This last week on paper vs. the trade plan published in last week’s post “Bread & Butter Week” was successful. Why title this post The Naughty Corner? Because I didn’t follow my rules.
I have a personal trading rule: If there is a risk that I can’t be present for a planned exit, e.g., EOD on a 24 hour earnings iron condor, I don’t trade. I broke that rule on Monday’s AIG entry.
Last week was a travel week from Paris - Dubai - Kuala Lumpur - Penang with a 45 hour door to door experience. My first flight left on Tuesday at 15:45 Paris time (9:45 Wall Street Time) and landed at 00:30 Dubai time (16:30 Wall Street Time). Despite this, I had entered the AIG 24 Earnings Iron Condor on Monday evening with knowledge that I would not be present to exit the trade EOD on Tuesday.
It gets worse - I am also a FOREX trader. I made a “sure thing” trade on GBP.CHF just before my plane took off on Tuesday with what I thought was a wide enough stop to pass through price volatility unscathed. I was wrong. The trade stopped out mid-flight for 2% loss on my account.
Break my rules = naughty corner for me for at least 24 if not 48 hours. The fact that I was still in transit back home to Penang magnified the need to STOP.
I did not take either the WYNN or DIS 24 hour iron condors. However, the results (which were positive) are listed both above in the TraderSync journal as well as the descriptive below.
Directional Post ER Plays
META put calendar - per the trade plan published in last weeks post for premium subscribers I entered a META Aug12/Aug26 $160 put calendar for a net total of $1.70 per contract (after legging in). In my opinion, FB was showing signs of resistance and likely to head back to the bottom of the channel. In come the Fed during my transit back to Penang. Despite this, held the position. I love calendars because they are highly adjustable. I let the short META Aug12 $160 puts expire worthless on Friday. My expectation is that META corrects back down early next week, at which point I will either exit the remaining long META Aug26 $160 puts or adjust into a Bull Put Credit Spread. At the time of this writing, the position is at a $210 loss. If the market is weak or corrects early next week, META could fill the gap down to $168.53, which would make my current position a break even.
Risk graph courtesy of TomsOptionTools
Earnings Iron Condors
AIG 24 Hour Earnings Iron Condor. I entered a 3 x AIG Aug12 $48/49/55/56 Iron Condors for $0.27 each ($0.73 risk) at 15:55 on Monday. AIG didn’t move enough to offset IV crush Those Iron Condors could have been bought back EOD on Tuesday (as per plan) for a $0.17 profit. Unfortunately, I had to buy back on open the next day and saw a $0.03 loss per contract.
WYNN 24 Hour Earnings Iron Condor. On Tuesday, 3 x WYNN Aug12 $60/61/71/72 Iron Condors could have been entered for $0.26 each ($0.74 risk). WYNN barely moved post ER and IV crushed the value of those Iron Condors was $0.03 each EOD on Wednesday for a $0.23 profit per contract. Nice win for the premium subscribers that played.
DIS 24 Hour Earnings Iron Condor. On Wednesday, 4 x DIS Aug12 $104/105/120/121 for $0.38 per contract ($0.62 risk). Interestingly, DIS gapped up above $121 but faded to close below $120 by the end of the day following ER. Part of my plan is to always wait for EOD - in most cases stocks that normally don’t move after ER make abnormal gaps fade back towards the mean. Thursday EOD, the DIS iron condor was worth $0.11, when bought back per plan provided a $0.27 profit per contract. Another nice win for the premium subscribers that played.
Pre-ER Directional
RIVN. Premium subscribers were alerted on Tuesday, August 2nd that I was entering RIVN Aug12 $34.50 puts for $2.02 based on a historical pattern showing the stock declines heading into earnings combined with a rush in IV. Earnings is scheduled for August 11th AMC. The position, an “all-in” play (meaning I’m willing to lose 100%) will be exited before ER, either at a double or in the last few minutes of open on August 11th. The historical performance didn’t extend to this ER. I exited the position for a 55% loss (-$111).
Summer Earnings Season continues. So far we are at a 67.74% win/loss ratio and a profit factor of 2.52 on all alerted plays for premium subscribers.
Here are this coming week’s planned plays:
It is a light week this week.
Earnings Iron Condors
LOW
Entry: Tuesday, 16 Aug (Past performance 3 out of 4 wins), Exit: EOD on Wednesday, 17 Aug
AMAT
Entry: Thursday, 18 Aug (Past performance 4 out of 4 wins), Exit: EOD on Friday, 19 Aug
Other
For consideration - The market (SPY) got past the $420 resistance zone. But we are not out of the woods yet. I expect the next area of major resistance up at both the 200 sMA and the 61.8% Fib area between $430 to $435 a Long Call Butterfly could give us a great risk to reward if SPY backtests a small amount early next week.
I am looking at something that would expire before US Labor Day centered on $435 that allows decent time decay if SPY starts seeing resistance in the noted area. My preference is to buy such a position on a dip early next week. The plan would be to take a loss on any SPY close below $421.25, take partial profit on 1//2 on a touch to $435 and to let the remaining 1/2 run as long as it is in the profit zone. I’ll post a comment to this post (and alert to annual premium subs on Telegram) if and when I decide to enter.
The Naughty Corner
META summary:
https://shared.tradersync.com/ricepirate/a6d6bc06-173c-11ed-9bf5-061a3d52649f?ref=https://www.tradersync.com/?ref=michaelkuhns
See SPY link for comments. Trade still in play.
https://shared.tradersync.com/ricepirate/88b0619a-1ec2-11ed-9bf9-061a3d52649f?ref=https://www.tradersync.com/?ref=michaelkuhns