Overnight trade on Priceline

As you know I’ve been following the action on Priceline since my first post on Feb. 17, See here. I also followed up on this idea on Feb 24, see here.

Today I’m sharing a short-term trade I’ve setup. Note: I’m not advocating this or believe this type of trade is for everyone. Today I opened a very small position in the April 8 $1290 puts.

Justification for trade.

  1. Technical: Short-term Head and Shoulders pattern confirmed. For more info on this pattern see here.
  2. Technical: Death cross on 60 Min EMA. For more information on the “death cross” see here.
  3. Technical: Closed below the highest volume distribution price of $1290.
  4. Sentimental: Widespread fear of terrorism slows international travel

pcln3.31

pcln3.31a

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$SDS and $VXX update

Yesterday I closed my $VXX long position for a -2% loss. I have re-established a position in the $VXX $18 Puts for April 15.

Yesterday I closed my $SDS long positions for a -6% loss. I have not re-established this position yet.

Check out my closed and open trades.

Stay tuned. I have a couple new trades that I am getting ready to share with you.

 

Is the Market Triple Barrel Bluffing?

Some of you know that my primary focus is day trading and I usually don’t hold large positions overnight. Day-trading has many advantages over holding a position over several trading days, weeks and months. It allows me to be in cash overnight, rest easy, and reset fresh every morning. When I choose to hold a short term trade for days and weeks my day-trading buying power (margin) gets used . It’s a sacrifice and opportunity cost in trading.

For me, a short-term trade is one I’m willing to hold for several days or weeks. When I think a good short-term trade  setup starts developing I may scale into a position and set myself up for the counter trend move. Scaling in allows me to maintain my day-trade buying power while building a short-term trade. Timing a counter trend move is a contrarian point of view. The simple definition of being contrary is going against the trend. The problem is that the trend can continue much longer than one expects. The psychological decision to run with or against the crowd is about timing the counter-trend move and establishing good location. This is exactly what I’ve been trying to achieve since I started scaling into the $SDS and $VXX puts, see open trades.

These trades are bearish and the market needs to reverse down for them to work. Right now I’m at an impasse because the market keeps pushing higher. The longer this trend maintains it’s upward trajectory the harder it is to hold this position. The potential reward is outweighed by compounded losses and the fact that my day-trade buying power decreases. I consider this a double loss because my diminishing buying power is an opportunity cost. I’m unable to use as much margin day-trading because it’s tied up in a loosing position. Hand-cuffing myself to this trade is something I need to really evaluate in terms of risk/reward.

The rest of this week will be crucial for me in determining what next steps to take. My options are really limited to three, not simple, choices.

  1. Take the loss and free up my day-trade buying power. Possibly re-enter the position at a better level.
  2. Sell half of my position to free up some of my day trading power. Possibly re-enter another half position at a better level.
  3. Hold strong

There are a lot of similarities in Texas Hold’em Poker and the stock market. I won’t take time to go into all of them here but want to share something I found on YouTube. The following link is a video of poker start Phil Ivey, winner of 10 World Series of Poker bracelets and Tom Dwan. In this short video Tom’s risky but brilliant poker play forces Phil to fold the winning hand. The move is called a Triple Barrel Bluff and the strategy is simple…don’t stop betting! That’s exactly how Tom won this hand. You see, even though he had the losing hand he showed a lot of strength by betting every time a new card was turned. This pretty much sums up how I feel right now about the US stock market. I’m Phil Ivey and the market is Tom Dwan. I could have the winning hand but it’s really hard for me to justify holding because I don’t know what two cards my opponents has. Even a pair could beat me at this point. There is still one more card left in the deck but as market forces seem to be willing and bid the market higher it becomes more difficult to hold this position. Watch video to see final outcome.

philivey2

I could saturate this blog with reasons that don’t justify the markets’ continual climb higher but I’m not going to because it just doesn’t matter. The market will do what it wants to regardless of what I or anyone else thinks. Plus, I could just be flat wrong! I think the market is stretched to the upside and just like a stretched rubber band it will snap back. If the snap back is coming soon then my location for this trade will be stellar! A look at the chart below will shows how incredible this move off the February lows has been and where I’ve entered my short position. A snap back down to even 200 on $SPY will yield a nice profit for this trade but.

SPY3.22

Note: I wrote this blog Tue 3/22. On Wed 3/23 I had my full position. On Thurs 3/24 I closed some of this position. The market has shown weakness but the $SPX (S&P 500) needs to stay below $1940 for me to be highly convinced.

