Weekly Options Play

During this years earnings I have been dabbling in the weekly options. I've been looking for bigger swings in the call/put trades and leveraging larger trades. To accomplish this, I have been using the SPDR S&P 500 ETF (SPY) Last week I had purchased 25 SPY April 24th $213.00 calls for $0.05 and got my opportunity a few days later to sell for $0.11, but missed my sale and never recovered on the trade. The options expired worthless.

The S&P 500 hit a new high on Friday, so my belief is there could be some large movement in either direction. To take advantage of this move I employed a strangle trade on the SPY May 1st weekly. My strike prices are $208.50/$211.50 (put/call).

New Established Positions

I established some new call positions and picked up some shares in a small company trying to leverage the transition into electronic cigarettes and vaporizers. The company I'm referring to is Vapor Corp (VPCO). I'm not a smoker, but at my place of business, I have seen a large amount of regular smokers now choosing to use electronic cigarettes or vaporizers, so why not invest in what you see? In the options world, I'm feeling bullish on a few areas based on earnings season and large swings in pricing, so picked up some weekly and monthly call options. The first two are highly speculative and are pure volatility plays and I'm looking for large movements over a very short period of time.

Netflix (NFLX) April 24th $630.00 calls. Earnings were released April 15th.

SPDR S&P 500 ETF (SPY) April 24th $213.00 calls.

ULTA Salon (ULTA) June 19th $170.00 calls. Earnings scheduled for May 28th.

New Position in FireEye

I established my first-ever position in FireEye, INC (FEYE). Instead of purchasing the stock outright, I purchased a few June 2015 calls. Looking at the chart, the stock crossed and seems to be holding above its 50-day moving average. If this remains true, I'm looking for at least a double in my options.

Update: Momentum Trades Using Options

I've made a few moves and wanted to bring everyone up to speed.

I closed out my Skyworks Solutions (SWKS) May 2015 $70.00 call at $14.30, which I originally purchased for $8.21. I still have confidence in SWKS, so I took some of the profits and re-invested in a further out of the money call. I purchased a May 2015 $100.00 call for $1.90. This allowed me to lock in some profit and still have some upside with SWKS.

I closed out my Celgene (CELG) May 2015 $125.00 call at $4.00, which I originally purchased for $6.35, so took a loss. Looking back, I had an initial opportunity to make a small profit, but let it run too long.

I'm still in my U.S. Oil ETF (USO). On multiple occasions I've come close to locking in some profit, but willing to let this "run" a bit more. Oil remains very volatile, so looking for a profit over $5.00.

One trade I didn't post here, but did sent out Tweets that I went short Abercrombie & Fitch (ANF). Five days ago, I purchased a May 2015 $25.00 put at $2.50 and following their horrible announcement sold it today at $4.60.

Momentum Trades Using Options

I entered three new positions using call options: Celgene (CELG) April 2015 $125.00 call for $6.35 Skyworks Solutions (SWKS) May 2015 $70.00 call for $8.21 U.S. Oil ETF (USO) October 2015 $15.50 call for $3.55

The genesis for my first two choices: CELG is continued upward chart pattern and support along 10-week moving average. SWKS is coming out of some consolidation and I'm hoping will springboard higher. The choice to dip my toe into USO is strictly based on the huge downward drop. I'm thinking the volatility will level out and prices will begin to level off if not rise.

Sun Worship

Over the past few months I've seen numerous Solar City trucks and vehicles all over the city and more and more solar panels on rooftops. Is this the time and place to get long? I've toyed with the idea of purchasing some stock, but also may look to purchase some 2016/2017 options.

Wild Ride

I've increased the import size of my charts, so hopefully this will be easier to see. Anyhow, what a wild ride yesterday with Deckers (DECK) and so many other stocks yesterday. What you are looking at is a weekly 5-minute chart on DECK. Because of the huge volatility yesterday, I closed out of my Jun $145 put position at $6.10 to lock in a nice gain.

There is a cool options calculator over at the CBOE to check on fair value and implied volatility, which helps me get in/out of options. Plugging in the latest numbers on DECK, I left some money on the table, but I'm okay with that. I'm off to look for some other opportunities, so good luck to all.

TEVA Position

I sold out of my position in Teva Pharmaceuticals (TEVA) today within the first 5 minutes of the market open @ $58.24 for a very small gain of just over 3%. I still have my Jan $55.00 call option.

DRYS Keeps Rockin' Higher

I took some additional profits on DryShips, INC (DRYS) two days ago by selling some shares at $10.07. Well it looks to have blown through the $10 range and is onwards and upwards. Currently DRYS is trading at $11.42 in pre-market and I'm wondering how long this upward trend is going to continue and where the next possible consolidation point will be....are we talking $15, $17, $20?

How much of this is tied to a "short squeeze" or have we passed that point already. There must be some people out there foaming at the mouth seeing this huge upswing. In my opinion, shorting at this level is not advised until this stock settles and a new base begins to form or one could look to play both sides of the fence with a spread.

Better Blogging

Again, I have become neglectful in updating my blog, so shame on me. I need to be more active and take my time to enter my trades both good and bad. So let's get this thing rolling with my most recent trades and thought process. First and foremost...I closed out ALL my mutual fund positions. This may be an egotistical move to think that I can do it better than "professional" investors, however I want the fluidity to move in/out of stocks. Initially, I did have some sellers remorse because the market had a nice uptick the day after I sold, but overall I am satisfied with my decision.

