A Bullish Option Spread on $AAPL

I have a long term put option on Apple, but since I have been watching it closely, I saw that it had been upgraded this morning.  The stock seemed to be steady, so I thought it might be good to put on a very short term bullish spread on.  I had some cash available from my winning $YELP spread that expired on Friday.


I sold a put spread (which is bullish).


Sold the $135 weekly put for this Friday for 40 cents
Bought the $132 strike weekly put also for this Friday for 9 cents.  The underlying stock was trading around $136.20 at the time.


If this works, that is, if $AAPL stays over $135 through close on Friday, I'll pick up the whole 31 cents (that is, $31 per option.)  The stock closed at $136.69, and I am already in the black. 


It's probably not smart to trade such short duration, I don't really have much chance of picking up much of the implied volatility, but it's a straight directional bet that the stock won't go down, or go down very much in a short time frame.


I'd like to update my position on the trades I made last week.  I have two bullish bets on $UVXY, short a $19 call and a $21 call.  The $21 looks OK, $UVXY closed at $20.69, that would pay off if it stays here.  The $19 is losing at this point, but $UVXY can fall quickly, so I will hang on to it for a few days.  Of course, it can also spike, but I have offsetting long calls at higher prices to give me some comfort.


Enjoy trading.

Closing a Put Spread on $TSLA, opening a short position on $NUGT

I closed out the put spread I sold on $TSLA (Tesla) today.  I had sold a put spread yesterday with a Friday expiration, which is a bullish bet, and the stock jumped from $276 to $283 and it looked like it might pull back.  I had a pretty risky position if it turned against me in such a short time frame, so I closed it out for a debit of $1.1, making close to a $200 profit overnight. 


I'm pretty happy with it, I would prefer to let a winner ride, but seems like the right move to take it off. 


I also closed out a put spread from a week ago that I hadn't posted, so I won't bring that up.  I prefer to only report on trades that I have been upfront with, not claiming a winner just after the fact.


How Option Spreads Work


For those that don't do a lot of trading in options, or spreads, just a comment on what I am doing.  If I sell a put spread, that is actually a bullish bet.  I am selling a higher strike put for more money, and buying a lower price put for less.  It creates a net credit, and if the stock price stays above the higher strike, I keep the entire credit. 


If I sell a call spread, it works that opposite and is a bearish bet.  See below for a real life example.


Selling a Call Spread on $NUGT


Today I sold a call spread in $NUGT, the Direxion 3 times leveraged Gold Miners ETF.


Sell $13 March 17 strike for $1.16
Bought $17 March 17 strike for $0.35


If $NUGT ends up below $13, I keep the 81 cents.  These are regular options, so everything is times 100, then times of the number of options.  Usually I don't say how many that is, but today it was 5, so I have chance to earn $408, while risking more.  The risk is mitigated by the fact that the stock price was $12 when I put this on.  Unfortunately, it went up during the day and closed at $12.46.  Not a good entry.


Because $NUGT is a 3x ETF, I have the chance to see some decay from rebalancing.  Maybe not too much in just a month. 


Enjoy your trading.

Weekly Put Spread on $TSLA

I sold a put spread on $TSLA today, stock has been a monster, and I think it has a chance to continue to run.  I can't see fighting this trend at this point.  Stock has a ridiculous valuation, but never short a stock based on valuation. 


As I did with $YELP, I used the weekly calls, for a lot of risk and a quick payoff.  I can't recommend this as a good strategy, but it can work. 


Actual trade was short the 275 put and bought the 260 put for just short of a credit of $3 per option on the 2/17/17 when the stock price of around $277.  Closed above $280, so already in the green.


I was surprised, I had originally looked at the 270 strike but would have only sold for $1.35.  Not enough payoff for the risk on this high flyer.  I could have stretched to a longer date, but decided to just cut the cushion.  Either it runs like crazy or it reverses hard, and no amount of cushion will help.


Risky play, but I accept that. 


Only trade I made today, others I have on are still working, including $YELP losing a bit more.


By the way, if you haven't caught Sean McLaughin's options podcast, I recommend it.  You can find the link on his twitter account, @chicagosean

A Put Spread on Chipotle $CMG

I am a little late posting this, and I feel bad because it has been a winner so far, but well, that's the way it is.  A few days ago I sold a put spread on Chipotle, $CMG.  I sold the $395 and bought the $375, both in May, for a possible $800 gain.  Price when I took out the spread was around $398.


A few keys points:


May is really far out for me.  This has a long time to work.  I got the idea from Jim Cramer, he said he thought Chipotle would come back from the dietary issues they had, but it would take 18 months.  We are now a year past that, so six more months would be around 18.  I figure there is some leeway in that so I chose May. (And honestly, Cramer doesn't know, he may be better at estimating that stuff than some people, or maybe not)


The other thing I was instead of multiple puts at close strike prices, I did one with a wide spread.  This gave me a decent return (40%) and lowered commissions.  Risk is pretty high, but not so much I didn't take the wager.


So, just two days out of 60 or so $CMG is up 20 bucks.  A lucky run.  I am already up $150 or so.  I don't think it's likely I will wait it out if I keep this profit.  Although I haven't yet.


I have a couple more positions I'll get to over the next week.  A teaser is that one involves $LABU.