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How to Play Market Maker Algos

What you see on your trading screen is not a complete view of what’s going on in the stock market. Behind the screen hard to comprehend forces are at work. These illusive aspects of the stock market include dark pools, high frequency trading, programmatic algorithms, and other technological innovations are designed for one reason…to take your money!

In this section I will discuss:

  • The role of the market maker in the stock market

Over the last decade one of the most fascinating technological advances in the stock market has been the replacement of human market makers with computers. A market maker is a broker-dealer firm that accepts the risk of holding a certain number of shares of a particular security in order to facilitate trading in that security (a security can be a stock, option, future or another asset). Each market maker competes for customer order flow by displaying buy and sell quotations for a guaranteed number of shares. Once an order is received, the market maker immediately sells from its own inventory or seeks an offsetting order. This process takes place in mere seconds.

This is an example. The letters are the market maker firm or exchanges, i.e. PHLX.  The numbers are the amount of shares or options contracts they are offering. This is an example of an option spread.

bidask

As a day trader it is important to understand the role a market maker plays in the stock market. Market makers will display offers that do not always accurately reflect the “true price” which they are willing to buy and sell. These offers to buy and sell are displayed in the form of a bid and ask. Say you want to buy a stock, the ask price is the offer the market maker publicly displays as the price they are willing to sell to you. The bid price is the offer market makers publicly display as a price they are willing to buy at. This service provided by market maker firms offers liquidity to the stock market and helps facilitate transactions. Without market makers no stock market would exists. The buyers and sellers pay for this service when they transact in the market. Market makers can increase their profits by widening the spread between the bid and the ask price. Widening the spread helps market maker firms hide the “true price” they are willing to buy and sell at. It is imperative to be privy of this fact. I always try and pay less for these services. The goal is to discover the “true price” or best price the market maker is willing to give.

Colossal giants like Apple, Microsoft and Exxon are so heavily traded that the bid/ask spread usually reflects the true price the market maker is willing to buy and sell at. However, realizing the true price the market maker is willing to give is more difficult the smaller the company gets. Take for example the Chicago Mercantile Exchange company, symbol CME. This stock has a market cap of $32 billion and trades and average of 1.7 million shares a day. It’s not a small-cap stock but certainly doesn’t compare to Microsoft, a $430 billion dollar company that trades an average of 32 million shares a day.

In this section I discuss:

  • A “fat-finger” (accidental) trade that I managed for a small profit
  • Tips for order entry
  • How I discovered the “true price” the market makers were willing to give 

On March 18th I received an alert to buy CME because it was going higher. This was a red-hot alert and the signal told me to buy a lot and sell quickly. This was a scalp trade. The plan was to use highly leveraged options and sell them quickly (withing 5-10 minutes after buying). The problem was that my execution was horrible. Instead of buying call options I accidentally bought put options (Call options increase when the stock increases and put options increase when the stock decreases). I was tying to be quick and in doing so bought the wrong options. My poor execution put me in a hole as the price of the stock went immediately higher which was what my alert had told me would happen (see chart below).

cmechart2.PNG

When I bought the Put options the spread was $1.00 (bid) x $1.45 (ask) and the market maker filled me at $1.20. This was the “true price” the market maker was willing to give me.

  • Tip 1 – When I need my order to fill immediately and the stock isn’t moving in one direction with a lot of volatility, I find that submitting a “limit order” slightly above the ask sometimes gets me the “true price” the market maker is willing to give. I can’t tell you why offering to pay more than the ask gives me the “true price” but I believe it has something to do with the way the algorithm is programmed.
  • Tip 2 – I use “limit orders” because I want a cap on the amount I’m willing to pay for a stock or option. A “market order” tells the market maker that you are willing to buy or sell at any price they offer, and since they want to make money, and aren’t always the most ethical players, they will probably give you the best price according to them!

After accidentally buying the wrong options I immediately tried to sell but the stock went up, the spread dropped down to $0.85-$1.20. I was in the negative but what was worse is had I bought the right options I would have been sitting on a nice profit!

The price and chart action showed short-term resistance overhead. As the price started coming back down the bid stayed at $0.85 cents but the number of offers at $1.20 started to decrease. This was a sign that the market makers were getting ready to increase the spread. At this point it was a busted trade.  Instead of breaking-even I just wanted out so I submitted an order to sell some at $1.15. As soon as I submitted my order hundreds of market maker orders to sell at $1.15 matched me. Even though the stock was going down, and in my direction, the market makers were not going to let me get out easy, so they thought!

