Turn Your Collar Inside-Out

This post may also be read at: http://www.cboe.com/blogs/options-hub/2017/09/14/turn-your-collar-inside-out

Ever make a sandwich so big and poorly constructed that the second you pick it up, the insides propel themselves out and all you're left with is a few pieces of dry toast?  Me neither, but I can envision it happening.  Keep stacking the vegetables without regard to sound principles of sandwich engineering and you may end up with a floor salad.  Well, I set out to make a short sandwich (reverse collar, you could also call it) on Tuesday, September 12th, hoping for the best, as always, but not preparing all that well for the worst.

Around 3:50 PM, I noted that SVXY had made a quick and ferocious climb during just three days, and I thought I'd take a chance on a little roll back down the hill, the way manual transmission cars tend to do at red lights when traffic is stacked up immediately behind them.  I had no brilliant thesis or compelling can't-lose calculation on my side; I simply sized it up with my bare eyes and took a chance by shorting some shares.  Yet I know that the financial winds produced by Mr. Market can be foul indeed, and I didn't want to be stuck on the wrong side of Party Town during the ongoing public festivities called "Market Rises Forever."  I thought I'd better buy myself an expensive emergency-use-only ticket out.

Searching around for protective calls proved unappealing as SVXY continued to climb for the last few minutes of the day.  I placed an order; no one liked it and it didn't go through; I withdrew the offer and made the uneasy decision to wait until the next day.  There ended my trading day, with SVXY short in my account from 82.55 but the rest of the world trading it at 82.73 (and even higher after the close.)

Next day rolls around and SVXY just keeps climbing.  VIX keeps sinking to the middle of the ten range and sits comfortably there.  Indexes can't decide what to do but SVXY keeps rising, and my blood pressure goes up a little with it.  I still haven't bought the protective calls by mid-day, so I resolved that I'd do so, just after shorting a little more and therefore raising my average shorting price.  At 10:39 on Wednesday morning, September 13th, I shorted some more from 84.11, and for a few minutes it looked like I had made a smart move.  But wouldn't you know it - SVXY rose higher and when it touched 85.00 even, I made a move to double my exposure using the justification that I had not yet bought the protective calls and might as well get the whole thing in place so I could begin the process of learning whether my trade had a chance or not.

At 12.52 PM I shorted from 84.95 to bring my shorting basis now to 84.01.  Though I would have rather waited for better call prices, I thought I should be responsible and go ahead and buy my protective calls.  I like the idea of maximum short profits but I don't like the idea of unlimited damage to my account via naked short shares in a quantity I might be completely incapable of covering.  So I put up the cash to buy an appropriate number of calls for Friday, September 15th for the 84 strike and paid a $1.59 contract price for each one of them (that's $159.00 per contract.)

Now I know a worst-case scenario for this short:  If Friday comes and SVXY has continued to climb, I can exercise my calls and buy to cover for the same price from which I shorted.  The only cost to me will be what I paid for the calls.

To break even at expiration, I need SVXY to fall below my basis by at least $1.59 (I'm ignoring the extra penny right now, pretending I shorted from $84.  I'm also ignoring any commissions so this would be off by several dollars here and there.  Let's keep it simple, though.)  All right, let's be precise, although ignoring commissions.   I shorted from $84.01 and if I want to recoup every last penny spent on those calls, I can just let them expire worthless and buy SVXY to cover at a price $1.59 (the price paid for the calls) lower than my shorting price, which comes out to be 82.42.  If it falls even lower before I close the short, then I net a profit.  If it falls below my shorting price, but just by some amount less than $1.59, then I recover some of the cost of what I paid for the calls.  But the price of the calls is the maximum loss I'll have to realize.  That's where I stand now (as I write this on Wednesday, September 13th.)  I have something else up my sleeve, but let's get to that tomorrow.  Before I go, though, let's talk about whether my long calls will be worth the price paid.  When I shorted SVXY, I opened myself up to unlimited risk.  If, on options expiration day, SVXY ends higher than a certain price, which can be determined via this calculation: the price from which I shorted PLUS the price paid for my calls (or 84.01 plus 1.59 which equals 85.60), then it will turn out to be worth the money, at least, assuming I would not want to keep the short open past that day.  Because that cost would be the same as if I had never bought the calls, yet decided to cash in the short (at 85.60) and take a loss of exactly the same amount per share (1.59) as what it turns out I did, instead, pay for the calls.  Every penny SVXY ticks up costs me more money, but at least now I know a maximum cost to me, assuming I exercise my calls before expiration.  Had I not bought those calls, the sky would be the limit as far as potential damage to my account.  Let's adjourn until tomorrow (Thursday), now.

**MINOR UPDATE Captain's Log, star date Sept. 13th 4:30 PM**  I could not resist the tempting profits on the long calls and kept a small fraction of them, selling the majority of them for 2.10, when I had bought them for 1.59, or a profit of 0.51 per contract.  The intent is to wait for a lower entry point and re-buy them... OR NOT.  (insert unsettling laughter sound here, echoing and distorted.)

Writing on Thursday, September 14th during the pre-market hours, I can now report that I bought shares to cover my short shares in a rag-tag assortment of lots, some of them at my preferred price and some not even near it (when am I going to learn to place my limit orders with more generous, um... limits?) and that, of course, is because I had to cancel a partially filled order and put it through again for a profitable, but not nearly as profitable, price.  The 84.01 shorting price turned into cover prices of 83.68 and 83.94.

 

  
Now, darned tootin' glad that I sold most of the calls yesterday, I turn my attention to selling the remainder of the calls at my first possible convenience and/or at the moment I sense that the price of those calls won't keep going up.  Options often go from valuable at varying prices to not valuable at all before expiration, as everyone knows, so my task will be to monitor SVXY which is influenced by the VIX which has something to do with the party-forever market-never-stumbles culture that SPX currently resides within.

As you can see in the pink ink above, between one paragraph and the next, I was able to get rid of the last contracts, and for 1.65.  So, having bought at 1.59 and sold for 2.10 and 1.65, with profits also made on the short shares, I wrap up this trade without complaining.  It was meant to be so much more, though.  Why does the title mention a collar?  I had envisioned the short going my way immediately at which time I would sell out-of-the-money puts.  Paying myself back for the purchased calls is the idea; I've done it before (see previous blog posts) but this time I didn't even get to pop my collar.

Everything went against me multiple times, but I was able to get out and avoid plenty of damage I signed on the line for.  I started with a naked short, and even held it overnight, which of course exposes the holder to unlimited risk.  Then I bought calls with a known possible total loss of $159 per contract.  Instead, I ended up making $41 per contract, and $14.75 per each 100 shares of the short, so added together, I made $55.75 per each block of 100 shares of SVXY shorted.  The security went from 82.55 at the outset of this trade to 85.04 at 9:48 AM today, September 14th when I closed the last of the trade out.  How did I profit from a short of SVXY when it only went up while my trade was open?

