I started building a position with the USO Jan 2017 $15 calls.  I have no idea where the bottom for oil is, but $40 WTI doesn’t seem sustainable because that is below cost to produce in many parts of the world.  2017 should give close to a year without significant time decay.

The market has continued to deteriorate and I’m glad I resisted the urge to cost base anything down.  The only new positions opened in the last couple weeks are USO and TWTR, both out in 2017.

The last of my BABA is basically at zero now, still made some money on this trade but not as much as it could have been if I didn’t re-enter the position.

DIA is likely a zero as well, but the VIX spike allowed me some good profit to take the sting out of this one.

This market needs two things to break out of this grind in my mind.

1. We need to get the 10% correction that the technical traders are so desperate for.  The good news is that we are approaching that number now, by my rough calculations that’s about 16500 on the Dow.  That’s only 600 points away right now.
2. We need the fed to raise rates off of zero.  I don’t think they will do it in September but I really wish they would.  No one knows how the market is going to react so everyone is just sitting on the sidelines waiting.  Likely we will have to wait till December.

If we can get to a 10% correction before the September fed meeting and then we get off of 0% then I think we could have a mild rally back into the rest of the year.  I’ll probably start buying some S&P 6 month calls if we can get the 10% correction.

I only have two positions that are September and it looks like they are both heading to zero..

BABA is going to zero for sure, I’ll see if we get an dead cat bounce (it will be small) and then I’ll just take the loss later in the week.  Fundamentals of what they are doing are great but I don’t think there is a stock in the world right now that can impress the market, sentiment is very negative, especially something as closely tied to china as BABA.  I had taken 3/4 of my position out at close to a double so this trade will still be a winner, but its still painful to see the market take a stock down when this war result was ALREADY PRICED IN!!

DIA, I said I would exit if we rallied 250 in a day and we almost got there… which means I almost sold… ouch.  But that is why I opened the VIX position, its up 40% today so my insurance is kicking in and I’ll likely get out of this without too much of a loss if you combine the trades.

VMEM came off the crazy lows and I sold some .30 cent calls for .65 cents.  I still have a big chunk of this, probably too much, but I’m going to roll the dice and see what the earnings bring at the end of the month.

So for the week it looks like 2 losers and 2 winners, given we are down big time that’s not too bad.

But outside of this week I’m starting to build long positions out into spring and all the way out to 2017.  I’m going long on TWTR, USO, etc.

I don’t have confidence this market is coming back in the short term or that OIL will bounce back that quickly either.  BUT…. both will come back, its just what things do.  Its so frustrating to hear the technical guys talk about OIL like its a stock vs a commodity.  But for anyone following me into OIL long term don’t forget that the wild card is the US dollar.  I’m also looking at Brent vs WTI, or maybe both as a hedge.

I’ve been pretty disconnected from the markets for the last two weeks.  I’ve of course checked my account everyday via mobile, but haven’t had my pulse on the market.  I made the decision that before I unplugged I was comfortable with my positions, nothing was set to expire till Sept with most of it out into December and Jan.

Turns out I should have sold everything and then re-entered when I got back.  But that is the way it works some time. Time for me to review and learn some lessons.  You have to take something away from every trade, profit or knowledge.  Not much profit the last two weeks…

DIA – This trade went up nicely but I didn’t sell, its now down, I need a pretty strong rally in the next two weeks if I’m going to get out of this even or with a profit.  I’ll sell part of the position, even if its at small loss, on any rally over 200 points.  But the lesson I’m taking away from this trade is that I was really just trying to play the “market” not specifically the Dow 30.  The Dow and the S&P 500 usually trade very closely together, but the last two weeks that broke big time.  The last two weeks the Dow is down 3%, the S&P is down 1.5%  That is DOUBLE.  With the leverage that Options bring, that is a big gap.  Lesson learned.  I am going to buy SPY from now on when I want to play general market moves.  I got sucked into this mistake because the media almost always quotes the DOW when they report moves.  Lesson learned.

