optionstrader's  Instablog

Options Trading There is a decent chance we could see deep red very shortly. So, I decided to increase my risk a bit for June Options:

Closed BAC Jun 2010 19 Put at 4.1

Closed HD Jun 2010 35 Put at 3.42

Closed COF Jun 2010 44 Put at 6

Closed QQQQ Jun 2010 49 Put at 5.2



Bought BAC Jun 2010 17 Put at 1.97

Bought HD Jun 2010 33 Put at 1.59

Bought COF Jun 2010 41 Put at 3.06

Bought QQQQ Jun 19 2010 46 Put at 2.38

Bought C Jun 2010 3 put @ .05


The options I'm currently holding:

C Jun 2010 3 put @ .05

C June 2010 4 Put @ .27

F Jun 2010 13 put @ 2.20

BAC Jun 2010 19 put @ 3.15

QQQQ Jun 2010 49 put @ 3.85

HD Jun 2010 35 put @ 2.4

COF Jun 2010 44 put @ 4.1

As I'm just starting this blog, I figured I should give a recap from the blogs I started earlier.

April 29th, 2010:
Misplaced Optimism The market is becoming ridiculously optimistic. Greece, Portugal, and Spain have all had their bonds downgraded and are in precarious financial position. Europe in general, England, and many US states are in horrible financial shape. Unemployment is not making much of an improvement. Despite all this, the market continues to rise into extremely overbought territory. I'm not certain how long this will continue, but I strongly believe there will be a dip shortly. So, I decided to make an aggressive play by buying Citigroup May 2010 4 Puts.


May 7th 2010:

With options expiration looming (May 21), I decided to close out all my May positions and move them to June, with the exception of my Citigroup puts. This month's gains are already much better than last. I will hold off on selling C puts until later. It may be a big mistake considering my current gains, but my puts could spike considerably higher if the market tumbles further.

All numbers are rounded to the nearest percent

Profit or loss = selling price / (buying price + $0.75 per option contract) - starting principal (100%) - selling commissions ($0.75 per option contract + fees)

I earned a 2.92/1.7175 - 100% = 70% profit on the F May 2010 14 put - selling commissions (1%) = 69% net profit

I earned a 4.05/1.6975 - 100% = 139% profit on the BAC May 2010 20 put - selling commissions (1%) = 138% net profit

I earned a 4.5/1.6475 - 100% = 174% profit on the QQQQ May 2010 50 put - selling commissions (1%) = 173% net profit

I earned a 3.30/3.1575 - 100% = 5% profit on the COF May 2010 45 put - selling commissions (1%) = 4% net profit

I incurred a 1.8/2.4575 - 100% = 27% loss on the HD May 2010 35 put - selling commissions (1%) = 28% net loss

69% + 138% + 173% + 4% - 28% = 356%

If I break even with C puts, 356% / 6 options = 59% gain

Total Net Profit = 59%

I never compound previous gains from past months; I only add to them. When you play with near-term options, in any given month, you can lose a large percentage of your money.

Cumulative effect = 160% of original amount (includes 1% profit from April options)
 

The options I'm currently holding:

C May 2010 4 Put @ .03

F Jun 2010 13 put @ 2.20

BAC Jun 2010 19 put @ 3.15

QQQQ Jun 2010 49 put @ 3.85

HD Jun 2010 35 put @ 2.4

COF Jun 2010 44 put @ 4.1


May 14th, 2010:

Closed C May 2010 4 put @ .13

Bought C June 2010 4 put @ .27

I believe I could have gotten more from my C puts if I held them into next week, but it wasn't worth the risk. They expire on May 21.


May 21st, 2010:

All numbers are rounded to the nearest percent.

Profit or loss = (selling price - $0.75 per option contract) / (buying price + $0.75 per option contract) - starting principal (100%)

Selling price of $0.13 - $0.0075 = $0.1225

Buying price of $0.03 + $0.0075 = $0.0375

I earned a .1225/.0375 - 100% = 227% profit on the C May 2010 4 put

227% / 6 options = 38% Total Net Profit + 59% Total Net Profit from F, BAC, QQQQ, COF, and HD May options = 97% Total Net Profit for May Options

Cumulative effect = 198% of original amount (includes 1% profit from April options)


The options I'm currently holding:

C June 2010 4 Put @ .27

F Jun 2010 13 put @ 2.20

BAC Jun 2010 19 put @ 3.15

QQQQ Jun 2010 49 put @ 3.85

HD Jun 2010 35 put @ 2.4

COF Jun 2010 44 put @ 4.1

Sources: ( http://www.unbelievableoptionstrader.com/ and http://caps.fool.com/Blogs/ViewBlog.aspx?t=01005166437761929187 )