Careful handling of all the dangerous moving parts, that's how.  And I'm glad I was able to do it.  Until next time...

Outcome: Net Fun

This post may also be read at: http://www.cboe.com/blogs/options-hub/2017/04/29/outcome-net-fun

Shorting UVXY is sort of like making pancakes and flipping them in the air and catching them with the pan.  You can entertain yourself and others like that for a while, and you just may accumulate a large stack of perfectly browned piping-hot pancakes, but sooner or later some raw batter is going to hit the kitchen floor, and that is not much fun.  And what if everyone eats up all your pancakes in the meantime, and you're stuck with nothing but a kitchen-floor disaster? Well, on Thursday, April 20th, I felt the ever-present hunger for a little short UVXY profit, so I shorted some shares.  But only with the keen awareness that I was lending out borrowed shares backed up by capital I really did not want to cut into and hand over in an "oops - bad timing" debacle.  It could also be likened to writing a check as a security deposit, not wanting that [huge] check to be cashed - because what if the damages might turn out to exceed the amount I have in the bank?  Sky's the limit with UVXY and I wanted to be along for the ride down the slide, but not for anything involving high-and-rising share price heights.

I could not or did not want to watch every tick and possibly experience the sickening sight of a huge and maybe nearly-immediate loss in value of my short shares.  So instead I paid a fee to set a limit on the amount of risk I'd be exposed to and I accepted a time limit within the fee's contract.  My fee was 0.65 per April 21st (the very next day) 19.50 strike call contract and I bought the appropriate number of contracts to go with my short shares.  I had shorted at 19.53, so the plan was:  Should I choose to exercise those calls, I'd be buying shares to cover at 19.50, making a $0.03 per share profit on my short, bring my loss at that point to 0.62, or $62 per block of 100 shares.  The hoped-for scenario at this point, conversely, was that UVXY would drop enough from my shorting price of 19.53 to pay me back for the 0.65 cost, so that I could buy the calls back for some small recoupment or even see them expire worthless, but I'd make so much when closing the short that I'd find the 0.65 to be worth the sleep-at-night value it conferred.

I wanted to reduce that cost, though, by selling some puts, even though that action would then limit the profit I could make on the above-described short with protective call.  I priced out puts tick by tick (see, there's no escaping watching the ticks, but at least I had breathing room now) but didn't like the fact that I'd still be locking in a loss, even though it would be a maximum worst-case loss.  Puts were going for prices lower than what I had paid for the call, so I couldn't pay myself back fully.  To be a hair-splitter, I had a 3-cent head start on the short, so I could accept a price 3 cents lower on the puts and still pay myself back.

It turns out that a series of nice red ticks brought the put prices down to where I was able to sell the same expiration puts on the 19 strike for 0.63 (see first orange arrow on chart), nearly the same as the price I paid for the calls.

At this point I could ignore the whole trade and check in late on Friday to find out whether it was a zero or the full profit or something in between.  Zero would materialize if UVXY would end higher than my call strike.  I'd exercise the calls, buy to cover for a 0.03 profit per share, and I'd have the full put premium received of 0.63 to set against the 0.65 I had paid for the redeemed calls, and you can see that this would come out to completely flat.

Something in between would materialize if UVXY would end between my strikes.  I'd be able to take some profit on the short, and premiums would offset each other (as described above, with the call expiring worthless against the full premium retained on the put).

Maximum profit would occur with UVXY ending below the put strike.  I'd lose all of the 0.65 I spent on calls, I'd be assigned on the puts, keeping the premium of 0.63 received, and at the strike price of 19.00, my short profit would be 0.53 per share.  This would net out to 0.51 per share, or $51 per block of 100 shares.  I was all set, though, with this can't-lose scenario and could sit back and do nothing.

But wouldn't you know I went and tinkered with this, taking vital parts of the machinery apart, early Friday morning.  UVXY opened so high and rose so much higher (see second yellow arrow on chart) that within seven minutes of the market open I bought back the puts to close for 0.20, envisioning a reversal of this hopefully-aberration-like open and then unfettered short share profits beyond my wildest dreams.   It seemed like a good move - for a little while.  Most of my short put premium had been locked up as a booked gain, and nothing was holding me back from limitless profits to the downside on UVXY.  But as UVXY zig-zagged higher for hours, I realized my mistake.  I had gone from max-loss-zero to a max-loss equivalent to the premium I chose to give back in my impetuous buy-to-close.  Should UVXY now rise above my call strike, I'd be able to buy to cover safely and essentially flat, but I'd be out the 0.65 cost of the calls with only the 0.43 profit made on the puts to offset it, or a 0.22 per contract/$22 per block of 100 shares loss.  Prices under my [no longer existent] put strike were looking unlikely by midday, and I kicked myself for turning my can't-lose trade into a might-lose-moderately trade without thinking it through.

I started looking for ways to bring in whatever premium could be recovered from the call side.  I already had a maximum loss set out at this point and while I couldn't likely recreate the no-loss scenario, I could manage the same max-possible-loss by changing the criteria for the day's outcome.  And the outcome loomed close, with only an hour and some minutes left in the day.

At 2:46 PM, I sold the calls for just 0.06 against the 0.65 I had paid.  That doesn't seem worth much, but I used that in determining the price for my stop-on-quote.  In order to break even-ish, I set the stop for my short UVXY shares at 19.33, while they were trading at around 19.12.  Within a few minutes my stop almost hit (see chart below.)  I believe it was within 2 cents, and you can deduce my mental state when I tell you that the person looking over my shoulder suggested that I "go and do something else for a while."

Soon, enough, a cascade of tumbling UVXY prices appeared like Niagara Falls, so - finding myself suddenly at the bottom of the falls - I climbed aboard the first boat I could see through the mist without stopping to read the name first, and grabbed the 18.98 bid to get rid of my short shares and put this story in the history books.  You can see the price bounce that ensued (back over 19.25 for a second), making me glad I hadn't waited and analyzed and computed even one darned digit before hitting "market" to unload that short.  To recap:  My known-max-loss went to no-loss, then to a different known-max-loss, and ended up at a profit not too far from the original max profit I had computed.  With an ultimate cost of 0.59 on the calls, 0.43 profit on the puts, and 0.55 profit on the shares netting out to +0.39 overall, I consider this a two-day adventure I'd be happy to have again, at least after I shake the 2-cents-from-stop experience (better than triggering-stop-in-one-tick) out of my brain and try to remember only the good parts and the fun.

