Lots of actions on quadruple witching Friday - 12/18

Friday 12/18 was quadruple witching. It was one of the busiest trading days of the year. Volume was very high.

It was a very busy day for me too.

I had a put diagonal for WMT. I closed my WMT bearish put it for a nice return of around 30%. It ended exactly at my short put price of around 52.5. This is the best I can hope for.

I am having a put diagonal for FDX and MON. Both are above water. My palm put calendar is doing extremely well. I started it a few months ago by having a put calendar with the LP at 15. Last two month I closed my SPs as long as the trend is still bearish for the stock. On Friday, I closed my SP for Palm at 10 taking most of the credit. I did not allow the trade to expire. This trade is going to give me a 100 % winner. It is about 95% ROI now.

The key to calendar is not just setting the target for 25% ROI. If the trend is on my direction, there are times I simply close the short option, maintain the long option and continue the trend for a few more months. You can make a lot more money this way. I did it for POT on a Call calendar which also gave me a very healthy profit of 150%. I closed it when POT turned bearish at 120 at the beginning of last week. I know it is sometimes difficult and you make mistakes with the direction. But with calendar, if you make a mistake, you can compensate for it with some adjustments.

It is nice to know money on a bearish trade in a bullish trend. I closed my AIG reversed collar today for a profit. I had a short position and a SP at 32. It went ITM. So, the trade will close with a profit finally after 4 months with an ROI of 17%. The details will be made available on the trade section in the blog.

It is important that we learn how to play bearish trend. We have enjoyed the bull for so long. If it turns bearish, lot of people will be struggling. Most people know how to ride a bull not do not know what to do when they encounter a bear. I believe a bear could appear anytime. Just be prepared. Most probably, we will have another up leg and after that a major correction or even a downtrend. Many of my indicators are showing major divergence despite the bull run. Volume is light. As long as there is no sell signal, I am still riding the bull but will be prepared to jump into the bear camp once my technical shows me the signal.

I got assigned for GDX at 48. Instead of buying a put on Friday, I shorted a call at 50. This was a new strategy I used. I felt it is better to sell a SC on imminent assignment rather than buy a LP. I will buy a LP only if the trend turns clearly negative. So I will have a covered call on Monday. My cost is 46.25. Stock closed at 46.29 on Friday. So, on Monday, if trade closed below 46, I will certainly convert it into a collar.


I was assigned stock on naked put for SU at 34. SU closed at 33.7. So, I will be profitable. I will decide on Monday whether to do a covered call or collar. May not even do anything as oil is recovering from the low at 69.

I am happy that I am getting some assignments with my short puts. At last I am getting some of my extra cash to work.


I rolled number of SC for my covered calls which went ITM this month.

- Line covered call : rolled DEC 25 SC to Jan 25 SC

- VZ covered call : rolled Dec 30 SC to Jan 32 SC. This stock has made me the maximum profit but I rolled it up keeping it slightly ITM for the short call. I like to keep the stock for the dividend.

- NLY covered call : rolled Dec 18 SC to Jan 18 SC

Finally, here ia an interesting adjustments which I am experimenting.

I had a call diagonal on GS DEC 165 SC and Jan 165 LC. It was losing some money. I added a LP at Jan 165 in the middle of the week. The banking sector was downgraded by a prominent analyst. The trade is now a straddle. I may put in some short positions next week to make it a single calendar or double diagonal. I may lose some money on this position but it will be minimum.

It is a handful on Friday. There were lots of action. Hopefully, we can learn something for all these adjustments.

I will comment on my position on precious metal in a separate posting on my blog this week.