It wasn’t as bad as I had previously thought. I am still learning how to download and correlate data from TOS so I ended up counting some losing trades from December into my January summary that I posted a few weeks ago (You can find all the details on my Closed 2010 page.) Overall, The Option Guru beat the S&P 500 for January in both the Spread Account and the Conservative Account:
S&P 500: -3.7%
Spread Account: -3.21%
Conservative Account: -2.14%
Don’t get me wrong, I am not bragging! Let’s look at a few things here…
Double Down Danger
Back in December I opened a Bull Call spread on GOOG because it was in a well-defined upward trend. In January I opened a Bear Call on BIDU because of its down trend. On 1/12 (the very day I entered the BIDU Bear spread), GOOG announced their change of policy regarding the censorship in China after the market close. BAM! GOOG drops and BIDU shoots up – burning me in both trades! Usually I like to keep more diversified and I let this one slip through – mostly for greed! So it cost me almost $2,500, where if I had stayed diversified it would only have been $930.
Conservative Account
Not much activity in this account – it was intended to be that way. I was assigned T last month and I should have purchased some insurance in the form of a protective Put, but I didn’t. Now I am waiting for a price recovery in order to start writing Calls.
I bought another 200 shares of TZA when the price was down at 9.32. TZA is a Direxion 3X Bear on the Russell 2000 that I am using as a hedge for a possible bad stretch. Turns out to have been a good idea so far. If that gets above $13 and starts to pull back, I will sell some Calls.
The Option Guru also closed KFT and LTD for a profit and used the money to do a Naked Put on DUK. There is still a nice chunk of cash sitting on the sideline waiting for a Bull move on something – anything!
Outlook for February Expiration
Right now it’s looking good! The Guru is in mostly Bearish trades and he hopes to have the opportunity to close some early.
The PCLN Double Calendar and its associated adjustment is working out quite well right now. In the Risk Analysis below, this is what it will look like next Friday (2/12) all things remaining the same. I have until earnings on the 16th to hang on to this – and if it stays in the fat part of the profit tent the Guru would be very pleased!
CLF is a FEB/MAR Put Calendar that I entered on 1/28 with the intent of entering another Calendar spread to increase the profit tent. Right now it’s in the profit tee pee and I will wait a few more days to optimize the next trade for the price direction.
I did enter ISRG on 2/1 with a 310/320/330 FEB Butterfly. I will do the same thing as CLF as soon as I have a good trade for a high probability double Butterfly.
Thanks for your time, and the Option Guru welcomes any comment or questions.
- Jeff
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