Short some shares and call me in the morning

This may also be read at: http://www.cboe.com/blogs/options-hub/2017/04/21/short-some-shares-and-call-me-in-the-morning

Who wants to buy high and sell low?  Why would anyone buy calls before the closing bell and sell them to someone for half price the next morning when the opening bell rings?  When would anyone feel okay about buying for 88 cents and then selling for 45?  Answer: When the calls are just a wrapper, a box designed to keep something else safe while in transit, like a shoe box protects the merchandise on the delivery truck so that your purchase isn't thrown on the porch one shoe at a time by the people in the step van.  Of course, that shoe box may convey to you an unflattering, ill-fitting pair of shoes you don't like or aren't ultimately able to use, but it may surround and present you with just the thing you were looking for; you may have something valuable in your hands that needed some insuring.

On Wednesday, April 19th just before the close, I decided to take a short position in UVXY.  Because I didn't want to spend a lot of time or put a lot of money at risk waiting to see if this short would produce gains for me, I decided I would limit the losses a wrong-way short might put me in line for and I bought calls at-the-money expiring just two days later.  The shares were shorted at the price of $20.08, and I bought one 20 strike call for Friday's expiration at the option price of 0.88 or $88 for every hundred shares of stock.  At the very worst, if UVXY would rise and never come back down to refuel, I'd be able to exercise my calls on Friday and turn that into a buy-to-cover at the price of 20.00, which would actually net me an 8-cent profit per share.  So it would be an expensive shorting venture, bringing in only $8 per block of 100 shares on the short and paying $88 to make sure I wouldn't have to buy the short back at some damaging, unpleasant or downright scary price which could be any price, really, when you're thinking about UVXY.

So, of course I didn't really want to pay that much, and I had in mind the idea of selling puts at the next strike down, so that I'd have the chance to bring in some profit on the short shares, but I'd also be able to pay myself back for the calls I had just bought.  Problem:  19.50 strike puts were going for prices not high enough to fully pay myself back, so I thought I'd wait until the morning and see if better prices could be found then.  So I kept these short shares with only protective calls to accompany them overnight.

In the morning, UVXY had dropped so sharply that I abandoned the idea of selling puts and instead covered my shares at 19.40 for a 68-cent per share profit, or $68 per block of 100 shares, and then I disposed of the calls by selling them to whoever shelled out 0.45 per contract, and against the 0.88 I had paid, that was 0.43 I recovered or $43 per contract.  Setting my final cost of $45 per contract against the $68 per block of 100 shares I brought in, that ended up being $23 per block of 100 shares on this short, and I was pretty happy with that.  Considering that the trade was opened a few minutes before closing time and in the can a few minutes after opening time, that's not bad for a coffee and ding-ding (closing bell and opening bell) trade.

Rewrap and return to the store

This post may also be read at: http://www.cboe.com/blogs/options-hub/2017/04/20/rewrap-and-return-to-the-store

Before the paint was really dry I started tinkering with the reverse collar set up yesterday.  The first thing I did, acting upon a suspicion (you could call it a wish) that the VIX would sift downward the next day (which is today, as I write this), is that I closed the short put.  To recap the spread, it was as such, all of it opened yesterday, April 18th:

Shares of UVXY sold short at 19.48
Put for the April 21st expiration, 19.00 strike, sold short for 0.62
Call for the April 21st expiration, 19.50 strike, bought for 0.98

Soon after setting this up, I realized that I was taking on a risk of a $38 per contract loss and stood to profit only $12 per contract, at best.  Then it went against me, and then in my favor, and I'm not sure how soon or how many times.  I was too busy calculating exit strategies and the landscape changed several times in between checking in on it.

Late in the day I decided I would buy back the put at a loss.  I would have been able to do so for a gain, just minutes earlier, but as I watched and schemed it turned into a loss, and I did it anyway.  Why?  I decided to raise my risk so that I could raise my potential reward.  As it stood, my risk was limited to a total of $380, but removing the short puts from the strategy would change that risk to the total of the loss I might realize on the shares (just two cents per share) and the premium paid for the calls, which was 0.98 plus any loss taken on the closing of the short puts.  I closed the puts for 0.79, after having opened them for 0.62, booking a loss of 0.18 or $18 per contract.  My total maximum worst-case loss would now be 1.18 or $118 per contract.

Then this morning, I saw that I was fortunate enough not to be looking at potential losses; instead I caught a glimpse of some nice unbooked gains.  As seen in the chart, UVXY was well into the 18s.  I saw that I could close both my shares and my calls and take a profit of about $40 per contract, but being greedy, I calculated stops to set instead.  So I did the following:  Sold the calls which I had purchased for 0.98 to someone willing to pay 0.27, which increased my total loss (adding in the put loss from yesterday) to $89 per contract.  My goal now was to close my UVXY short shares at any price that would pay me back for that loss, or better.

Remember that I had shorted UVXY at 19.48, and it was now trading in the 18.20s.  The yellow line indicates a stop I set to buy to cover at 18.56.   This was intended to net me a $92 (per block of 100 shares) profit so I could wrap all this up and put it behind me in the learning books.

 Then, as often happens, one spike, and I mean ONE one-minute candle (see above) conspired to take out my stop and I lost the whole deal.  My UVXY short shares were now bought back at 18.58 (you should have heard the series of ring-a-dings as attempts were made to get me out as requested) and my profit on the short shares came in a 0.90 per share, or $90.00 per block of 100 shares.   So I ended up essentially flat on this venture, which is better than the way it could have ended.  That sure was a lot of fancy footwork to close out such a multi-faceted gem that was intended to run as long as three days and could have produced a range of outcomes, only to back out within one day and wipe the slate clean.

Taking the unmarked trail

This post may also be read at: http://www.cboe.com/blogs/options-hub/2017/04/19/taking-the-unmarked-trail

Every once in a while I have to try something new, and that means choosing something different from the menu and forgoing that same old tried-and-true sandwich.  What sandwich am I talking about?  My own trademarked "strangle sandwich," which is no one's favorite but my own.  It's a doozy; it's not for all tastes, and it might just fail and make you sick (and sorry you tried it.)  Let me tell you what it is before I tell you what I opted for instead, today:

I like premium, so I can't resist the appeal of the classic short strangle.  But who wants to lose on any spread?  This is how I have managed certain strangles in the past (and by "certain," I mean those that appeared they were going to lose me money.  I don't open them to lose money. Does anyone?)  Going short some puts and short some calls is simple, beautiful, and graceful because the option prices decline daily, your premium becomes "safe" from grabbing hands, and your account goes greener with every tick until expiration - if things go your way.  That's the dream scenario:  That your underlying goes to sleep and doesn't budge from its park bench while call buyers are crying and put buyers are fuming and their money becomes yours, more and more till the clock runs out.