USO – I started a position on USO (vs UCO) a couple weeks ago when WTI broke under 50.  The volume is much better on USO and though its not as leveraged you can get orders filled a lot easier, that is a lesson I learned previously, volume matters a lot.  I’ve got the Oct 16th, $20 calls.  $20 on USO is = to about $60.  I don’t necessarily think we are getting back to $60 in mid October but these far out of the money options have a huge potential to move, they are trading at .07 cents right now.  This is a very very aggressive play, but if WTI rally’s up a few dollars on any sort of Middle Eastern turmoil or if the Iran deal hits some bumps, that is not out of the question.  Listening to the “experts” predict the moves of Oil drives me crazy so I’m trying to ignore the never ending headlines.  I’m actually thinking about putting a really big bet on Oil with a date out to Jan. 17 and just leave it.  You can buy the Jan 2017 $20 calls for about a $1.30, will Oil get back to $60 in 16 months??  If we get back to $60 that will be a 300% return with very little risk in my mind.  For anyone scared of the risk in Options that is one of the safest bets you could make in my opinion.

VIX – bought a little VIX action with a Sept date, its flat, only way it will move is for a big spike this far out.  I bought it at the lows of 12.  Its just a hedge against a major fall against my DIA position.

BABA – even though I’m playing with the houses money on this one since I got over a double, its still frustrating to see it down.  Its didn’t hold $80 because the news out of China is just getting worse.  Its all going to come down to earnings on the 12th.  I’m hoping for a rally into earnings to get me back to even and I’ll sell 1/2 and leave the rest to see how that actual earnings play out.  When I re-entered this trade after making so much money I should have pushed the expiry out farther, instead I just added to my old position.  Lesson learned.  If you are committed to a idea you do NOT have to just cost base down the same position, you can add but with a different expiry.

TWTR – I bought into this knowing the only real catalyst would be a new CEO or an acquisition rumor.  Nothing has changed on my premise or plan, lots of time for either of those scenarios to play out.  But WOW was it painful to watch TWTR blow away the top and bottom line and then get crushed because of user growth and the brutal feedback of the new/returned CEO.  One comment, one little comment that they are open too or looking into a sale will shoot this stock through $45 instantly.  I wish I could cost base down but I’m already in with a sizable position.  If anyone reading this has not bought TWTR options, look hard, go way out to Jan. 2017 if you are cautious.

VMEM – this is painful, last week it rallied up to 2.50, options DOUBLED, a couple days later its back down to 2.00 again and the options with it.  I have a big position on this, with lost of time, feel OK with my new cost based position but I sure hope they had a good QTR or announce they are looking for a buyer on the next earnings call on the 24th.  I really don’t know how low this stock can go, who is selling any volume of shares at $2? IPO was $9.

So in summary the last two weeks have sucked.  Earnings season has not been great which really surprised me since expectations had been lowered.  The sentiment I feel in the market is now very negative, the street is looking for any reason to sell off and punish stocks, I really don’t know what is going to break this feeling, its summer and volume is low which can have an effect, but I think what we need is an official correction (10% off the market highs) and for the Fed to just get the stupid raise on the books.  Hopefully I can salvage these positions and move into a higher ratio of cash and then pick some really long stuff off waiting for the stupid technicians required pullback so that we can get back to the familiar patterns.  Why the street thinks interest rates of .25% vs 0% will make any real difference is beyond me.

I bought the DIA Aug calls for 2.03, I then cost based down during the worst of the Greek drama and rolled to September for 2.20.  Booked a $600 loss on the roll but the trade currently sits up $2600 so its up about 55% or $2000 profit in about 2 1/2 weeks.  I’ll look to exit if we break above 18100 or 18200 on the Dow.  That will likely happen early next week.  We have likely entered the familiar range bound market again…. This earnings season is going to be good, but fear of fed rate rise will keep things from breaking about 18,500 (if the range holds). If we break above that level it should be a nice run till the fed actually raises rates.

TWTR is holding above $35, still waiting on the new CEO or another acquisition rumor.  I’m going to sell on the next rumor if I catch it, the false rumor this week made the options double in a matter of hourse, that is the potential of this trade, feel good about it.

