Trading Update - Recovery Edition II

Following last week's trading update (Edition 1), where I didn't necessarily call a bottom (as I'm not signaling the all-clear here either), I did make note of some especially timely volatility plays to profit from the anticipated mass-volatility in either direction.

Volatility in Financials

One play in particular has panned out quite well. Since last Monday, the S&P 500 has moved about 9%, including a 7% move Monday. FAS has moved about 45% and the options I purchased 2 weeks ago as part of the Financials volatility play are up 220% since purchase, while the hedged FAZ long shares represent an ever-decreasing share of the position. In that edition, I also highlighted my long GE position; that is moving in the right direction as well.

Selling Treasurys short

While my Short Treasurys play has recovered, the oddly timed announcement that the Fed would be buying $300 Billion in Treasury securities on the open market triggered a stop-limit order on TBT at 45 (I've just started using these and it saved me a few ticks on the way down; I bought back in upon stabilization). I'm still a believer that on a long-term basis, money's going to have to shift out of risk-free assets with virtually no yield into stocks, bonds and other instruments, giving TBT and other short-treasury instruments a boost.

AIG - Quick Trade

In a rather stupid, but lucky move, I moved in and out of AIG quickly, given continued mass runups. I don't intend on going back into AIG; this was a rather compulsive move that just happened to pan out well.
Bought 1000 AIG @ 1.3199
Sold 1000 AIG @ 1.6199

Apple and Google Options Plays

As the shares of AAPL and GOOG continue to run, the Apple Covered Calls play and the Google Credit Spread plays continue to perform well. In Google's case, as the shares diverge further from the 260 top end strike (Jun expiry), I can just watch a few dollars per day tick my way as these expire worthless; in the end, I should collect ~$900 in premium spread income by the time all is said and done, unless of course, Google drops below $260 per share by June. Apple is a bit more complex. As outlined in this initial article, the share price is now approaching my initial strike of $110 per share, which isn't a terrible outcome. As my old investment club buddy Paul would say, I need to "move the chains" on this one. If Apple rockets past $100 per share, I'll simply buy back the call I sold and re-sell one with the same (or later) expiry further out of the money. As long as I don't have to do this on a weekly basis and don't keep paying for more and more volatility premium (and commissions!), this will turn out to be a lucrative play; I've already captured my first premium from this play during round 1 of the strategy.

Liquor in Eastern Europe! - Going Like HotCakes!

As highlighted in my Doomsday edition, I picked up an option on CEDC, a liquor distributor in Eastern Europe, which was decimated by Russia's breakdown. I felt it was way overdone and have been rewarded accordingly. CEDC has moved over 60% since early March when I entered, and the option more so of course. Still holding on to that one. As I tweeted Monday, an Eastern European brethren CETV in the entertainment industry moved over 45% on a partnership deal (my tweet was at 31%, so anyone acting on that one picked up an easy double digit gain Monday; I actually never took the position due to liquidity in account).

Bad Calls

My positions move down too; I'm human! My gold position doesn't seem to be going anywhere. I also bought some more FAZ today to balance the hedge and it continued its descent. Obviously, a 100% long position in Financials would have been optimal, but I'm playing both sides on this.

Finally, I bought an out of the money oil call, thinking it will continue to run. Will update in the future on status there, not much movement just yet.