My YTD performance and reviewing Options Action and Fast Money from 2/9/2018


In an earlier post, I shared my one-year performance in my two active trading accounts, one is a retirement account and the other is taxable. 

I call my retirement account my speculative account and I call my taxable account my less risky account. 

In the speculative account I trade large volumes of options. Fidelity loves me, even at $4.95/trade. I have about 25 names going. Last year I made about 75% in this account. 

In the less risky account I trade SPY and call and put options on SPY. Last year I made about 35% in this account. 

Here’s my YTD performance for these two accounts after this draw down: 

Speculative – down 7.37 % 

Less Risky – down 19.17% 

Ouch! Funny the difference, right? Is Less Ricky really less risky based on these numbers? 

BUT, remember volatility is WAY, WAY up which means the bid/ask spreads are much higher in options, particularly put options which greatly exaggerates these numbers.  

Also, I have/had a great deal of working calendar spreads in the speculative account which is the PERFECT thing to have on going into a volatility spike. On Friday a bunch of the short legs of the spreads went to 0, most of the credit spreads went to 0 too. I either rolled them up and out, or just held on to the longs over the weekend. 

Which brings me to yesterday’s Fast Money and Options Action. I’m feeling a bit nervous as I agree completely with the ChartMaster’s analysis. I think we have hit the 200-day moving average in the SPY and reversed. I don’t think we get back to all-time highs within two weeks, but maybe in the course of a month? 

As to the other trades mentioned: 

XOM – I have not stock or options in this name, but I agree it may be time to change that. Mike’s trade of the March16 77.5/82.5 call spread for $120 looks good to me. Monday I am going to look into following him into that trade or maybe set up a April/March calendar spread. Will post it here if I do. 

F – no recommendation from Mike, but ChartMaster thinks the chart is similar to XOM above. 

WMT – Dan takes this name on and recommends selling a put spread, the March 97.5/92.5 collecting about $150 each (risking $500). I actually like this too, the exaggerated volatility means you can get more for these credit spreads than before. Calendar put spreads would work here too. I may look into buying one April 97.5 put, buying one March 92.5 put and selling two March 97.5 puts. I think this is called a long calendar put butterfly. 

VXX – Mike talked about this on OA and the other guys on FM too. Suffice it to say most agree it will be difficult for this to hold this level and I couldn’t agree more. I’m not going to bore you with recapping my VXX trades (and UVXY and SVXY) but one week ago these names (all long now) used to be about 7.5% of my speculative account is now about 12% of the account. Probably why the account got hit the least.

Thank goodness for my moron trade! 



Volatility, excuse me I meant <<<< !!VOLATILITY!!>>> $VXX $UVXY $XIV

So that just happened, right?

It wasn’t just what happened in the regular session but WTF happened after hours? 

The XIV, which is the inverse of the VXX fell about 15% in the regular session down from 115 to close at 99. I even bought a little bit in my speculative account at 96, as a hedge, as I am net long options in the VXX and UVXY. 

In after hours, the XIV traded down to 15.43, yes, it lost 84.4% in the after hours session. I generally walk away from the market at the close or otherwise I would have doubled my position in XIV. 

What is going on here? All I can think is that were some big institutions that where making some extra $$ by being short volatility, and that worked until last Friday. It even seemed to be ok today until late this afternoon. 

At some point after hours these guys decided to cover the short which sent the VXX from 43.94 to 56.57, as a frame of reference it closed on Friday at 32.92 and actually traded down late in the morning. The UVXY went from 13.67 to 22.87 at the close today (gain of 66.21%) to add another 6.10 in after hours to end up at 28.97 (another 26%). 

This looks to me like panic buying, just as in the afternoon it looked like panic selling. 

I had planned to talk about some of the trades I made this morning but this focus on volatility has just taken over. 

I am net long both VXX and UVXY but gains on both are going to be capped because we are waaay past my short call positions. 

But this has the real potential to correct right back to where these ETNs were trading this morning, or even where they were tading last Thursday. 

As an aside, last week I noted that in accounts trading a lot of options can appear to blow up when volatility spikes. This morning in my speculative account the total value fell the normal 3-4% after the market opens. This happens because Fidelity assigns the value of an option in the worst possible way depending if you are long or short. If you are long they value the option only at the bid price, which is what you can get if you have to sell it. Likewise, they value short options at the ask price. Overnight they value the option at the last traded price which is more at the midpoint. So, when the market opens and bid/ask prices become available, the total value falls. Today in the late morning it was down about this normal 3-4% but at some point, in the late afternoon it suddenly fell about 35%. It’s not real, and it will be interesting to see what it looks like in the morning. 

Bottom line for me, I think this is an opportunity to get longer. Karen Finerman stated on Fast Money today that she sold half of her S&P puts today and will sell the other half if there is a whoosh down tomorrow. 

I’ll probably do the same. 

WTF? I thought this market was supposed to only go up? $VXX $UVXY $SPY $AMZN $AAPL $GOOGL

The Selloff

Today it happened, the market sold off. Particularly the $SPY and $QQQ and $DIA took it on the chinny, chin, chin. 

What didn’t go down? $AMZN for one thing, and $NFLX  and $FB only fell about 1.5% when the QQQ was down 2%.  

OSTK, on the other hand, was down almost 16% closing at 56. 

But in my speculative portfolio my holdings in VXX and UVXY were up 13.5% and 27% respectively. 

I hold this stuff in my portfolio just for days like this. I never know when they are coming, but that’s why I hold it. 