BABA was down to a $1.00 and I almost cost based it down but I missed my shot and it shot up .50 today.  Down a little on this, but should see a rally if we can get the china market stabilized.

VMEM finally found a bottom, and rallied off the bottom back up to 2.50.  Breaking under $2 was very very painful and I have now cost based down 5 times.  Yes 5 times.  My last time was at .30 cents and it traded at .50 cents today so I’m glad I stuck it out.  My cost base is .60 cents and I have an uncomfortably large position so I’ll be looking to edge out of this to a more reasonable amount as we close in on earnings release end of Aug.  I could really use some rumor to drive this up.

I still am dancing with an entry UCO, tried to fill twice today and no luck, I’m really trying not to overpay because I’d like to get in and out a few times on this trade.  We have bounced up and down but WTI is just about to break $50, one more down day and I should get my fill.

Last couple weeks were a test.  Got way down, now I’m right back 🙂  I’ll bank the DIA profit next week and if VMEM can edge up a little bit more I should be golden.

I rolled and cost based down my DIA till September at the low yesterday.  Which was a huge win for about two hours as the markets dropped from up 250 to up 50… 200 point drop in hours.  Crazy days.

Never filled my UCO but will as soon as we close back in on 50 wti.

Vmem is killing me.  Let’s not talk about it.  

My gut says Greece is going to get bailed out and China is going to be supported by the government and stabilize which will lead to a HUGE rally but it is tough to keep buying into this selloff.  But that is exactly what you have to do….   

I missed getting short on UCO by less than a dollar, I was looking for a break above $62 to enter a put on UCO.  It got to $61 and then fell and fell hard, oh well can’t get them all.  But this sell off seems a little overdone, If I can I’ll get long on UCO tomorrow and take profits on a short bounce.  I believe we could test around $45 again, but I’m not going to wait since everyone crowds into the trade on the long side every time we get below $50.  A lesson I’ve learned is that oil fundamentals (supply and demand) are only a small part of how it trades, we have speculation, more speculation and the dollar strength.

I’m still long DIA, I’m even after today’s small loss on the Dow.  I should really exit if we get any sort of rally but this market has so much upside going into earnings season I really want to stay long.

Vmem is killing me, new lows everyday.  I’m long into December and this will rally huge with any sort of decent number end of August when they report but this stock clearly has no floor….

TWTR looks good with a floor around $35, BABA is down but should hold $80

Interesting day.  I really don’t have a clue how this Greece thing is going to play out, the economics of it say that they will get a bail out but since there are politics involved who knows.

TWTR rocketed up on a rumor that google was looking to buy it…. if that rumor gets stronger this could be my best trade of the year.  I didn’t sell any today, hope I don’t regret it.

And its a good thing TWTR was up so much because VMEM continues to fall, now at historic lows, the reality is I guess this stock really could continue to grind lower until they show a earnings call that isn’t a disaster.  In talking with some folks I know that work there they are selling, so I hope to just tough it out till next earnings call.  I don’t know if I have the guts to cost base down again, I have a rather large position already.

I did enter a long on DIA 180, Aug calls for $2.03 today.  Ended slightly down but basically today was a wash.  I’m not really committed to this call so I’ll likely lose my nerve and take profits on any single day rally this week.

Baba and CBI both had nice rally’s today but I’ve noticed that the spreads on things are getting wider this week.  (the gap between the offer to buy and offer to sell prices).  That can set up pretty big swings and it means you have to have patience on your offers when you move into something.

Great day to set up some trades if you believe the world is not going to end with the Greek default.  There is a chance that I might have missed the entry and the market will bounce tomorrow, I hope we get another down day or at least flat to give an entry.  Things are on sale, even aapl if you want a safe boring play.

I’m looking at DIA Aug, 21st 180 calls

Also looking at VIX Jul 22 ’15 $18 Put

I got my fill on TWTR today, .77 cents, feel good about that.  Also bought some CBI Jan $60 calls for $2.20.