  • Tip 3 – I believe there are two apparent reasons why the market makers matched me at $1.15; if new buyers appeared they would sell from their own inventory instead of letting me sell, and they wanted me to capitulate and sell at a lower price.

What happens next is what led me to write this blog. CME continued heading down in my direction but the market makers didn’t want to let me sell the options at $1.15 so I cancelled my order because I knew that the “true price” was getting closer to the price I initially paid ($1.20).

  • Tip 4- To control order flow, market makers look for “real orders” from buyers and sellers. They like to anchor their bid and ask prices to these real orders. Cancelling my order took away their anchor.

My next step was to test the market makers and see where they were really willing to sell. I submitted an order to sell 10 contracts at $1.05 which immediately filled. The hundreds of market maker bids at $0.85 cents immediately rose to $1.05. This was a clear sign to me that the market makers wanted to buy at $1.05 and a “real order” from a buyer would not get filled at $1.05 unless the stock went back up.

  • Tip 5 – testing the market maker with small orders can force the algorithms to change their bids.

My next step was to see if I could sell at the price I paid, or better. I entered an order to sell 20 contracts at $1.20. The market maker algorithms did not match me this time and I was the only available ask at $1.20. The stock continued down but my options weren’t selling. This was not all that surprising to me.

  • Tip 6 – When your order is the only ask being offered and it doesn’t fill quickly when the stock is heading in your direction it is likely that the market maker is “holding” your order. This is so high frequency traders can take any on-coming order flow and trade ahead of you. Market maker firms and exchanges get paid by high frequency traders for order flow.
  • Tip 7 – my order to sell 20 contracts was the carrot I dangled for the market makers.

At this point I started moving my order up from $1.20 to $1.30. With my order resting at $1.30 it was time to test the algos again. This time I submitted another order to sell 10 contracts at $1.20. Then again another 10 contracts at $1.25. They both immediately filled!

  • Tip 8 – My test orders are smaller than the order I use as my carrot. This is to prevent spooking the exchanges from lowering their “true price” or best price, and keep them focused on the prize.

I moved my larger order up to $1.40 and was able to sell more at $1.30, then I cancelled my order at $1.40 and exited those for $1.30 for a net profit on the trade. This was at a point where the stock found a short-term bottom and headed back up. I was glad to be out of the trade.

Full disclosure of my trade below…

cmetrade

In this blog section I will discuss:

  • The psychology behind the trade:

I do not want to make it sound like manipulating the market maker algos is an easy task. Fact is there are many other aspects that can impact what the market maker is willing to show as the bid/ask offer. The lesson here is that the market makers display orders to buy and sell which do not always reflect the true price they are willing to give. One misconception about the stock market is that there are only two participants, one being a buyer and the other a seller. Truthfully, there are three participants. The third being market makers who are not usually speculating on a stocks direction but making money on the spread. These market makers will do whatever it takes to make money. The cost is absorbed by buyers who overpay and the sellers who capitulate. I still struggle with overpaying or selling to low. It’s not easy but it is something I continually look to improve upon.

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Check out my open trades here.

Check out my closed trader here.

 

 

Market update and what to watch for this week.

In this blog I will discuss.

  • The FED day trading range
  • Open Interest for the $SPY March 18 put and call options.
  • The “Triple Witching” effect
  • $SPY Moving averages, trend line resistance and the Bollinger Band indicator
  • $VIX Bollinger Band

Today was the Federal Open Market Committee meeting and as expected there was a lot of volatility in the market. The market has continued to climb higher, and against my market outlook the bulls seem to be in control for now. One way I will gauge who controls the market (bulls or bears) is by watching the S&P 500 as measured the $SPY. What I’m looking to see is if $SPY trades above or below today’s range, high of $203.82 and a low of $201.55. If the market is above the high the bulls will maintain control but anything below $201.55 becomes suspect and the point of control could easy fall into the bear’s hands. If it remains in the middle than there is uncertainty.

The theory behind this idea is simple. If the Fed meeting instills confidence for investors the market should stay above the FED day high. If investors aren’t confident with what the FED is doing to stimulate the economy the low will not hold as support.

