$TSLA – #DayTrading #ShortStrangles for a steady 15% weekly gain

Despite being stopped out twice during the five days last week, TSLA short strangles once again had a double-digit gain, 15%.

This strategy since introduced here six weeks ago, in early February, on TSLA, a volatile stock with liquid weekly options, has had a double-digit return every week.

The cumulative gain is now 76% for the six weeks on a maximum margin requirement (as calculated by the CBOE) of $20,000 per contract.

The values on the table below for last week’s short-strangle trades are per contract.

The reference for this strategy is this link: $TSLA – Day trading short strangles for simplicity’s sake.

(Click on the table for a larger view)

#ShortStrangles on stocks – the weekly on $SHOP WITH UPDATES

Didn’t get around to posting this on Twitter Monday to get the real-time stamp as is often my custom with trades like these but now that’s it is stopped out, I thought I’d note it anyway.

I first wrote about this short-strangle strategy in this post in September:

#ShortStrangles on #Stocks – stealing money weekly in cash

As per the strategy, this was a position to be taken 30 minute into the open Monday (see the green vertical line on the chart below for reference). SHOP closed that bar at 441.01 which made the short strangle an out-of-the-money 450 call and the 430 put, a ten-point spread on each side of the stock price and a 20-point spread over all. The option expiration was this Friday, 1/17.

The stop loss was on a five-minute close by the stock above or below either strike.

If all went well, meaning SHOP stayed between 450 and 430 for the week both the call and the put would expire worthless and earn approximately $850 per contract, a 9.6% gain on the cash margin required for the trade.

All did not go well as the stock broke 450 this morning (see the red line on the chart for reference), which closed out the strangle. Still there was bit of profit, about $183 per contract, 19% on the price of the strangle, 2% on the margin required. SHOP could fade back below 450 by Friday’s close (which wouldn’t surprise me) which would reap the full reward for the strategy but this stop discipline is crucial, otherwise this strategy can have unlimited losses.

UPDATE: At the close of the week SHOP did not slip back below 450 but the flush in the call premium, along with the put going worthless, would have this strangle gaining approximately $427 per contract, a gain of 4.8% on the margin requirement. But it would haven’t taken a different stop-loss strategy to capture the end-of-the-week return.

P.S. Shorted a 460c/440p strangle on the bar after the other stopped out for a potential gain of about $485 per contract on Friday’s expiration.

UPDATE: This strangle which replace the other went well with both the call and the put expiring worthless for a gain of about $475 per contract, a gain of 5.5% on the margin requirement.

(click on chart for a larger view)

#ShortStrangles on #Stocks – 11/18 – 11/22

Trades on the strangles for AAPL, FB, TSLA and NFLX were in direct relation to this post below to show how selling naked would work as a hedge on cash alone:

#ShortStrangles on #Stocks – stealing money weekly in cash

It was not a spectacular week but there was a gain 2.3% on total margins for the trades (still, scale that over a year and happiness will reign).

Should note only AAPL steadily decayed through week. FB came within a whisper of being stopped out with a loss but righted itself by Friday and expired worthless. TSLA slightly touched its upper strike stop at 360.84 but sold off so quickly I didn’t close it.

MADE A MISTAKE AND GOT AWAY WITH IT – NOT GOOD

Should have closed NFLX which showed a 47% loss for the position, a 2.8% loss on the margin requirement, but with the stock itself up a virtual six days in a row, wildly overbought and ripe for a bit of end-of-the-week profit taking, so decided to hold it into Friday. Probably because I wrote the post in the link above, I was thinking too much. Not a good thing to do in options trading.

Not honoring the NFLX stop was a mistake and I’m rationalizing its profit since it worked out great but doing that on a regular basis is a road to ruin. Being rewarded for making a mistake makes one think it can be done again…and again…until one comes along and kills you.

THIS WEEK’S STRANGLES:

#ShortStrangles on #Stocks – 10/14-10/18

THIS WEEKS SHORT STRANGLES:

LAST WEEKS RESULTS:

A PERTINENT QUESTION ON TWITTER:

#ShortStrangles on Stocks 10/07 – 10/11

This week’s strangles:

Last week’s results:

(Percentage gains and losses reflect returns on cost of strangles, not margin needed for the trade.)

#ShortStrangles on Stocks – 9/20 to 9/27



See chart panel below.

(click on chart for a larger view)

Short Strangles on Stocks 9/16 -9/20

Short Strangles on Stocks 9/9 – 9/13

This week’s short strangles (see chart panel below):

Last week’s short strangles:

Results were for the week but during the week (and FB stopped out at breakeven):

CHART KEY: The number in the yellow flag on the lower right is the cost of the strangle. The number in the white flag on the lower right is the price gain on the position (a negative number on the shorts is a gain). The number in the green flag on the lower left of each chart in the panel is the percentage gain or loss on the price of the strangle (not accounting for margin needed for the position).

(click on chart for a larger view)

Short Strangles on Stocks 9/03-9/O6

LAST WEEK’S SHORT STRANGLES:

THIS WEEK’S SHORT STRANGLES:

CHART KEY: The number in the yellow flag on the lower right is the cost of the strangle. The number in the white flag on the lower right is the price gain on the position (a negative number on the shorts is a gain). The number in the green flag on the lower left of each chart in the panel is the percentage gain or loss on the price of the strangle (not accounting for margin needed for the position).

(Click on Chart for a Larger View)

$SPY – Runs up on a tweet into the FED…

MARKET TIMING SIGNALS FOR 6/19/2019.

Long-Term Breadth (NYSI): BUY DAY 11
Short-Term Breadth (NYMO): BUY DAY 2
Price: BUY DAY 2
Nifty-50-Stock-List: 34 BUYS, 14 NEW BUYS, 26 OVERBOUGHT; 16 SELLS, 1 NEW SELLS, 1 OVERSOLD.
CNN MONEY’S “Fear and Greed” Index: 44, Rising, FEAR LEVEL.
Bellwether Stocks: 13 UP, 2 DOWN.

WHAT?

The Market ran up today when President Trump tweeted that he and President XI would be meeting at the G-20 conference (like they weren’t going to?) and would discuss the tariff tensions between the US and China. Then it stopped for the day when a Chinese spokesman shortly after basically declared the victory and planned to have no more than lunch with Ding-Dong.

Now there’s a fundamental for you?!

Oh, and it also came out that Trump wanted to fire the head of the Federal Reserve. On the first day of the FOMC meeting that news breaks!

Used to be this kind of uncertainty and instability would tank the market but evidently not now, or at least not yet.

OF PARTICULAR NOTE TODAY:

Stocks followed through another day with more strength to the upside – 26 of the nifty-50 list are now overbought, and 12 of the bellwether stocks up on the day.

NVDA calls led the options day trade with an 82% gain, AAPL ITM calls were up 38%, BABA ITM calls up 26%, and finally the SPY calls also joined the rise, up 52%.

WHAT NEXT?

Tomorrow is a FED day, with the Federal Reserve Open Market Committee making known its policy on interest rates. Any thing can happen in reaction to the FED decision, but given the market is in a positive upswing, tomorrow should be more of the same bullishness no matter what the FED does.

Unless one is an investor, this is a day to sell into the FED if the market’s rising and buy if it is falling. The aftermath for the rest of the week will matter more.