BTU (coal got a really nice bounce based on a court ruling against the EPA), BTU was up 10% on a day when the market was down huge, could be a nice little rally in the next few weeks.  Bought 80 contacts at .10 cents and they are trading at .14 to .17 cents now.  That is a 40% worst case to 70% best case return in 5 days 🙂

long UCO could be a play but I have to wrap my head around what the dollar is likely to do, stand by on that one.

We have a lot of data this week that should take the edge off of Greece, Jobs, ISM, etc.

Fun times!!

Lots to cover here.

I’m back into BABA.  I bought calls on this in May, didn’t call the bottom but close enough.  I killed it in this trade with over a double in less than 2 months.  I edged out on the way up exiting over 3 trades.  I think I might have cost based down once as well.  So I’m trying it again.

open 8 contracts of BABA Sep 18 ’15 $90 Call – price $2.07

The fundamentals on this are very strong, basically every analyst is bullish on this with targets for most at $105 or higher.  Technical’s look OK with hard support at $80.  I’ll cost base down on any pull back up to a $5k position and then just roll them out to December if we get into late July with no rally.

Still trying to enter TWTR, I’ve be putting orders in at the bottom of the spread but they aren’t filling.  I’ll keep trying and will likely just pay up next week and then I’ll wait for the new CEO or acquisition rumors to heat up and this will pop.  I’ll have to keep an eye on the next earnings call which is around end of July.

Also trying to enter NMBL again.  I’ve lost twice on this trade and I just don’t want to give up.  I work in this industry and anecdotal sales seem strong, customers like them, and they are always a possible target to be bought.  I missed the recent rally and refuse to overpay on the trade so it may never fill.  But I’m looking at the Nov. $35 calls.  If it continues its pull back I’ll edge in.

I should mention I’m in VMEM Dec $2.50 calls, bought them before I started the blog.  They are dirt cheap right now.  Basically priced for bankruptcy (well not really, but its ugly).  I used to work at Violin, great technology, crappy mngmt.  Its a tough space but they seem to have a good product and the bar is set so low I don’t really see how this stock could go any lower.  But I think I said that at $3.00 as well, opps.  I have a decent position on this at .70cents and you can probably get them for .60 cents right now.  Earnings in early September will be key, could bounce back up to $4.00 easy.  That will be a 300% return on the options.

Last note on a lesson learned and it applies to both Vmem and NMBL.  I have a small position in MLHR that I got beginning of April.  I own the Aug, 21 $30 calls.  I paid $1.32, stock was at $28.  Stock moved over $30 on good earnings but I can’t find a buyer for the options at almost any time premium and there are over 45 days to expiry.  Very frustrating since this should have been an easy profit.  The lesson is that options on low volume stocks is tough, period.  I’ll keep trying to exit but what should have been a double is turning out to be a break even…

I closed my short on DIA right at the end of the day, I got 4.40 so that is a 20% return in one day.  I usually hold out for a more of a move but I just can’t get a good feel for this Greek drama. (as a side note its 90k a year in profit if you squeak out small wins like this everyday)

I like TWTR right now, looking at the Jan $50 calls.  If a Google or Facebook acquisition heats up or some rockstar CEO gets named the stock will bounce.  I see a bottom around $30, with upside of $50 – $90.  Google acquisition target price was $95 before twtr shot it down, stock was higher then but I still think it would drive $80 a share.  I’m looking at .85 as a great way to get into this trade.  And if the lottery hits and Google does heat up then it will be a nice 3500% return 🙂  I love oversold stocks that everyone hates.

I also opened a really crazy bet on Coal.  yes coal.  Coal sucks, everyone hates coal, but if this trade doesn’t lead to bankruptcy then it should bounce back a little bit.  I bought 80 Call contracts of $8 BTU Jan, 17 (NOTE 2017, lots and lots of time) for 10cents each.  I think I already regret this trade but I find that most options will bottom out at this level.  Basically if natural gas prices rise then this will rise too.

I’m keeping my eye on WTI, if it breaks above $62 then I’ll get short via puts on UCO.