Another important short-term consideration is this week’s open interest level for $SPY put and call options. As I’ve previously discussed, the option strike price with the highest open interest can act as a gravitational pull. This this also referred to as the “max pain” theory, see blog.

The highest open interest for this week calls is at $200, and then $205.

March18_call_oi

The highest open interest for this week puts is at $195, and $200.

march18_put_oi

I suspect the $200 level, with high open interest on both sides, could be a magnet for $SPY. On the flip side, the high open interest on the call side at $205 may push prices even higher into this weeks close. It’s impossible to predict what exactly will happen but I do like this tool as a helpful indicator. To make things even more complicated is Friday’s option expiration day, a “Triple Witching”, and we should expect a lot of volatility at the close of the bell. Triple Witching is an event that happens in the market only 4 times a year, and contracts for stock index futures, stock index options and stock options will expire on the same day (3rd Friday in March, June, September and December). Typically, markets are quite volatile in this final hour as traders quickly offset their option/future orders before the closing bell. As a short-term trader this kind of event can easily whip you out of your trade so it’s advised to position yourself wisely so you don’t get stopped out, unless of course you need to get out. For more information check out this CNBC article.

Furthermore, chart elements have developed since my last blog about the $SPY

  •  $SPY 200 day EMA (exponential moving average) is right at $200
  • The next trend line resistance level is between $205-206
  • The Bollinger Band has not been stretched above the upper band to indicate an extremely overbought situation.

SPY3.16

The Bollinger Band on the $VIX has been stretched below the lower band. This means that volatility in the market is at an extremely low level. This indicator suggests that a “snap back” to normal levels is coming.  In the chart below I’ve outlined areas when the $VIX has expanded above or below the upper and lower bands. At these points you can see the $VIX changes direction. If the $VIX snaps back into range and volatility increases the reciprocal is a lower stock market. The perfect setup for an extremely overbought market would be to have the $SPY above the upper Bollinger Band and the $VIX below the lower Bollinger Band. The opposite is true of extremely oversold conditions. For more info on Bollinger Bands check this out.

$VIXbb

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Day-trading to reduce risk.

In my first blog post regarding a potential Priceline trade idea (here) I discussed the setup I wanted for a short-trade, short term idea. I will maintain this stance as long as the stock stays below the bottom channel of the trend-line which it violated at the beginning of the year (see chart).

I started day trading $PCLN successfully when I thought the scalp setup was in my favor and had a decent %164 gain on Feb, 24. See blog.  This week I’ve been day-trading $PCLN for a gain of $1,800. This gain covers my max loss ($2000) on the $PCLN vertical call (Trade 4 below) and now my vertical call spread has no risk!

In my open positions list you can find my current trade I have on $PCLN…

Trade 4: 

  • Symbol: PCLN (Priceline)
  • Contracts: Sold-to-open the $1310 call, and bought-to-open the $1330 call for May 20th
  • Premium collected: $920
  • Trade Type: Moderate/Conservative
  • Directional bias: My bias is that the stock will go down or stay flat
  • Trade Plan: Hold position until 4/5 or more premium has been realized.
  • Time-frame: TBD

My risk/reward ratio for this trade was 2:1 when I put on the trade. Meaning that I could lose twice as much as I gained on this trade if $PCLN was to go above $1330. That might not sound like a good risk/reward scenario for a trade but if you understand how options work then you know that I have the luxury of time because the option price will go down every day if the stock stays below my upper strike of $1330. Options are much different than stock. The price of the option is not only determined by the price of the underlying stock but also by the expiration date of the options contract, and the volatility in the stock. I sold this options spread when volatility was high enough to justify the trade and in doing so collected more premium than I would when the volatility is low. Also, the stock doesn’t need to go down for me to make money here. The price of these options will go down if the stock stays flat. These three things make trading options more difficult than trading stock and one of my goals in the blog is to help you understand that.

Note: If you’ve been reading my blog you may think that I am very bearish on the market, meaning I have a negative stance. I do not mean to sound like a permabear or someone who thinks the stock market is forever doomed. I actually would like to be more bullish (positive) on the market but given the damage we’ve seen over the last six months I believe the market is guilty until proven innocent.

For more of my #tradeideas follow me on Twitter @Jeffreytief

 

 

The Concept of Imagination and how to Defeat Greed.

