Results Week Ending 5/8/20
Last week I had a very good week, the best of the year. This week was even better. I beat last week by a few bucks.
I’m really having trouble with the way this market is moving, and I may change the way I trade. I’m having trouble rationalizing why the market is moving the way it is. Don’t get me wrong, I like it, but I feel something is not right. If we listen to the “professionals” we hear there’ll be no chance of a V shaped recovery. Well take a look at the DOW candlestick chart. It looks like a V to me. the right side of the V might be going up a little slower than the left side came down, but it is moving up consistently since the bottom of March 23rd. So, if the professionals are correct about no V shaped recovery the right side of the present V will not continue up.
Stock’s prices are so temperamental to stock’s earnings. If a stock misses estimates by a penny many time the stocks tanks. News moves stocks, and earnings in the number 1 news item. I don’t believe there is one company on the market that made the same earnings in April as they did in January. United Airlines (UAL) went up $2.67 on Friday. To me this is crazy! I bought UAL to do a Covered Call, not to invest in the company. For the stock to move like that many people are buying the stock. This is only one example. Who is investing in airlines, hotels, resorts, restaurants chains, etc? It seems like professional investors are throwing all their investment rules out the window. If you listen to them on TV they all talk about earnings. Well no one is making money so why are they buying these stocks? I’m worried! Between this earnings season, and the next, I could see something bad happen to this market. I feel there are billions of dollars getting pumped into this market because people are afraid to miss out on a great buy; they’re gonna miss the boat! I thing it’s a dangerous situation. Warren Buffett said he was no longer gonna put money into this market. He’s gonna sit on cash. Besides greed and the irrational desire to make money, I don’t see why this market is going up.
Do not listen to me! I’m only giving my opinion on this market. I’m not giving investment advice. You must follow your heart. I’m only trying to make sense of this market. When you listen to the professionals they advise according to the financial health of a company. Well, I don’t see too many companies that are as healthy as they were a few months ago. The NASDAQ is higher than it was before the coronavirus started. To me that’s crazy! And I’m gonna make moves according to my outlook.
Now that my account is above where it was on Jan 1st I’m gonna be more careful. I’m gonna continue with my trading. I’m gonna try not to buy stocks. When I sell Calls I’ll lean toward Naked Calls. If I do want to invest in a company it will be with long term options, LEAPS. I’m gonna lean toward companies less impacted by the coronavirus. I did get out of a few LEAPS this week which helped me have the biggest week of the year. Any exited position below that is 1 or 2 contracts was LEAPS. I still have a bunch more I’m holding but I’ll look to exit this week if I have a nice profit. Last year I was up 101%, and I’m up an average of 50% for the last 3 years as a result of my trading. This is the strategy I want to stick with. Not buy and hold.
I have a bunch of trades to report closed this week. I’ll try to say a little about each….Very little lol.
Square
I exited a LEAPS. I may have jumped the gun because the stock continued up. I don’t care! I made money!
4/2/20 – Buy to Open 1 SQ 1/21/22 $47.50 C @ $13.00
5/4/20 – Sell to Close 1 SQ 1/21/22 $47.50 C @ $26.00
Profit +$1300
RH
With RH I had 6 contracts of this Long Call. Here I sold 3 with a nice profit then I sold the other 3 with a nicer profit. See below.
4/30/20 – Buy to Open 3 RH 1/15/21 $140.00 C @ $37.50
5/7/20 – Sell to Close 3 RH 1/15/21 $140.00 C @ $42.00
Profit +$1350
United Airlines
Here I sold a 10 contract Naked Call and as soon as I did the stock went down. I jumped out in 10 minutes with a $200 profit.
5/7/20 – Sell to Open 10 UAL 5/15/20 $25.00 C @ $1.00 (+$1000)
5/7/20 – Buy to Close 10 UAL 5/15/20 $25.00 C @ 80¢ (-$800)
Profit +$200
Nvidia
This was not a LEAPS but it was a long term option. I don’t like holding Long Options with less than 6 months to expiration so I sold.
4/27/20 – Buy to Open 2 NVDA 9/18/20 $295.00 C @ $41.90
5/8/20 – Sell to Close 2 NVDA 9/18/20 $295.00 C @ $42.90
Profit +$200
RH
The other 3 RH Calls I mentioned above.
4/30/20 – Buy to Open 3 RH 1/15/21 $140.00 C @ $37.50
5/8/20 – Sell to Close 3 RH 1/15/21/$140.00 C @ $44.00
Profit +$1950
Penn
This is a 1 contract LEAPS. This trade falls into my strategy of getting out of companies that are adversely affected by the coronavirus. I like the stock, and I might miss the boat, but there are other stocks I feel better about.
5/1/20 – Buy to Open 1 PENN 1/21/22 $15.00 C @ $8.00
5/8/20 – Sell to Open 1 PENN 1/21/22 $15.00 C @ $9.80
Profit +$180
Netflix
NFLX is a great company and is doing nice with the coronavirus, but I don’t like the way the premiums are moving with the stock. It’s a volatile stock and for buying options the premiums are too high.
4/22/20 – Buy to Open 1 NFLX 1/15/21 $430.00 C @ $67.50
5/8/20 – Sell to Open 1 NFLX 1/15/21 $430.00 C @ $70.50
Profit +$300
United Airlines
This was a Covered Call with assignment. Made $250 on the stock sale and kept the great $1400 premium.
5/4/20 – Buy 1000 Shares UAL @ $24.75
5/8/20 – Assigned 1000 Shares UAL @ $25.00
Profit +$250
5/4/20 – Sell to Open 10 UAL 5/8/20 $25.00 C @ $1.40 (+$1400)
5/8/20 – Expired 10 UAL 5/8/20 $25.00 C
Profit +$1400
Another Covered Call with assignment. Made no money on the stock sale because it was an At-the-Money Call
5/1/20 – Buy 1000 Shares TWTR @ $28.00
5/8/20 – Assigned 1000 Shares TWTR @ $28.00
Profit 0
5/5/20 – Sell to Open 10 TWTR 5/8/20 $28.00 C @ $1.00 (+$1000)
5/8/20 – Expired 10 TWTR 5/8/20 $28.00 C
Profit +$1000
Another great week!
Total Weekly Gain +$8130
Try to have a nice weekend.
Successful Trading,
Steve
The Options Coach