Weekly Update 5/14/10

Most of this week was quiet trade-wise, although I did add a couple of new positions Thursday and Friday.

XEC Fly

I had looked at XEC as a PCCRC candidate, but like most stocks right now IV is too high for a PCCRC. I decided instead to do a bullish butterfly trade. The first leg I opened was a 75/80 call vertical for $1.50 on Thursday. The initial plan was to sell the other vertical if XEC climbed higher to get into the butterfly at a lower cost. Thursday XEC did not bounce up so I ended the day with just the long call vertical.

Friday XEC dropped further with the market and I decided I needed to make an adjustment when XEC broke below 70. I looked at several adjustments, but with the drop in price the 85/85 vertical was out of the question. I decided the best adjustment would be to add a 65/70/80 BWB, giving me a fly at the money.

I had the core position and then decided to add an OTM long call to give me a bullish bias again and to see if I could scalp it Monday and lower the cost of the position. I put in a limit order to buy the 80 call for 0.90 and it eventually filled giving me a 65/70/75 fly with an extra 80 call.

By the end of the day Friday XEC had bounced a little giving me some profit on the long 80 call. Monday I will look for an opportunity to sell the call for 0.30 or so profit. Overall the position shows a loss of 14%.

TPX PCCRC

No adjustments were made to the TPX position this week, and like all the PCCRCs it showed a profit on the week. Normally I would have rolled the short options on Friday, but with the inflated IV I decided to take the weekend theta and roll early next week. Currently the p/l stands at 21%.

WHR PCCRC

The WHR PCCRC has done well this week also but is off from earlier profit totals and currently is up 17%. I will adjust this one as well early next week.

BIDU Fly

BIDU was another PCCRC candidate that was too expensive after earnings and now has too high an IV for a PCCRC, so I looked at opening a bullish butterfly on Friday after BIDU dropped in the morning. I started with a 75/80 call vertical which was filled at 1.75 dr. BIDU did go a little higher later in the day giving me some profit, but I have not added the other half of the fly at this point. Monday I will likely do that to get to a more neutral position. Current profit stands at 7%.

CTXS PCCRC

The CTXS position is doing well and will be rolled to JUN early next week. Current profit is 14%.