 

In the blog I outline my SPY put options trade:

If you’re new to trading stocks and are looking for some online education I would highly recommend checking out the Shadow Trader guys on TastyTrade.com. I particularly like Peter Reznicek and Brad Augunas for their daily commentary on what’s happening in the market. Today I was imagining a break below $198 on $SPY and envisioning the dollar signs as we fell to $197 but we never got there and I needed to change my plan quickly and adapt to what the market was saying in order to have a successful trade.

Key points of emphasis from today:

  1. Envisioning a target based on greed is bad.
  2. It’s okay to envision a target but you need a reason why.
  3. Shorts were right at the open but a the market was moving lower it was classically obvious that the downside tempo was slowing.
  4. Understanding the temp of the market is extremely important for day trader.
  5. Market breath is KING and the market cannot become overly disconnected from up volume and down volume.
  6. Every day the data will change and it is important to be agile and adjust your trades based on new information!

In my Monday update I re-hashed my SPY put trade and have continued trading these contracts. Here it is from beginning to present.

Trade 1: March 4, 2016

  • Symbol: SPY (S&P 500 ETF)
  • Contract: Bought-to-open the  $199, March 18th put
  • Entry Price: $1.95
  • Price at close $2.47
  • Trade Type: Aggressive
  • Directional bias: My bias is that the market will go down in the next two weeks
  • Trade Plan: Take profits quickly/reduce losses quickly
  • Time-frame: 1-5 days
  • Blog analysis here and here.

Monday 3/7 Update:

  • I sold 20 @ $2.18 for a 12% gain, then bought 20 more and sold at $2.34 for a 19% gain. I’ve scaled down  to half my original position because these options will decay quickly if I don’t get the move I expect soon.

Tuesday 3/8 Update:

  • I sold 10 @ $3.15 for a 61% gain, then scaled in and out of more contracts (see chart) for a decent gain. I could have done better but I’m happy to take profits off the table and maintain my $SDS puts that I sold on 3/6 and 3/7.

SPY3.8trades

SPY3.8chart

My first sale was not an easy decision to make but it was the right decision. As the Shadow Trader guys, Peter Reznicek and Brad Augunas discuss in this video, it was clearly a turning point for the day and the right place for shorts to get a bit squeezed!

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Adding $LNKD to the repertoire

I’ve been watching company Linkedin ($LNKD) and noticed that the stock has been coming down from the most recent high at $122 and forming a lower low. Yesterday’s action tipped me off that something may be happening with the stock, and not in a good way. I believe several key short term resistance levels between $118-$114 have been broken quick enough to signal a possible change in direction. Yesterday $LNKD was rejected at $120 and fell to $113.30 where it formed a little base before reversing up into the close. When I saw this happen I asked myself if this was a buying opportunity?

Maybe The Street just got it wrong and falling 50% after earnings was just a mistake? Who knows? The stock has made a nice 20% rally after dropping from $200 all the way down to $100 but the skeptic inside me believes this is a smoke screen rally and not one that I want to participate in! As a trader I need to be objective and afraid of the outcome in case I am wrong. One thing I fear is that this could be a potential”bull flag” chart pattern forming and a solid break above $120 would prove that. However, I don’t believe this to be the case. One reason is the white line on the chart (see below). That is the VWAP (Volume Weighted Average Price). I’m not an institutional trader but I know that institutional traders use the the VWAP as a benchmark. The theory is that if the price of a buy trade is lower than the VWAP, it is a good trade. The opposite is true if the price is higher than the VWAP, see Investopedia. Notice that the price of $LNKD from $100 to $122 is above the white line. If the theory is true, than institutional buyers were not taking positions on this rally. In-fact they may have sold into it because a sell above the VWAP would look good for their performance!

LNKD.10min

The other interesting note here is the volume at price (green and red horizontal bars on the left of the chart). There is heavy accumulation and distribution between $114 and $118. The upper range should provide enough short-term resistance here and led me to sell a bearish call option spread. In this case if $LNKD can stay below $118 before March, 18 I will collect premium, even if $LNKD stays flat, as these options decay into expiration.

Trade 8

  • Symbol: $ LNKD (Linkedin)
  • Contract: Bought-to-open the  $122, March 18th Call
  • Contract: Sell-to-open the $118, March 18th Call
  • Entry Price: $0.92
  • Current Price $0.84
  • Trade Type: Moderate/Aggressive
  • Directional bias: My bias is that the stock will go down in the next two weeks
  • Time-frame: 1-5 days

Day Trade:

I started testing the short trade idea as a day trade but got whipped out of my first position for a small loss. I re-entered the trade at 117.50 and came out $200 on the day. I could have kept some overnight which would have been okay but because I already have a short position established it is better for me to take the gains off the table and let my other trade play out.

lnkd.trades

lnkdday

Further Commentary:

Right now, many traders could be anticipating “gap fill”. A gap fill is what happens when a stock opens above or below the prior days close and then comes back to the price it was previously at. In this case, a gap fill for Linkedin would bring it all the way back up into the about $186. Personally, I think this is wishful thinking and a bit to ambitious at this stage.

