It was a nice week for the diagonals this past week especially on Friday.
NOV Bullish Diagonal
NOV was a great example Friday of this diagonal trading strategy working. The position was up 95% in 1 day. In order to get returns like that, a couple of things have to happen. First, the position size (not risk) has to be increased by adding additional shares with credits. This can only be done when the underlying stock has moved in the direction of the diagonal position (up for a bullish trade in this case). The number of contracts in NOV has been tripled over the life of the trade- I started with 2 contracts and have worked up to 6 contracts at this point. Second, the diagonal has to be uncovered (the short call bought back leaving the long call naked). According to the rules I follow, I uncover a diagonal when the stock and MACD indicator have moved up 2 consecutive days. In NOV this occurred on Tuesday and I bought back the 6 Feb 70 calls for $1.52. Once you have a position setup like that and you get a move in the right direction in the underlying, you can have some nice profits occur. NOV was up $2.18 on Friday to 69.31 and the position is now up 385% overall.
FCX Bullish Diagonal
On Tuesday I uncovered FCX by buying back the 2 Feb 125 calls for $4.10. On Thursday I rolled the longs calls from the 99 to the 105 strike for a $4.35 credit. Overall the FCX position has a profit now of 177%. FCX has earnings on Thursday so I will be covering the long calls either Tuesday or Wednesday.
XLE Bullish Diagonal
No adjustments were made to XLE this week and the underlying was up 2.5 points on the week. Profit now is 342%.
UA Bullish Diagonal
On Friday I uncovered UA by buying back the 2 Feb 60 calls for $1.20. The position turned profitable this week and is up 12%.
Posts
No comments:
Post a Comment