Week 3 NLV (AH): $2376.23 (-$123.77/-4.95%)

I apologize for the big gaps in updates…apart from a slow market, I’ve been pretty busy with real life the last couple weeks and trading has taken the back seat.

On the brighter side, I closed our first trade this week, the FB 125 put calendar. The strike selection on the calendar was very poor in that while it was cheap, there was too much dependency on a directional move for a volatility play. A strict vega play should have been placed closer to the money. I was trying to play the skew and in doing so lost sight of the reality that the stock still needed to move $6 in a couple weeks w/ steady vol or stay flat-ish with a huge volatility move to make a decent dollar profit. I got lucky when yesterday FB shot up ~$3 and I was able to sell the calendar for $0.41. Since we bought the cal for $0.27, that’s a gross $0.14, or around 50%. If you factor in commissions, it was bought for $0.30 net and $0.38 net. Not great, not bad, not a loser. I’ll take it for now. Small steps.

Despite the moves in gold and bonds after the fed meeting today, our short vega plays in BABA, GLD, IWM, PG, and TLT are slowly but surely starting to come in. PG and IWM are contributing a lot of short delta to the portfolio but with so much time still left I’m hesitant to make adjustments on those positions. The combined AAPL position is the big loser and I’ll be looking to make some adjustments to it early next week. AAPL is still sitting on the extreme low end of its IV range, and in order for this position to come in we need either a moderate move down in the stock or a tick up in IV towards the mean. In retrospect, I should have avoided trying to call the bottom in IV and waited for it to start riding back  up. Good lesson moving forward.

In other news, I’m considering replacing BAC in our top 10. It’s a cheap, relatively non-volatile stock that even with IV in the 73rd percentile presents very few attractive trades for us one-liners. I’m hard pressed to justify selling a 20 delta IC for $0.60 when the commissions are going to take $0.06 of that right off the bat.

BTC FB 23DEC16/06JAN17 125 put cal @ $0.41 (Open @ $0.27)