Fund D Update - New positions setup for Feb

Very volatile day as it was Option Expiry Friday 16-Jan.

Implied Volatility for BAC and C are around 170% and 190%. STO some PUT positions for Feb.
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BAC support level at $7.00 and C support level at $3.50.

Look at the Stochastic chart to time entry point for the STO of PUT option when it is close to the over-sold area (optional).




STO the followings :-
60x BAC-Feb-$5-PUT at $0.52 (share price at $7.15)
1x BAC-Feb-$6-PUT at $0.76 (1 contract only to test out a new strategy later)
50x C-Feb-$3-PUT at $0.51 (share price at $3.75)
25x C-Mar-$2.50-PUT at $0.40 (share price at $3.75)

Did not use vertical spread today, trying to save cost on the "Buy" leg. Put in far out Stop-Loss protection instead.

BTO this 1 position :-
10x BAC-Feb-$7.50-CALL at $1.45 (to test out a new strategy)

Target max profit for these positions is around $6,746 which is within plan of $5K to $10K per month (3,120 + 76 + 2,550 + 1,000). If at 80% it is still around $5K.

Remarks :
Very volatile day as it is Option Expiry Friday. Market opened on down trend and stabilized/reversed after lunch time.
At 3pm several share prices moving nicely upwards, could be due to Short sellers trying to cover thier positions before the long weekend starts (next Monday is holiday in US ?). Massive swing downwards at around 3:30pm, definitely a lot of big players out there manipulating the shares prices trying to "kill" each others.... to see who blink first before the Option Expiry Friday.
Citi incurred $8.3B loss last quarter. Planning to split company into two. One with all the toxic waste and the other with the healthy business (sounds familiar ???). Someone commented on CNBC that C is worth only $1. I think all the US banks share are also worth $1 each right now. There are so many "skeletons" in the closets and we do not clearly know how many there are and in who's closet. But the government will definitely continue to bail them out and it's a right thing to do. Just hope the government do not become bankrupt instead of the banks.

MER incurred $3.9B loss in Q3 and $16.4B in Q4 !

BAC gets $20B funding from TARP (or spell as TRAP? Need to check).

Fund D Update - after expiry Friday 16-Jan

Both vertical spreads for MS & COF and one BAC naked PUT (with Stop-Loss protection) all expired worhtless. Kept profit of $4,008, $2,222 and $350.

Total profit for the Jan Option month is $13K, exceeded the fund objective of between $5 to $10k per month. Key profits for the month :-
MS = $4,008
C = $2,240 + $130
BAC = $4,136 + $350
COF = $$2,222

Could have been a bit higher if we did not close out C-PUT-Jan position yesterday as we do not want to keep open positions during earning announcement due to unpredictable market response.

Market very volatile due to Option Expiry Friday. Saw some good opportunities and setup some new positions for Feb.

Old Net Value = $92,062 (as of 6-Jan)
Current Net Value =$106,701 (as of end 16-Jan)
Current Cash Value = $110,854

January option month contributed a value of about $14K from base of $92K i.e. about 15.2% for this month (or in 10 days). Average time spent per day in Jan was high at about 45 minutes (a typical month average was 20 to 30 minutes e.g. for last quarter).

Fund D Update - before expiry Friday 16-Jan

Just about to went to bed last night and heard from CNBC news that Citi brought forward their earning announcement from 22-Jan to 16-Jan (before market open) i.e. on option Expiry FRIDAY !! That sucks...... what a timing.
As we do not trade through earning period, quickly close (BTO) all Jan-C-PUT positions. Collected $130 profit instead of $1,040 planned. And can sleep well not having to worry about Citi earning announcement next day (was prepared to take small losses and get out if needed).

Fund D Update

MS and COF still on downward trend. No action needed. Likely to achieved max potential profit of $4,008 and $2,222 respectively by expiry Friday 16-Jan (positions started on 5-Jan through STO).

All major banking stocks on downward trend today due to news on C and BAC. Implied Volatility of C and BAC went above 200%. Couldn't resist to try to collect $1K or $2K with high probability of winning e.g. selling far out PUT option for Jan expiry Friday which is only 1 day away.

STO (Sell-To-Open) 130x Jan-$2.5-PUT-C at $0.08. C price was at $3.90. To lose money C has to drop from $3.90 to $2.42 which means it must drop 37.9% within next 1 day. Target profit of $1,040 within a day.

STO 20x Jan-$5-PUT-BAC at $0.175. BAC price was at $8.00. To lose money BAC has to drop from $8 to $4.83 i.e. it must drop 39.6% within a day. Target profit of $350 within a day.

Fund D Update

Bear-CALL-Spread Positions Management
C share price dropped to $5.01 and profit of the Bear-CALL-spread hits target 80% of max potential profit. Contract is 20-Feb and has 35 more days to go, not worth to wait that long for another 20%. And C is announcing earnings on 22-Jan and we do not want hold open position through earning announcement due to unpredictable outcome. So BTC (Buy-To-Close) all 100 C contracts at $0.055 and returned $550 back to the market and keep profit of $2,240.

COF share price dropped to around $26. Profit is more than 80% of max potential profit. Price is $9 (34.6%) away from defense line of $35 and 2 more days to expiry as this is 15-Jan contract. Likely to keep 100% of max potential profit of $2,222. No action needed.

MS price dropped to $17.25 and retracing back upwards. Very volatile and this is our highest risk position. Potentially may lose money if held for 2 more days as price is only $1.75 (10.1%) away from our defense line of $19.00. Profit crossed $2,000 today at 50% of max potential profit. Should have closed it out and locked in $2K profit but was hesitant.
Today MS dropped and pierce through its $18 support level. So it is likely that $18 will become its new resistant level which mean it will likely stays below $18 and we may collect full 100% profit at expiry Friday. Max potential loss is about $8,000. Potential max profit is $4,000.
Summary sheet.