I pulled the list of my current positions this afternoon and pasted it below. With some of these short put positions giving me more than a 6-7% cushion and some of my covered calls more than 6-7% in the money I have been very tempted to go even farther out on a limb and sell more options. I’ve resisted though because I’ve seen the markets weaken recently and expect more downside to show up soon. If I’m wrong about another leg down for the markets then I’ll just have to profit on what I have in play already. If I’m right (and I only think any downturn will be shallow and met with another strong rally) then I’ll be poised to buy in at cheaper prices. I’m not buying back any of my short options, even the ones that only have less than $0.10 of value left because I want to keep them in place as what amounts to a limit order. If these stocks or ETFs drop enough to put them in the money, I’ll be ready to buy (or sell on the covered calls) at those prices.
I’m trying to hold off on adding to my account until after mid-term elections next week and the November 3rd Fed announcement for plan details of QE2. Both of these events could spark some “sell on the news” action. Some new positions I’m considering if they dip to the levels I like are VNQ, WAG, NSC and maybe AFL. What else should I be looking at? What are you opening positions on this week or next?
SHORT PUTS
- -2 DVY November$46.00
- -1 JPM November $39.00
- -1 MS November $23.00
- -2 MSFT November $23.00
- -1 SPY November $112.00
- -10 UCO November $8.00
- -2 IWN November $58.00
- -1 GLD November $130/140 Bull Spread
- -1 MDY December $145.00
- -1 BA December $67.50
Long Positions + CCs
- 300 CVS + November $31.00 covered calls
- 300 INTC + November $19.00 covered calls
- 100 JPM + November $39.00 covered call
- 100 MS + November $27.00 covered call
- 200 MSFT + November $25.00 covered calls
- 100 SPY + November $112.00 covered call
- 1,000 UCO + November $10.00 covered calls
- 800 VXX + November $20.00 covered calls (only 2)
- 200 AVAV + December $22.50 covered calls
- 100 ITRI + December $65.00 covered call
- 500 SNRV (down from up to 1,500 shares that I sold too soon)
- 25 BND (will be adding to this over time)
- 460 SHM (no plans to add to this for a while)
Like you, I’ve open positions in ITRI (short Nov 60 Puts) and VXX (a number of positions including a Nov 15 Straddle and some short Nov 13 Puts). I also have a Nov 20 Straddle on INTC as well as some short 19 Puts and long shares.
Some of my other positions include KCG, HI (only long shares here), NUE and SKX.
SKX is a particularly interesting one that dropped almost 20% yesterday. I had a position in SKX up until about a year ago and reopened a position yesterday because I think the selling was overdone. If there’s a few more down days, I’d definately recommend selling some Naked Puts on this one (I’m short Dec 19 Puts and will be adding to this if it drops furher). One of the big factors that caused the drop was a rise in inventories but they’ve had this problem before and are capable of dealing with it. They also have a lot of cash on hand.
Thanks Ronan. I’ll add SKX to my watch list. I’m always weary of fad shoe companies, but CROX made a nice % comeback after their fall. I’m just not sure SKX is there yet.
KCG looks like it could interesting on a dip.
HI looks like an interesting company. Seems like it would be more steady than it is.
NUE is going to come back strong eventually. I don’t follow it enough to know the cycle well though. It sure looks like it’s near a bottom though.
Hi Alex, If you have 10 cents or less with three weeks until expiration I would either close or roll them. Why tie up capital for a few bucks or risk losing on another flash crash?
Mule, those positions aren’t tying up any capital since I’m considering them naked. Most are so far OTM that I don’t think a flash crash would cause me harm for more than a few minutes. I wouldn’t mind buying any of them at those levels either, even if on margin. For example, my MSFT Nov 23 puts are sitting at .02/.03 bid/ask. Of course it would cost me less than $5 to close these, but I would be happy to add to my MSFT position at $23.00.
Now, let’s hope I don’t regret those words.
You have $5 upside and $4,600 downside on the 2 MSFT $23 Puts.
That’s one way of looking at it, but I look at it like my naked put is gone and I’m leaving a limit order in for 200 shares at $22.98, good for a few weeks. I see your point, but I’m just leaving the position in place to buy more, cheaper.