning looking at individual stocks to buy protection, but the dive was so quick that I felt I was missing the mark of where it’d be worth buying protection.  I thought that for the past few weeks and was clearly wrong, but I’m trying here.  So, I moved to ETFs to try to buy protection in an indirect hedge.  SPY made the most sense to me after I charted it this weekend and saw that it could have a 9% drop in it before it leveled, if not worse of course.  It was already down a few percent, but I jumped in anyway.

While SPY (S&P 500 Index ETF) was trading at $106.90, I bought two XPY December 110 puts (SPYXF) at $9.15 and paid $1841.99 with commissions.  The farther out time horizon for the options’ expiration will slow time value from beating me too soon and I sold a little in the …

I went back a full 20 years to see where the S&P 500 (SPX) is on a longer term chart’s perspective.  I only drew three trend lines in this week’s chart.  I also drew (in blue) extensions to these lines to show where they might intersect.

The long trend line that started in the early-90s and hit again in the mid-90s and in late 2002 and early 2003 is close to being touched again.  The latest trading channel is on a collission course for it around 1,000.  That’s 100 points (9%) below where the SPX closed on Friday.  This past week’s losses (114 points) make me feel like we’re in a race to get there, but the chart shows that we’ve already gone as low as we “should” for this month.  Believing that too much could cost you some money if the markets don’t want to do what this chart says.  If we flatten out for three weeks and then have four weeks of a slide that equals last week’s fall we’d hit that line.  It’s a reasonable target.
The lastest trading channel’s trend line of lower lows just met up with the SPX’s fall which could mean an area of brief support, but …

I charted all stocks I have an open position in.  I’ve been getting spanked for more than a month now and have saved myself from losing as much as I could have by selling naked calls.  I would’ve done better by buying some protective puts, but I didn’t.  I’ve sold all my calls far out of the money in the hopes of a rally after the bailout bill passed.  It passed today and we saw the markets sell on the news.  That means I should sell more calls or just get out of some of my losing positions.

There’s a new wrinkle though.  Now we hear that the Fed could cut interest rates by 50 basis points any day between now and their next meeting in a couple of weeks.  If they cut, the dollar will weaken again and commodities will go up.  I’m back in my quandary of not knowing what to do.  That always leads me back to the charts to help figure out where I should make my next move.  What I see on all of these is that they could all be near support.  So far for the past few weeks they’ve broken support at each opportunity.  Nothing says …

I’m already short one Monsanto (MON) naked put at the October 100 strike (MONVC).  I received $419.25 for selling it on August 19th.  MON was downgraded today by Merrill Lynch and dropped around $20 to start the day.  Since it was trading near the strike yesterday, this knocked a quick chunk out of my account.  I opted not to wait around to see what happened, but ADDED to my position while implied volatility was up over 100 at all nearby option strikes.

While MON was trading at $79.42, I sold one October 90 naked call (MONJU) at $2.75 and received $264.25 after commissions.  Since I’m in the hole for 100 shares I’ll be buying at $100 from my first naked put, I’m essentially covered on this to the upper side to 100, $20 away.  This trade was mainly to try to give me some more cushion if it falls more.  If MON rallies, I’ll either get out completely or buy this back as my original put improves for me.  My original put will change in price quicker than this call will since it’s in the money and moves closer to dollar for dollar now.

Immediately I went back in while MON was trading at …

If I was to name this month it would be dubbed “Revert to the Mean” month.  I’ve been ahead of the major indices for annual returns for a while and then I get hit with the worst total dollar loss in a single month that I’ve ever taken, although I ended with a realized gain of $268.21.  The losses I have on paper will be realized soon enough I’m sure.  Basically, my account reverted to the mean return for the major indices.  I like to think I’ll pull ahead when the market turns or flattens out, but for now, the law of averages got to me and knocked some sense into me.

According to Quicken, my account balance is $80,422.15.  Ameritrade says I have a balance of $80,603.16.  I’m down approximately $19,000 from last month’s end.  That’s nearly 20% in one month.  It would’ve been worse, but I rallied more than $5,000 on the last day of the month.  This is the reason I continue to sell my new calls farther out of the money - every good rally does wonders for my account balance.  At least I haven’t thrown any new money in my account and lost it.  We’re being more cautious …

I’ve been all over the board this month.  Here’s a snapshot of my current portfolio as of 2:45 pm today.  I have a mixture of covered calls, naked calls, naked puts and long stocks.  I have a little less than $4,000 in time value left to melt away before October options’ expiration.  I recovered about half of my losses from yesterday so far today, but we all know that could change by a few thousand in either direction with more than an hour left in the trading day.

A little more than a week ago when my account recovered half my losses I actually thought about dumping almost everything to have something left when this mess settles down.  I didn’t and now I’m back to my lows again.

Starting this morning down more than $4k made me react quickly.  My first two trades were naked put orders I left in from last week, expecting the bailout to be signed and give us a brief bounce.  Instead we’re down big today.  The VIX is barley under 40, which makes my paper losses look bad, but gives me a lot of room for recovery as the time value on my options decays over the next three weeks.

CMI - While CMI was trading at $43.51, my limit order from last week hit and I sold two October 40 naked puts (CMIVH) at $2.10 and received $408.50 after commissions.  It’s way down from where my options expired last month.  These options are still out of the money.

JOYG - 11 seconds after opening, while JOYG was trading near $46.00 my limit order from last week hit and I sold two October 40 naked puts (JQYWH) at $2.15 and received $418.50 after commissions.  These options are still out …

I had a panic attack this weekend.  This is a feeling I haven’t felt in a long time.  It wasn’t due to me being a recruiter during a recession, the 15% drop in my stock account’s value the past month, political issues, UGA’s loss to Alabama, my three sick aunts, or my son acting out at school.  No, this one surprised me.  I went out to get gas on Saturday and every station I went to was out.  We took my car because it was lowest on gas and needed a refill while we ran errands.  The first seven stations we passed were out, so we opted to come home instead of wasting more gas looking and hope that on Monday or Tuesday we could find some gas for my car or I’d have to walk to work (only 2 miles).  I took the long way home to try Costceo with my less than 1/8 of a tank remaining. 

In the Costco parking lot we were stuck behind a driver who apparently forgot while pedal was the gas and which was the break.  Tension started to build as we thought we could see they had gas available.  Then we could see the …