I know these are a bit historical, but this was my latest trade activity:

* 10/21/08 purchased Dec $15.00 put(s) XJZXO (XLF) @ $1.25
* 10/22/08 sold put(s) @ $1.88

* 10/27/08 purchased shares of U.S. Steel (X) @ $32.27
* 10/30/08 closed out all shares of X @ $38.43

* 10/01/08 purchased shares of Vasco Data (VDSI) @ $9.98
* 10/03/08 purchased additional shares of VDSI @ $9.10
* 10/31/08 closed out all shares of VDSI @ $11.33

My general thought process moving forward is to focus on energy and industrials. I will also look at getting into some options on the larger indexes.

My Vasco Data Security Upgrade

Just a little background on why I like VASCO Data Security International INC (VDSI) and how I escaped a possible calamity in late 2007. I actually picked up some shares of this company, which was active on Investor's Business Daily 100 back in October and November 2007. I decided to sell Dec 25 covered calls to pick up some extra cash and lower my entry point. Well...December rolls around and damn if my shares didn't get called away. At the time I was a bit disappointed, but as one can now see, I was extremely lucky.

VDSI is now trading in the 11 range. This week, I was trying to get into the Sep 7.50 and Sep 10.00 calls, however they are trading a tad expensive, so I may just buy the stock outright. The market has been taking a drubbing this week, yet VASCO has fought back and gained some ground. The company is well positioned in the overseas marketplace and is well linked to the security issues the world is constantly facing.

For final disclosure, at the time of this post I do NOT own any shares or options on this stock.

Options Expiration

Options expiration is this week, so I am expecting at least a few days of increased volatility as people scramble to get in/out of their respective short and long positions. I am looking to sit on the sidelines unless something falls directly into my wheelhouse. I still have my Jun 53 put position in the qqqq's and feel there is some more downward pricing to follow. The Feb 30 calls on the VIX have large volume, so why buck the trend that seems to be presenting itself.

Options Expiration

As the mantra in my blog states, "lessons learned good and bad," Tomorrow I have a bunch of put options that are going to expire worthless because I was over zealous with my purchases. I fell into the classic trap of buying "out of the money" puts because they were cheaper when compared with their "in the money" counterparts. One thing to always remember, when you are a buyer of puts/calls time is your ENEMY and conversely when you are a seller of puts/calls time is on your side and you want that option to expire worthless, so you can pocket that premium and then turn around and sell another option against the same 100 shares of stock. I actually find myself in this situation because back in Nov I sold a Dec 25 call on VDSI for $1.20, so looking at the price right now it is likely to expire worthless tomorrow. I am also currently contemplating selling some covered calls against my position in RIO.

Waiting For a Fed Move

It looks as if a bit of uncertainty is slowly creeping its way into the market place prior to the fed's anticipated rate cut on December 11th. Here is where it gets interesting, initially the market was falling all over itself trying to coerce the fed for a rate cut. It looks as if the market will get its wish, which is why I believe the market was up so huge last week. Anyhow, I feel the market is getting too greedy and talk is abound about how the market may be hoping for a 0.5 basis cut. So what happens if the market gets the lesser of the two? In my opinion the market will take on a downward trend.

To be honest, I have a few put plays in the options market, which expire in December and are not looking to hot right now. However, I still hold out some hope that the fed cuts rates by only 0.25. If for whatever reason they don't cut rates at all then the market better brace for a large drop in market share and increased volatility. I will continue to monitor the market until the fed makes its move, but I am not looking to make any additional large moves in either a bearish/bullish direction.

My First Options Trade

Well today I was full of apprehension because over this last weekend after the market took a drubbing, I decided to make my first options trade ever! I have been doing research and read a great book "Understanding Options" by Michael Sincere. It takes a very common sense approach to beginning options and is extremely user friendly. Anyway back to our regular programming. I have been following Vasco Data Security International INC (VDSI) for awhile and have even previously blogged about it being on my watch list.



On 25 October 2007, after doing my due diligence I finally picked up some shares on a pure momentum play and based on earnings at $30.02. The analysts were a bit disappointed with VASCO's earnings and valuations at the time, so the stock took an immediate tumble the very next day. Of course this sucked quite a bit and I was initially put off, but the more research I did the more I realized how this company has true worldwide exposure and are a true leader in their respective marketplace. I decided to hold on for the ride and watched it tumble down to the low 20's. On 8 November, I picked up more shares at $20.05 to shrink my cost basis realizing this was a great buying opportunity and that VASCO was being punished based on the overall marketplace not on the value of the company.

Now to the main point of my post. Today I took my first giant step into the options market by placing a covered call sale via my brokerage at Scottrade.

At first, I was a bit nervous thinking I was going to mess up my first options trade and end up costing myself a ton of cash. My main decision was what was my time frame and strike price for the covered call. I decided that since this was my first trade I did not want to space this trade out for many months, so I needed a strike price that if exercised would still allow me to earn a little profit. Based on my previous price points (mentioned earlier) I entered a sale for the December calls with a 25 strike price. My order was filled and I received a premium of $1.20. As you can see, I could have probably got a higher premium, but the NASDAQ started dropping this afternoon and I did not want to lose out on a trade just over a few bucks.



Lessons Learned: Don't get nervous it's just another trade, so it's not like I'm selling naked puts or calls where the risk is extremely great. All-in-all, I'm pretty happy with the trade and hope that the option does not get exercised because I still believe that VASCO will go higher just not sure if it will accomplish this in this volatile market by December. I guess I will have to wait and see.

On a more important note: A happy Veteran's Day from one veteran to the hundreds of thousands out there worldwide.