But somewhere there in the middle, the middle might not stay in the middle and you might see your strikes in danger of being breached.  As the strangle seller, I have done the following:  Bought the stock as the call strike loomed near, with the intention that those shares get called away.  What a beautiful solution, right?  You still get the full premium received from both legs, and you get a bonus in the form of stock bought and then sold at a profit, as the calls are exercised.  Now, let's not get into whether I've practiced this, exactly.  I've done it, but then closed the calls way up there in the loft, and what do you think then happened to my shares?  I got out of that scrape, still for a profit, but not quite as much as I would have, had I followed the described plan.  If you try to get fancy, you have to realize you're getting chancy as well.  But back on topic:

  The same thing works on the downside, as well:  You can short shares if you believe the lower strike will blow through. Have I done this?  I don't think so.  But I would, if the need arose.  What I am describing is transforming your naked calls or puts into covered calls or covered puts. Is this a fail-proof plan?  Is anything?  Well, this isn't, since you can take on the long or short shares, only to see them go the other way.  I've done this (making my short strangle into naked puts and covered calls) so few times that I can say I specifically remember it and it worked well when I did it.  But could I count on that?  Of course not.
 

Let's move on to the next thing on the menu I have become willing to try.  I love shorting volatility, and I need to leave a lot of unused cash to cushion that.  No position is a good one if it leaves you vulnerable to being wiped out.  So I have to be responsible and leave oceans of unused dollars serving as collateral to my short-scheming ways.  Could you blame a coyote for licking his chops, looking at all the dollars just sitting there doing nothing?  How about breaking out the cookbook (or at least the Acme catalog) and planning something new?

What to do when you'd really like to take a short position but don't want to risk being wiped out, or even if you'd just like to cap the loss you might realize?  Is it worthwhile to pay to cap that loss?  One way to do this is to simply buy calls when taking out short shares.  Today I shorted UVXY at 19.48 and bought one 19.50 strike call contract to go with each block of 100 short shares.  Now, I don't like to take losses (note the .02 difference between my shorting price and the call contract strike) and I don't like to pay for anything, so this wasn't a move I made while smirking and high-fiving myself.  In fact, I had to hold down the nausea from paying 0.98 per contract for this dubious privilege.  And I'm pretty sure I didn't construct this in nearly the best possible manner, so don't take this narration as instruction from me.  Take it as the "cry along with me" tale of how I possibly (not sure yet) messed up, but darn tootin tried, anyway.  To recap, I shorted at 19.48, which is $1,958 per block of 100 shares, and paid 0.98 per contract which is $98 to insure each 100-share block from rising to infinity or even some moderately high price and closing down my whole account in three days.  The idea is that if my short should fail, I could exercise my call and cover my short for just two cents higher than I opened it (or $2 per block of 100 shares), and I'd be out $98 per contract as well.  Not bad, I guess, and that could have been left as is.

But wait!  The story's not over.  I did bring in some salve for the burn:  .62 per contract received from selling puts at the 19.00 strike.  So there's $62 brought in per contract, and should UVXY rise (or even stay above 19) instead of fall, I can set $62 against my costs as detailed in the paragraph above.  So it looks like the worst that will happen to me is that I'll lose the $98 and the $2 and gain $62 and that comes out to booking a $38 loss per contract.  That would happen if $UVXY ends anywhere above my upper strike of 19.50.

Now, there's filling in the middle of this sandwich just as there is with the previously described strangle sandwich, although the filling isn't as delicious.  In this case it would be various degrees of disgusting (since I consider all losses unpalatable) as I might end up selling the calls for some puny price (if I hurry up and do it before they burn up at expiration) and booking an even punier gain on my short shares.  But then again, I did bring in some premium on my short puts, and I keep the full profit on that at every UVXY price over 19.00, so there's some ketchup to disguise the bad taste.  Let's take a theoretical ending price of 19.25 for UVXY on expiration day (Friday, April 21st) and compute it.  (I'm excluding commissions for ease of computation.)  The calls would expire worthless, so there's $98 gone bye-bye. The short 19.00 strike puts would expire worthless to the buyer and my entire received amount of $62 per contract would be retained by me to set against the $98 loss.  So far we're at a $36 loss per contract. I'd close my short shares for 0.23 gain per share, and per block of 100 shares that would be $23 gain. I'd be THAT close to being ahead, but would actually be $13 down, for the trouble of watching this drama unfold and end right near the bulls-eye.

If the bottom strike (the put) is breached, I'd have to buy it back to close (assuming I don't get assigned early and that I want to avoid being assigned at expiration), but of course, the more I have to pay for that, the more my short shares would be working to hand me the money needed to do that, dollar for dollar.  (Alternatively, as just mentioned, if I'm assigned long shares I could just close the position while setting the short shares against them.)  The maximum gain to me on this reverse collar would be UVXY ending lower than the put strike price of 19.00, which is the point below which I'd have to start paying something to buy the put back.  I'd make 0.48 per short share at that price and more, accordingly, at lower prices (although I'd have to spend the gain from those lower prices to defray the put-closing costs), so that after paying to close the short puts, I'd net $48 per block of 100 shares, with the long calls being lost money.  So at the worst case, I'd lose the $98 spent on calls, I'd make enough return on the short shares to offset any costs incurred in closing the short puts, so my maximum profit would be exactly as follows: The short put premium collected of $62 minus the long call premium paid of $98 plus gain made on the short shares which is capped at 48 cents per share because if UVXY ends under 19.00, any extra profit seen on those shares will be needed to pay to buy back the short puts, for a grand maximum total of $12.

I see what I could have done better.  I should have made sure the put premium received was higher, to make the risk on the top side worth my while.  In fact, a rule of thumb would be that the width between my shorting price and the put strike price, plus the premium on the short puts, should stand up against the price of the calls combined with any loss I'd take upon exercising those calls by an amount that I consider worthwhile, as compared to what I'd stand to lose, should the desired direction for the security (in this case, down for UVXY) not materialize as I wish it would.

Of course, there are various methods by which this can be closed out without waiting until the dealer gives out prizes when the hands are turned in.  I could close out any segment of this trade anytime, and reopen (or not!  See third paragraph.)  Follow UVXY this week and check back to see how I close out this clumsily-constructed first try at a reverse collar.