Volatility is here to stay, deal with it! 

Turns out the CNBC chyron from a few days ago was correct. At least through today. 

I’m gonna try to detail what I did with my volatiltiy options since three days ago but if this sounds like nails on a chalkboard, please skip down to my SPY section below. 

You’ve been warned! 

Three short days ago I sold covered calls in my holdings of both UVXY (at 15) and VXX (at 30). These were scattered over the Feb 2 (today’s) expiration, Feb 9 and Feb 16. 

The next day volatility retreated and I and I put on one calendar put spread for each 100 shares of each of the two names buying the Mar 16 puts and selling the Feb 16 puts at the 27 level in the VXX and 12 in the UVXY. 

Yesterday as volatility retreated even more I rolled the covered calls up and out, to 31.5 for the VXX and 20 for the UVXY. I also put on some matching call calendars at the 30 level for VXX and 12 for the UVXY.  

Good thing, since these two names closed up on the day VXX closed at 13.76 and UVXY closed at 32.92. 

I’m happy where this ended out. Now on Feb 16 I have both some (virtual) strangles (in the VXX) and straddles (in the UVXY). 

Buying the SPY

Is this the start of the big decline, or just a minor pullback? I don’t know, it might be but my feeling is that this is temporary. When earnings keep coming in hot, and projections are for increasing revenues, it is hard to imagine this will be a prolonged pullback. Could it go down another 3%, 5% or 7% or more? No problem. 

But besides squaring up all my expiring trades today, I also bought small amounts of SPY and a micro amount of TLT.  

I may add to my XIV if it has another day like today and I’m looking to sell some put credit spreads in the SPY and close out some of my long put spreads in the same (which is really the same thing – selling a higher price put option and buying a lower price put option, its just with the debit spreads I already own the spread) 


Good luck next week ! Check back this weekend for some updates. 

Volatility Persistent through the Trading Day $UVXY $VXX $XIV Jan 30 2018

As I said in an earlier post, many new traders woke up to an unusual volatility spike. Those of us doing this for more than a year remember when this happened on a regular basis. 


So far today: 

  • $SPY down to 281.22 but bounced up to around 282 
  • $VXX spiked up to over 31.80 but has settled down to about 30.75 at the moment or up about 3.35% on the day 
  • $XIV is the inverse of the $VXX, and $UVXY is double the $VXX and have moved accordingly.  
  • I bought a teensy amount of $XIV at 121, haven’t added, haven’t sold. 
  • I sold some covered calls against both the $UVXY and the $VXX.  These are spread out over the next three expirations Feb 2, Feb 9 and Feb 16. 

But here’s what I did this afternoon: 

I bought two calendar put spreads, one in the UVXY and the other in the VXX. 

For each 100 shares of equity in these names I bought the same number of puts with a strike price of 27 for the VXX and a strike price of 12 in the UVXY. 

I sold and equal number of puts with the same strike prices in the two names (27 and 12) that expire on Feb 16. 

I paid $120 for each UVXY put spread and $133 for each VXX put spread. 

Since all the long, covered calls expire by Feb 16 I figure I can’t lose. These names can’t be both above and below the two strike prices on Feb 16, right? 

Buying puts on volatility names has frequently been a winner for me in the past. When volatility is high is usually when you can get quite a good price for the near dated short option and then as volatility falls these short options peter out pretty quickly. 

Time to Panic? Time to Buy? Volatility and my morning trade in $AMZN, $VXX and $UVXY Jan 30 2018

If you just started trading just after the 2016 election you woke up this morning to something you have never seen. The market is down, and volatility is up.

Those ‘old timers’ that started trading, oh let’s say the summer of 2016, have some experience with this but its quite a shock to you, right? The market was set to drop about ½ to 1% (I always will use the S&P500 here for ‘the market’) and in fact did so. As I write this, the market is down about 0.86% 

As an option trader, when the market opens you can see the market value of your portfolio plummet out of proportion to the move. 

This is because volatility explodes on a day like today. One of the hedges in my portfolio are holdings in $VXX and $UVXY. Between the two they comprise about 12% of the market value of the portfolio. This morning $UVXY is up 11% and $VXX is up 5.5%. 

But my portfolio looked like it was blowing up, being down about 15% at the open when the market is down only 1%. 

This all has to do with how Fidelity prices my portfolio. It ALWAYS prices the options at the worst possible executions for every position. It always assumes that I will sell only at the low, bid price and buy only at the high, ask price. Volatility is a measure of that bid-ask spread so as it widens, the portfolio suffers. 

That also explains why every day at the close the market value of my option rich portfolio will drop 2 – 6% just seconds before the close. That’s because the bid-ask spreads widen right at the close. This is way more pronounced with puts than with calls.  

We have been in a historically low volatility environment and if you are new to trading you haven’t yet seen a rise in volatility quite like this. Trust me, it used to be normal. 

So today, I’ll be writing covered calls in the $UVXY and $VXX and maybe even some credit call spreads. 

I’m also going to buy a VERY small amount of $XIV and, in fact, I already have at 121. That’s the inverse of the $VXX. 


This mega-cap stock reports on Thursday and I am getting a little longer today. When $AMZN was under 1400 I bought the April 20 call butterfly spread, 1420/1440/1460 for about $90. I may also buy a calendar call spread buying another April 1460 call and selling a Mar 1460 call for $1,600 debit. I’ll fish for that one a little bit and see if I can get it cheaper . . . . I’ll let you know. 

Good Luck today!