$25K Virtual Portfolio Status

This one is on a very nice roll at this point!

We have the same issue as the $10KP as LVS, for example, is booked as a $2K loss even though the $110 calls we sold are $7 and the stock is at $110.  There’s a whole lot of ignoring you need to learn to do when looking at spreads.  You need to build your faith, slowly but surely, in the process and, as long as your stock is still in your target range, you can ignore the gyrations that puts and calls go through on a daily basis.

Once you get comfortable with that, you’ll learn when a call is "too cheap" or "too expensive" and you’ll learn how to time your entries and exits better, which can give your virtual portfolio a significant boost.

I’m glad we rolled the Apple puts up as it’s a good excuse to leave the $185s and $190s naked but we need to stop those $190s out at $3.75 with a .50 trailing stop as it would be idiotic to allow them to turn into losers when they’re up 35%.  We can afford to be a little generous with our stop as we do have the puts but we are undercovered to the downside.  Taking out the $190s (if we have to) would still leave us with the $185s but we’d suddenly be 2:1 bearish on the way down.  This is how you can set up a virtual portfolio to almost automatically swing from 70:30 to 30:70, by identifying fulcrum positions that will benefit first from a reversal.

At this point we can add 10 more BUD (assuming you have $50K+, no uncovered position in the $25KP should be more than 10% of your balance.  We’re very lucky MSFT came back but now we have great downside protection from our caller so we can let that ride a bit.  NFLX got assissinated by CitiBank who are speculating over postal rates, handling issues and the effect on NFLX as if NetFlix wouldn’t address the issue quickly and effectively.  All I get out of this article is 1.6M a day!  Sounds like a business to me…  Let’s DD at $1.10.

PFE – I told you so!  Now we can not be greedy and take 1/2 off the table as it’s in a bad spot for selling calls so we’re all out at $2 or selling the $25s for .50, whichever comes first.  T – I told you so!  I love them long-time so let’s roll down to the Apr $35s for $1.65 and we’ll sell the $37.50s if it breaks below $38.10.  Note that spending $1.65 to roll to the $35s adds $2.50 of intrinsic value, dropping our premium from $2.35 (.02/day) to $1.48 (.01/day) so the second we spend the $1.65 we get back $1.35 in premium saving over the 135 days left on the position – that’s a no-brainer!  If we break up over $38.75 I will be inclined to roll the $40s back a month but only if it looks like they will be working for us as T is a very slow mover generally.

CAKE – have you ever seen so much movement just to get back to our target?  GOOG – holy cow, how did we end up with a $33,000 position in a $25K virtual portfolio?  SHLD – we’ll have to roll him up of all things.  Let’s just take out the $110 caller for now and re-cover with $115s IF IF IF they get rejected at $115, otherwise we’ll be looking to sell the $120s but those we absolutely will sell at $120 as it would be greedy not to.  Keep in mind how thrilled we are to be even with our call on this one after that $17 drop although, of course, we did wipe out several callers along the way.  I don’t book the profits into the basis in the small virtual portfolios as it’s easier to review without having to figure out how the complicated plays run over time and these are meant to be teaching virtual portfolios.  Unfortunately, this tends to create massive reports as you can see from this week’s download!

TSO – I keep forgetting to fix this one!  They may have actually bottomed here but we are too far in the money so let’s roll ourselves down to 2x (10) $50 puts, taking $1.50 off the table and roll our caller down to 2x (10) $50 puts, giving them back $1 that we owe them anyway and adding $1 in premium.  We’re probably going to double roll these back to the Feb $50/Jan $47.50 puts near expiration anyway so I’m not too worried about them.

Oh, I didn’t get my roll up on the DIA puts and I’ll still be looking for that today.  I wanted the $134 puts.