Tales from the cross-VIX highway

This post may also be seen at: http://www.cboe.com/blogs/options-hub/2017/03/06/tales-from-the-cross-vix-highway

While traders of nothing but the Essenpee would find themselves sitting on a gain of 1.5% to nearly 2% from February 14th through today (or through Friday, March 3rd's closing price, thus the difference between quotes), traders like me who favor TVIX or UVXY would be sitting right where they started, whether short or long. See chart below for a short history of UVXY over the last nearly-three-weeks.

My account performance shows a gain of several percent. How did I do that, when trading nothing but UVXY/TVIX? And when taking a large loss on short puts for UVXY at a level that was hardly seen again over a range starting minutes after my entry through the present?

 See the account progress, above.  Now, see the ill-fated set of UVXY puts below.



It's easy to imagine the feelings I had (but you can't imagine the curse words) during the remainder of the day on Thursday, February 9th, during all of Friday, February 10th, and for every minute up through February 15th when UVXY dipped down to 18.49 intraday.   That's a whopping $4.01 in the money on my short puts, when I had only received eighty-four cents each.  Unsure I was getting the best escape-from-punishment price, but eager to end the ordeal, I held my nose and bought the puts to close for $2.00 on February 16th, just one day from expiration.  Of course, the price changed in my favor, but not until one week after the scheduled run of this drama ended, and not for more than a crazed, chaotic UVXY-trading morning.  I was not trading UVXY that day, but it turns out I was in the process of getting some recompense from UVXY's country cousin, TVIX.

Note that aside from the unfortunate UVXY trade, I kept some plates in the air skillfully enough by way of shorting and closing TVIX repeatedly.  First, circled in green, you see four day trades made over the course of three days.  You'll see that I missed out on profit by closing the first short and then re-opening it from a lower price the next day.  But then I "double-dipped" (performing the same trade twice using overlapping price points to get extra profit.)  All during one day, I shorted from 4.18 to 4.12, then got back in once I saw a return to 4.19 and closed at 4.12 again.  Shazam!

The next trade, in which I simply lost $13, served to lighten my holdings so that I could short again from a higher level.  On February 22nd and 27th I established subsequent short positions that were closed later on the 27th (see blue box.)

When prices rose a little higher on February 28th, I shorted some more and closed those shares out on March 1st for some profit (see the orange box.)  Also within the orange box, I shorted some more on March 1st and March 2nd, closing each of those out within the day, one for essentially flat and one for a $62 loss.

Despite all these gains, and enough of them to make up for the bone-headed loss, I still believe I could have managed trades better and raised my account value higher by trading more aggressively (holding more shares short at any given point, and being slower to liquidate so many), but maybe I should look at the prices between the 14th and today and realize that I squeezed what I could out of that stone.  Any other change in value that doesn't seem to be reflected in the above trades has to do with shares in varying number held short from the beginning of this story through the present, which at times was zero shares but more often was and is currently considerably more.

Unexpected and Vicious

This post may also be seen at: http://www.cboe.com/blogs/options-hub/2017/02/06/unexpected-and-vicious

Today's saga starts on January 24th, just two days ago but it seems like last week.  I had just, the day prior, added to my core short TVIX position to raise the number of shares from 2,000 to 2,500 as you see in the portfolio graphic below.  The price for that lot of 500 was $6.26.  This will be revisited later in the post.

First, let's dispose of the TNA story.  You'll see that standing out at the top of the graphic like the subject of a "which of these things is not like the other" song.  TNA is also a little reminiscent of TNT, and that's not a ticker symbol, that's more like:

Just before one in the afternoon, I got it in my head to short TNA because I thought it wouldn't climb higher and I wanted to paid for that failure.  I got one thing right but I didn't get what I wanted out of it.  TNA didn't climb any more that day, but in order to avoid paying for the venture, I had to wait until after hours to get out with a couple of dollars in my pocket.  And a wise move that turned out to be, because the next day TNA kept right on climbing like I thought it wouldn't, to right around 106.50 before cooling off.  I'm glad it climbed without me, because I don't like paying to take a "heck" ride.

The other oddity in the portfolio (above) is the 26 strike UVXY short put.  That same day, close to noon when UVXY was trading at about 26.30 or so, I sold 2 puts for the following week's expiration for the 26 strike for $1.37 premium each.  My plan was to cash those in quickly on any substantial bounce, but UVXY just kept on dropping.  Check the price now (or as of my writing, which is Thursday, January 26th in the afternoon.)  UVXY is now 23.95.

Now see the portfolio graphic above.  This was taken the next day, January 25th, when my 26 puts had gotten substantially away from me, and UVXY was hovering above 24.  I did a repeat by selling two of the 24 puts short for $1.01 in premium each.

Later on January 25th, I saw TVIX hitting a level so low (the same level where it sits at this moment) that I was inspired to bring in that addition to my short made two days prior.  I judged the return to be so good within just two days that a retracement would be likely - if not immediately, then pretty soon.  The chance of missing out on more return seemed expendable in this case (due to what I estimated to be its relative unlikelihood) compared to the benefit of locking the profit in; so, that much -and only that much - of my TVIX short, I booked as such:

As seen in the graphic below which was captured today, the 24 strike puts are no longer my problem; I bought them back to cover at exactly the price I had received for them.  Though they would have been the more logical selection to keep rather than the 26 puts, I wanted to clear some clutter off my table and wanted to lessen my risk exposure.  Next I mulled over a plan to make my short puts less risky, possibly by making them covered.  One alternative was to simply dump them for the loss you see below ($161, and I hate taking losses).  As I cogitated and calculated, UVXY hovered around 24.76 for a good long while, almost as if it urged and beckoned me to go ahead and make my move.  So I went ahead and shorted 200 UVXY at that price, making my two short 26 puts covered, even at a disadvantageous price.  The reason I call that disadvantageous is:

If expiration day comes seeing me refuse to trade in the contracts and UVXY remains below $26, I'll be assigned, which means I'll have 200 shares of UVXY put to me (long) at the contracted price of $26.00 even.  I would think of this (or rather, I'd finagle it to come out this way) as buying to cover my 200 shares short, which obviously I just transacted at 24.76.  This would represent to me a loss of  $1.24 per share of $248 total.  Keep in mind, though, that I received $264.65 for selling the two put contracts in the first place.  This would net out to being essentially flat.  I made this move today, shorting the 200 UVXY, to "lock in" a guaranteed outcome of no money lost to me, should UVXY stay below $26 and should I hold the puts through expiration.  Naked, the puts could cost me any amount of money, limited only by how low UVXY may drop between now and expiration.  Covering them made the downside (meaning: UVXY dropping lower) worst-case scenario outcome known to me.