 

lnkdgap

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Monday’s update

This weekend I disclosed my open positions that I held  into today, see blog. Although we didn’t quite get the action I was hoping for today, I am still anticipating a pull back in the market. I was able to capitalize on some of these trades despite another surge above the $2000 mark. Here is an update.

Trade 1:

  • Symbol: SPY (S&P 500 ETF)
  • Contract: Bought-to-open the  $199, March 18th put
  • Entry Price: $1.95
  • Current Price $2.47
  • Trade Type: Aggressive
  • Directional bias: My bias is that the market will go down in the next two weeks
  • Trade Plan: Take profits quickly/reduce losses quickly
  • Time-frame: 1-5 days
  • Blog analysis here and here.

Update

  • I sold 20 @ $2.18 for a 12% gain, then bought 20 more and sold at $2.34 for a 19% gain. I’ve scaled down  to half my original position because these options will decay quickly if I don’t get the move I expect soon.

SPY.

The arrows on the chart show about where I exited these positions and the circle is where I bought back more. Wasn’t my best trade and I could have done better but that’s all hind-sight.

 

spy

 

Trade 5: 

  • Symbol: AMZN (Amazon)
  • Contract: bought-to-open the March $580 put
  • Entry Price: $15.27
  • Current Price $16.45
  • Trade Type: Aggressive
  • Directional bias: My bias is that the stock will go down in the next two weeks
  • Trade Plan: Take profits quickly/reduces losses quickly
  • Time-frame: 1-5 days

Trade 6: 

  • Symbol: AMZN (Amazon)
  • Contract: bought-to-open the March $575 put
  • Entry Price: $14.64
  • Current Price $14.03
  • Trade Type: Aggressive
  • Directional bias: My bias is that the stock will go down in the next two weeks
  • Trade Plan: Take profits quickly/reduces losses quickly
  • Time-frame: 1-5 days

Update:

  • I closed the $580 put for 67% gain and the $575 for about a 42% gain. AMZN could still go lower but I’m happy to take both these off the table for a decent gain. Plus last night when I signed up for Amazon Prime and bought a bunch of stuff it made me question if I really wanted to be short AMZN!

amzn.sale

amzn.chart

Trade 7: 

  • Symbol: FB (Facebook)
  • Contract: bought-to-open the March $110 put
  • Entry Price: $2.46
  • Current Price $3.04
  • Trade Type: Aggressive
  • Directional bias: My bias is that the stock will go down in the next two weeks
  • Trade Plan: Take profits quickly/reduces losses quickly
  • Time-frame: 1-5 days

Update:

  • Happy to take this one off the table for an 84% gain although it could have been better!

FB

FBct

Also: I’ve added to my original $SDS and $VXX positions and put on 1 new position which is sold a bear call spread on LNKD.

Trade 2: 

  • Symbol: SDS (Proshares Ultrashort S&P). This is a 2x’s inverse ETF which means that SDS will go up twice as much when the market ($SPY or $SPX) goes down, and visa versa.
  • Contract: Sold-to-open the $20, April 15th puts
  • Premium Collected: $0.59
  • Current Price: $0.73
  • Trade Type: Conservative
  • Directional bias: My bias is that the market will go down or stay flat
  • Trade Plan: Hold position until 4/5 or more premium has been realized. Close or roll if below $20.
  • Time-frame: TBD
  • Blog analysis here and here.

Trade 3: 

  • Symbol: VXX (S&P 500 VIX Short-Term ETN with exposure to VIX short-term futures)
  • Contract: Sold-to-open the $21, March 18th puts
  • Premium Collected: $0.68
  • Current Price: $0.55
  • Trade Type: Moderate/Aggressive
  • Directional bias: My bias is that volatility will go up or stay flat
  • Trade Plan: Hold position until 2/3 or more premium has been realized but close or roll if  VXX goes below $21.
  • Time-frame: 2 weeks or less

Follow me on Twitter @Jeffreytief