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Good morning, tradeologists. There is a lot of activity this morning. We had CelGene going crazy. We had Gilead going crazy. We had the IWM going crazy. I was actually able to scalp quite a bit out of CelGene, and made $164 so far for today. Gilead, we’re up about $78. As soon as I can, there’s a couple of hundred dollars of profit here that I can take, as soon as we get to some sort of Delta position where I’m comfortable.
We had quite a few opportunities this morning for scalping. I even did some scalping on Adobe. I sold 100 shares and made some money on that too. We have some profitable positions in our stock positions, and it looks like we’re doing pretty well here. We’re pretty much Delta-neutral on everything right now.
It should be an interesting day. Hopefully, we’ll have plenty of opportunities to scalp today. I will keep you informed as we go.
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Well, the market has traded sideways for most of the day, so I didn’t have a chance to really do any scalping. Most of the activity took place in the morning. This is today. It all came down here, and then went sideways. Even this little move up ended with a negative tone to the market. The Dow Jones was down 42 points, but it didn’t really make a whole lot of progress in the afternoon. Most of the activity was in the morning.
If we take a look at IWM, we’re up a couple of hundred dollars for the day. $180 open profit. I pared back all my other positions. This is the only Gamma Scalping position I have open. I took my profits on CelGene, and that worked out to about $300. Then I closed out my Gilead position, which was a loss of about $150. I closed out Adobe, which was a loss of $300.
We’re down about $400, minus the profits we made on the IWM. We’re down a couple of hundred bucks for the day. This is the only Gamma Scalping position I currently have open. It looks like it’s performing fairly well. If we take a look at the IWM itself, we have the 72 call and put straddle.
We’re right in here. 72 is quite a ways away. If we continue down lower, I am currently 65 Deltas long. With any dramatic move down, I’ll make some money. With any dramatic move up 3 points, I’ll make some money up around $4000, down about $3000. I’m not too worried about this position.
The one thing that is really important about these positions is to cut the losses on the ones that aren’t performing, and to keep the ones that are performing. In other words, the ones that weren’t performing, I cut out of my portfolio today. I was looking for a reinvestment of that capital into other positions. I didn’t really find it yet, because the market just trended sideways.
On the IWM – I really like the IWM. Number one, because if we take a look at the bid-ask spreads, they’re very tight. During the market hours, they’re actually about a penny wide. The Russell itself is about $70 a share. It’s not cheap. It’s pretty liquid, and it’s easy to get in and out of large positions.
At least for my account, I’m trading 30 contracts on the straddle. I can trade up to 3000 shares on the IWM, without making any problem in the way it’s traded. I could trade 30 contracts in the options. If we take a quick look at the open interest, there are a couple of hundred thousand contracts.
By contrast, I was taking a look at ENS, which has earnings coming out on Wednesday. If you take a look at the open interest, you’re talking about a couple hundred contracts. It’s really a good idea, if you are trading actively, to stay with those contracts that are very liquid, and have tight bid and asks, like the IWM, the QQQs, the DIAs, and the SPYs.
Those are the ones that I really recommend for you guys. It’ll save you a lot of trouble. Obviously, what we’re doing is we’re trying to find stocks that are going to be – if the earnings report comes out, we really want them to move, like we do with the AVP. AVP moved tremendously when we bought it. When we bought that straddle, it just took off. It was absolutely unbelievable.
Look what it’s done since then, though. It’s just traded sideways. I took the profits the day that it went up, and had this very large move here. If you don’t, your straddle prices are actually going to start declining in price. It’s going to be very difficult to pull any money out of this trade at all, after this big move.
You’re actually better off selling the straddle after a big move like this. Look at the time decay. This stock just did not move after that. A big move like this, on a very active stock, on a stock that you can sell the straddle – you’re probably better off selling the straddle, than buying it. You’re better off buying the straddle when the volatility is low, just like we did here, prior to this big move.
That’s it for today, guys. We have this large position on IWM open. I look forward to making continual and additional profits on this particular position. We’re going to be looking for some more this week. There are a couple of earnings out that look particularly attractive, and we’ll keep our eye on those, but that’s it for tonight.
Go out there and trade with confidence.