On the other side, though, having these 200 shares of UVXY short exposed me to more risk, since UVXY could rise above $26 (and to any level higher that it might feel like, especially during one of its regularly-occurring temper tantrums.)  And my only consolation would be the $264.65 pushed to my side of the table for taking on the puts.  In this case it would be great for the puts to be uncovered.  Who wants more ultra volatility shares short than they can handle during an unexpected and vicious volatility spike?  As you can tell, I have UVVS on the mind frequently; I have to keep it in mind to avoid being ensnared in a UVVS to a degree that it'll harm me.

To that end, while typing up this post, I closed out the 200 shares you see above, making my puts, once again, under-dressed for the weather.  I wish I could say I caught the bottom of the UVVD (unexpected and vicious volatility downplunger) that took place from 2:00-2:40 today, but I got most of the move.  I'll try to scalp some more day trades or short-term trades before the expiration of my short puts and see if I can offset any loss I'll incur, should the puts turn around and bite me with the teeth they're showing me right now and have been showing me pretty much since the moment I took them on.

Getting the 2017 Party Started

This post may also be seen at: http://www.cboe.com/blogs/options-hub/2017/01/11/getting-2017-party-started

The cliffhanger last time involved the $6.50 put for UVXY expiring this Friday, January 13th.  I had sold twenty contracts on January 4th for premium received of $0.18 each.  It turns out that I got nervous about this put when UVXY touched 6.57 later that day.  I knew I had time, but I also believed that the nature of UVXY was not on my side, and I began plotting to trade out of these options and eventually replace them with more advantageous ones.

It turns out I didn't have to wait long.  See the dip in option price the next day wherein I and apparently just a few others traded at eighteen cents, thus ending my obligation with this option before the price took off again for higher ground through today.

What happened to the 1,400 shares of UVXY (which, as you'll recall, made these options partially clothed, although uncouthly underdressed)?  After buying back the puts, I witnessed UVXY slide down an intraday hill to the low 6.70 range until I could not stand feeling "out of the action" and I sold 600 shares short at 6.74.  Ironically, this brought me up to the grand total of 2000 shares of UVXY I would have needed to support those puts as fully covered.

Right now, (as I write on Wednesday, January 11th around 3PM), UVXY is 6.17.  So what have I spun from a 57 cent drop in UVXY since January 5th, four trading days ago, when I had 2000 shares short at that time (but, you'll learn, I no longer do)?  Get out your calculator and you'll figure that, had I simply held those shares short through this moment, I'd have an $1,140 profit just on those shares.

The next day, January 6th, I bought the most recent 600 shares back to cover, immediately regretting it, but netting an even $100.  The regret stemmed from the additional gain I could have realized by waiting until later to close the short.  I then shorted other securities as a balm to the pain, but came home with nothing.  I usually don't detail such mundane happenings, but if anyone wants to see it, the combined escapades that day looked like this:

 Before that day was over, witnessing UVXY dip all the way down to about 6.23 and back up, I shorted it again at 6.50, only "losing ground" by about four cents from my last transaction in which I had closed it at 6.54 in the morning.  What happened after January 6th?  Only two full trading days elapsed after that, and today is still in progress, but the transactions were too numerous to narrate full stories on.  Instead, I'll give an accounting, excising another group of failed TNA shorts.  If anyone really wants to see that embarrassing sub-story, it's right here:

Here's the accounting breakdown:

So, with $200 slipping between my fingers there, let's detail the remaining transactions to date, first the UVXY and then some TVIX short I acquired on a few different dates so far this year.  The UVXY:

The green box shows the profit taken on the 600 shares shorted as an attempted continuation of the same short started when I closed the options.  The red-ringed lots represent the closing of shares shorted on the first trading day of the year.  And the remaining lots were opened this week and closed this week, through today.  At this moment I have no short shares of UVXY. What's not shown in that chart is that I was unable to borrow some shares for shorting today, and used TVIX as an alternative, and I also used TVIX intentionally two days ago to add to an existing pool of TVIX shorts I began accumulating before the year started.  The lots sold short this year were transacted at the following prices:

TVIX is currently 6.68, so my unbooked gain on the above is, right now, $560.  Disregarding profits I took on shorts started on the first trading day of the year, I only brought in a little more with all of my shuffling of UVXY shares, and would have been better to just hold the 2,000 shares since January 6th.

One of the goals I achieved today, however, was to lighten my exposure to combined TVIX/UVXY short shares by cutting it in half from a somewhat overweight position at the end of yesterday and a very overweight position this morning as I "doubled down" to try to get out of yesterday's "mistake" faster.  It worked; I got out unscathed, but as of this writing, UVXY/TVIX continue to drop along with VIX wallowing around in the low elevens, so I'm looking at profits missed out on today and feeling irritable.  I have to remember, though that it's essential for keeping my account intact that I make sure I'm out of the way if the train changes directions.  To mix metaphors, I'd like to have fun at the party, but it's more important that I get home from the party alive, even if that means leaving while it looks like the party is in full swing. 

Follow the bouncing... Arrow

This post may also be seen at: http://www.cboe.com/blogs/options-hub/2017/01/05/follow-bouncing-arrow

Yesterday, January 4th, in order to start out the new year with some degree of nail-biting (figuratively) drama, I hatched a little plan involving some short shares of UVXY.  The first thing I did was to buy to close 400 shares, reducing the 1,800 I had opened the previous day to 1,400 in quantity.  My plan was to re-short those 400 shares later in the day or on some upcoming day, along with 200 more which I envisioned as a day trade.

Then, thinking about the 1,400 short shares I still held, plus the 600 more I planned to acquire soon enough, I looked at premium for puts on the 6.50 strike of the same security.  As you can see from the graphic below, UVXY was trading in the $7 neighborhood when I sold 20 puts for the $6.50 strike and the January 13th expiration.

Of course, I was putting the cart partially before the horse, since I hadn't yet made another short sale of shares, so only 14 of these contracts were considered "covered puts" and 6 were plain old stark naked.

See chart below for the timeline of my trading so far this year.

Here is expanded detail of the put trade.  This chart tracks the exact contract.  Last week, trading price was just a few pennies.  This week, prices exceeded twenty cents.  My price received was eighteen cents.

Several courses of action are available to me at this point, particularly regarding the short puts.  I could keep them and hope they expire worthless on January 13th.  This would require UVXY to close above $6.50 on that day.  I could trade my way out of the puts, by buying them to close and making a profit, breaking even, or taking a loss.  I could leave six of the contracts naked, or I could short more UVXY shares to make some or all of the contracts covered.  Of course, I could buy back any number of my existing short shares to make any number (including all ) of my contracts uncovered.

