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December 23, 2013

Portfolio Update - 12/21/13

Lots of action in the market this week. SPX hit all time highs, VIX is back under 14 and the taper is finally here. We're not going to try to predict where the market's going but we'd expect a grind higher and volumes to  dip as we enter Christmas/New Years last 2 weeks of the year.
Our position in GOOG expired worthless and we kept full credit. AMZN is a very bullish looking chart:
amznIt was a bit difficult getting a fill as one trade so breaking up into 2 credit spreads (370/400 bull put and 400/430 bear call spreads) helped. However, breaking up Iron Bfly into 2 credit spreads can hurt overall position if the underlying stock starts to move against us. Here's our current P/L:
risk profileWe're going to let this trade simmer and if AMZN starts to move fast we'll make adjustments accordingly. Next week we'll look to sell some put spreads in the names that show relative strength (FB,GOOG,NFLX some on our watch list).

December 19, 2013

$AMZN Weekly Trade - 12/19/13

  • Strategy: Iron Butterfly
  • Underlying: AMZN
  • Trade: SELL -1 IRON CONDOR AMZN 100 (Weeklys) JAN2 14 400/430/400/370 CALL/PUT @17.00 LMT
  • Trade Price: $17.00 credit per spread
  • Margin: $13.00 per spread
  • Return on Risk: 130%
  • DTE: 22
Risk Profile:
risk profile
This is a daily chart of AMZN:
AMZN is coming up to retest 400 level. We're entering slightly bullish Iron Butterfly looking for a drift higher (not explosion). We are looking for 10% return on margin as our profit objective and we don't want to lose more than 15% of margin. Points of adjustments are 385 and 415 (price) and when we're down 50% of max allowable loss or $100 (P/L). We will adjust by rolling 'bad' side up or down 30 points. For example, AMZN goes to 385 we will roll 400/370 put spread down to 370/340 and same for the upside. Last few weeks of the year should be slow and that should help our trade reach Profit Objective.