Update on my portfolio

Last week's first coverage report was still somewhat bullish but not as much as before. The sell side is selective about stocks with some bearish and some bullish. There are some investors who sold and went to the sidelines. There is also a tradition that says: "Sell in May". However, the sell side says stay bullish but be nimble!

Here is the update to my portfolio:

1) I sold my CTIC for $1.32. I saw the share auction news and felt it is not a good sign. I may be wrong, but getting out with profit is always right :)

2) I closed my FSLR put spread today with less profit (about 16%). Although most likely it will expire worthless tomorrow, I again thought I should protect myself specially with yesterday's nasty sell off + yahoo finance reports that there were a lot of insider selling on FSLR a few days ago. So, there may be something wrong out there. It was a good trade, but the only problem was that sometimes, the bid/ask spread was too wide. So as soon as I saw the bid and ask gap decreased today, I closed out the position.

3) WMT: This has been such a good trade so far. Although WMT trend was not so positive, the puts are almost worthless already. The good thing about WMT is that the bid/ask spread on puts are so narrow, so it is very liquid + It is not too volatile like FSLR. I actually transferred my margin from FSLR to WMT June put options as WMT was negative today. An aggressive investor could at the same time sell bearish call spreads on WMT to double the profit. I guess this is called a box spread :) Maybe my next step should be doing these kinds of neutral trades.

4) FCX: I also wrote some bullish put spreads for June strike 36 and 35.

5) DRYS: Sold June $5 strike and bought $4 strike (I am not so sure about this, but the pullback was too much I think)

6) RIMM: Finally, I wrote a bullish put spread on RIMM with June $55 and $50 strikes.

Other than that, it seems to me that the market has sort of slowed down recently. Some shorts are aggressively looking to short stocks. However, I think it is going to be a neutral month. I want to start selling box spreads on neutral stocks. I am thinking of AMGN right now. Here are my reasons:

1) Bullish reasoning: AMGN is cheap and trading close to its 52 week low + Health Care is a bullish industry (based on first coverage)
2) Bearish reasoning: Insiders sold shares recently around $48
3) Analysts in GS recently downgrade AMGN to neurtal.

So, I was thinking of a put spread on $42.5 and $40 puts + bearish call spread on $52.5 and $55. I am just keeping and eye on this trade. The gain is about 20%. For tomorrow, I may just do nothing letting the options expire.

Let me know how you guys have been doing these days.

Portfolio Adjustments

My BAC strangle did well, with the BAC $9 call becoming well in the money. Yesterday, I saw weakness in BAC in early trading with high volume, so decided to do profit taking. I sold it for about $5.2/contract. Instead, I bought 2 BAC calls of the next month at strike $20 in case the rally continues. Even if the calls expire worthless next month the overall gain on this trade will be more than 100%.

The $40 investment on CTIC is giving good results! I am still holding on to it.

FSLR and WMT put spreads are doing fine so far. I actually added some more to them as I thought they are profitable. I also sold WMT put spreads for June with $45 an $42.5 strikes.

FCX did so well. For FCX, buying call options would have been the most profitable. I actually sold some $43 puts (buying $42 puts). They almost became worthless in a matter of 1 day!

I actually entered two more trades today for June. I sold INTC $14 June puts (buying $13 puts). INTC is not too volatile (similar to WMT), and pays dividend. There is some recent news keeping it down, so I look at it as an opportunity. There are not much insiders owning it though. I will watch it and if I feel further weakness, I will consider some action :)

The other trade I entered which made more sense was put spread on VZ. VZ had some recent insider buying at $30.5, so I sold June $28 puts buying $27 June puts.

I was almost triggering to do an option strangle on PCLN with Monday earnings report. However I got scared of the time decay effect. I may instead write June put spreads after the report.

Trade Entered

Today, I was anxiously looking for a trade and finally did :) I thought with the time decay accelerating, I should increase my risk appetite a bit, so I was looking for a bullish stock that has pulled back and the answer was FSLR. I have seen that on RIMM before. After RIMM reported strong results, it had a 20-25% jump and then a brief pullback and then continued its bullish action. So, looking at the two day chart of FSLR, I guessed it will close above $170 at option expiration in two weeks, so decided to sell 2 $170 put contracts around $4 and buy 2 $165 put contracts around $2.9. Risk/Reward is $780/$220, which can give a gain of around 28% if it closes above $170. It may be a bit on the edge, but I decided to give it a try :)

By the way, I sold my other MAR contract today as I lost faith in the buyout. The lesson is: Buy about a week after rumor, sell on news or even before news. Based on experience, it is best to close all option positions well before the expiration as the time decay is a real killer. I only have BAC as a strangle as it has the potential to move big any day. We will see how that will do though.