Will UVXY change in price today or in an upcoming day such that I'll feel motivated to close my short puts?  Will it appear safe to leave those puts open through expiration?  Since I received eighteen cents in premium, UVXY could close as low as $6.32 (that's $0.18 lower than the strike of the contract) on expiration day and I'd be able to realize no loss upon covering the short shares just before expiration.

Will UVXY rise enough that I'll decide to re-short the shares I recently closed, and will I want to short even more shares?  Or will it rise so much that I'll want to keep watching it for a higher entry point?  Will it continue to sink, yet I'll decide to short more UVXY shares anyway?  Or will I close all of them?  These are all questions that will be answered in my next blog entry, as the near future unfolds.  If you've read this far, you must be following along, and if you've been doing that, I'm glad!

Whistling over the bridge

This post may also be seen at: http://www.cboe.com/blogs/options-hub/2016/12/05/whistling-over-the-bridge

At my last writing I had taken an accounting-sheet loss by simply exchanging one security for a comparable one and then selling some options against that position with the intention of bringing in some extra return on that position.  Refresher:

Converted to: (shown after just a few minutes as the position immediately resumed producing red ink):

Well, what happened to those during the earthquake that was election night and the days leading up to it?  I said I'd report back on my bag of Halloween goodies (or NOT-goodies), and here is the answer:

The going got rough, but I got going and worked to repair those positions (some repairs handled poorly and some better executed) until my account, as shown below in an entire-year view, bounced back:

What became of the above-depicted positions during the turbulence that transpired over the first several days of November and during the presidential election?  I got nervous about the short puts connected to my short UVXY shares and cashed them in on November 1 for a tidy profit, as shown below:

Then, I did the same thing again on November 7th, also as puts to cover that same position of associated short shares, but closed them out for a loss. (see below)

I don't remember the exact rationale for that move, but I believe I was worried that the puts would limit my profit, and I wanted to close the position and consider opening another one later.  As it happens, my prediction that UVXY would hit the 13.50 strike by the November 11th expiration (an undesired - albeit acceptable and anticipated - outcome in my mind) was somewhat on-target!  On November 11th, UVXY was all over the map but closed the day at 13.54, just pennies above the strike price.  It spent a lot of the day in the 14s, even looking 15 in the eye, and dipped to 13.43 just to freak out traders [of those particular options], before settling on the hairsbreadth gavel-drop of four cents above that option's strike.

I, of course, had long been out of it, making hay while the sun shone for the remainder of November.  Aside from the options trades described above, my trades consisted of short UVXY and TVIX shares (and just one lot of TNA), and the results are shown below.  For some reason too boring to go into, I changed my closing lot selections from LIFO to FIFO and back several times, so some of the profits are on lots opened earlier the same day, and some are on lots opened as far back as October 31st, the day of my last blog entry.  Some are associated with the options discussed above (you'll see the close of the 1,100 shares from in the second graphic, for example.  Just look for the 15.95 entry price to see those two lots; they were bought to cover at an average of about 15.21.)  The block of TVIX closed for a large loss was "converted" to UVXY with the purpose in mind of selling options against it, and we already talked about those.

As enjoyable as it's been to type this up and chop and crop all the screen shots, I must get back to watching the shares I have outstanding, once again with an uncertain fate.  But I returned, as promised, to reconcile my misdeeds with you readers, and you can be sure I'll do it again.  Maybe this time before an entire month has gone by!

Oh, before closing this entry, I forgot to mention that I had to sit through uncomfortable adversity on those shares before booking the nice profits you see above.  It wasn't an intentional glossing-over, but more like something I've put behind me since it was weeks ago (I hope there's no reprisal in the short-term, though.)  Just a little taste of it, if you'd like to see, went like this:

Fun to look back at the chasm-like gorge after you've crossed it on a creaky, fraying rope bridge.  I documented it then so I could look back and laugh.  Until next time, and best trading to you!

Trick now, treat later

This post may also be read at: http://www.cboe.com/blogs/options-hub/2016/11/01/trick-now-treat-later

After having a pretty good week shorting anything with a ticker (no, not really - just a few select names) and getting away with it, I got caught with my shorts up on Friday afternoon.  Who can predict green ticks higher than the Empire State Building that materialize while you're waiting by the microwave for coffee to warm?  So I decided to transmogrify the offending position into a Frankenstein's monster of sorts, fitting for the candy festival otherwise known as October 31st.

I booked a loss as such:

Then opened a new position as such:

To compare the old, closed position with the new, open position, it goes like this:  On Friday I had sold short 800 TVIX at a price of 15.32 and then added 200 more short shares at a price of 16.63 (halfway up the Empire State Building) for an average short position from 15.58.  Today (October 31st as I write this) I bought those shares to cover at 17.46 to close that position at a hefty loss.

Then, trying to waste no time but apparently wasting opportunity ticks anyway, I opened a similar position slightly larger in size in the comparable security, UVXY.  I sold short 1,100 at 15.95, and to go with those shares, I sold eleven 14 strike puts for the November 11th expiration at a price of 0.87 each.  Here is how the position actually looked, value-wise, a few minutes after establishing it:

As you can see, the short position immediately moved against me, and the option immediately moved in my favor.  I had sold the puts for 0.87 and they were going for 0.81-0.83 a few minutes later.  As UVXY moved higher in share price, the puts became less valuable immediately.

Obviously there are only three real dispositions for the options, now that I have sold them.  I can buy them to close for a price higher than I sold them for (taking a loss), I can allow them to expire (worthless or with value), or I can buy them to close for a price lower than I sold them for (making a profit.)   Let's outline the possibilities in relation to my short shares.

For the price of the puts to be higher than my entry price, the underlying would likely move lower than it was at the time of entry.  Buying the puts to cover at a price higher than I sold them for is something I would consider if I wanted to close out the short shares for a profit, set any losses on the options against that, and clear my slate of the entire position.  I'd enjoy less of a profit on the short shares than if I had just shorted and covered the shares with no options associated.

Buying the puts to close for a price lower than my entry price, similarly, may occur if the price of the underlying moves lower than it was at the time of entry, but due to time premium eroding daily, option price may stay lower than  my entry price so that I may not have to take a loss on the options, and may make some kind of profit on them.  So I could profit from closing both the short shares and the options.  The other scenario is that the options price would be lower than my entry as share prices rise above my short-share entry price, so that I'd have a loss situation (realized or unrealized) regarding my short shares, but at least I'd be able to book some sort of profit on the short puts. (See third illustration for a depiction of how this began to unfold immediately after opening the positions.)

The last possibility is to allow the puts to expire (either worthless or with some value) on the expiration date of November 11th.  If UVXY ends above 14.00 I will have ended my obligations connected to the options and, assuming I still have the short shares (I'm not planning, in this instance, to have naked short puts, so I'll still have them if I carry the puts through expiration) I'll be free to keep or dispose of my short position after November 11th; the premium received through the sale of these puts will simply be extra income for me.

But if UVXY ends under 14.00, I'll have 1,100 shares of UVXY put to me. Any value remaining in the options will be of no concern to me if I choose to be subject to assignment.  The result will be a short position and a long position which I can then ask the brokerage to zero out for me (this equals the equivalent of buying my short shares to cover at 14.00, and this caps the profit I'd realize on the short shares.)

In any case, I don't have to trade in my short puts and I can keep the $941.54 brought in by them.  Assignment will result in a nice profit of 1.95 per share on the short shares, times 1,100 which equals $2,145 to add up to a total of about $3,087 on November 11th; remember that I just ate $1,902 so that's about $1,185 I'll be ahead two Fridays from now if all goes according to plan on this.

If it doesn't go as I envision, I'll be on the hook for some unknown amount of loss on the short shares, or I'll take some small or maybe even respectable amount of profit on them, but I'll have the "option" of  keeping every penny of the $941 I didn't have until I decided to sell the puts this morning.

What's it going to be for me - trick or treat?  Or trick, and then treat?  We'll find out and I'll report back on my bag full of goodies (or not!)

A trader's week in review

Last week I traded only two securities, each of them short each time.  The below charts, detail sheets and typed logs represent every trade I made during the week of October 10th-14th.

The drawn brackets show each closed trade.  Most often I trade by opening and closing only one lot at a time, but fairly often I add a lot or two to my original position and then close all open lots at once to bring my account back to all cash.  The chart in the middle of this post (see below) shows a full week for each security with the totals made or lost trading that security for that day of the week.  I also typed up trade logs which are just another way of displaying the data in the detail sheets (above for TNA and below for UVXY). Starting with the TNA trades:

On Monday, October 10th, I sold 200 TNA short at 80.23 at 10:26AM. 
An hour later at 11:33AM, sold 200 more shares short at 80.26.
Covered all of these shares at 1:07PM for 80.22.   P/L: -$18

Also on Monday, October 10th, at 1:22PM, sold 400 TNA short at 80.12.
Covered these shares at 3:59PM for 79.88.  P/L: +$78

On Tuesday, October 11th, at 9:32AM, sold 400 TNA short at 79.02.
An hour later at 10:23AM, sold 200 more shares short at 77.66.
Covered all of these shares at 12:42PM for 76.10. P/L: +$1,449

On Friday, October 14th, at 10:01AM, sold 200 TNA short at 74.70.
A few minutes later at 10:16AM, sold 200 more shares short at 75.04 .
Inside an hour, sold 300 more shares short at 73.43.
Covered all of these shares at 12:34PM for 73.24. P/L: +$674

As for the UVXY trades:

On Tuesday, October 11th, at 1:25PM, sold 500 UVXY short at 16.51.
At 2:36PM sold 300 more shares short at 17.18.
Covered all of these shares 3:35PM for 16.75.  P/L: -$20

On Wednesday, October 12th, at 11:25AM , sold 300 UVXY short at 17.01.
Covered these shares at 11:59AM for 16.97.  P/L: -$9

Also on Wednesday, October 12th, at 12:01PM, sold 300 UVXY short at 16.95. .
At 12.23PM, sold 300 more shares short at 16.66.
Covered all of these shares within a half hour at 12:30PM for 16.48 .  P/L: +$167

On Thursday, October 13th, at 10:01AM, sold 300 UVXY short at 19.03.
Just five minutes later, covered these shares at 10:06AM for 19.04 .  P/L: -$21

Also on Thursday, October 13th, at 10.20AM, sold 300 UVXY short at 18.79.
Less than five minutes later, covered these shares at 10:24AM for 18.62 .  P/L: +$32

Also on Thursday, October 13th, at 10.49AM, sold 500 UVXY short at 18.88.
At 11:00AM, covered these shares at for 18.87 .  P/L: -$15

Also on Thursday, October 13th, at 11:25AM , sold 500 UVXY short at 18.48.
Covered these shares at 12:47PM for 18.09 .  P/L: +$176

Also on Thursday, October 13th at 2:26PM, sold 300 UVXY short at 17.72.
Covered these shares at 3:03PM for 17.67.  P/L: -$3

On Friday, October 14th at 12:41PM, sold 500 UVXY short at 17.35.
Covered these shares at 12:47PM for 17.48. P/L: -84

The TNA trades were more profitable, but I was happy to have the extra return from the UVXY trades, although they were a lot of work.  I can't remember which were more nerve-racking, but if you desire meticulous detail and if you bring up your own charts to see the movements of these securities between the opening and closing points of all trades, you will see that in many cases positions moved against me by a lot (not just a little) before they ultimately became profitable or even more-or-less flat.

My general trading behavior looks something like this:

I try to judge whether to cut losers short or allow some "room to become right," and it seems like the latter pays off many times.  When I need to cut a loser, I make all efforts to close it for flat, whether it has gone against me and come back, or gone in my favor but come back to where it's threatening to start robbing me.

In many cases, I add to winners so that I can amplify any returns should the movement be in my direction and the potential profits appear to be rolling in.  I strive to do this, actually; a day of adding and adding until my account is maxed out and break-even stops are a mile over the current trading price would be my dream come true.

In other cases, when a position goes against me, I short more shares at a higher price (see the paragraph about judging whether to cut losers for a loss) to raise my average basis so that, should the movement of the security resume downward, I can get out sooner and/or with less loss (or a greater profit!  That's right - I don't honor that old saw, "Don't add to losers.")  I probably should have included an enlarged inset showing the instances where I did that, but I'll leave it to any motivated readers to bring up and zoom into charts themselves if they want to wear out their own eyeballs, since every last data point of every single time I hit "order" last week is printed and accounted for two ways here (in the detail sheet and in my typed log).

I don't wait until I'm an expert at something before I start doing it, so don't expect to see perfect trades, exemplary technique, or even trades that you'd consider trying when you see what I do.  I learn as I go and I assume I'm always improving and refining my methods, so what you see is a work in progress, but also an attempt borne out of necessity as I have bills to pay and income that needs generating.  I don't think the week was too bad... Will the next one be better, or way worse?  Can't tell until we get there, and tomorrow's coming up soon, so I'll close with this word to my fellow traders: Goodnight and good trades tomorrow!  Thanks for reading (if you didn't skip all of it and simply read the last sentence.  If you did, go back and read the WHOLE thing - right now.)  ;oD