Update for 3/25/11

I was out of the country last week so I was unable to update the blog. This update is for after the close on Friday March 25.

NOV Bullish Diagonal

NOV dropped early last week but has been climbing ever since. On March 15 I rolled the short calls down to the 80 strike as the short delta had dropped by 0.2. Last Thursday I uncovered NOV after 2 up days with MACD up. Overall profit is now 609%.

XLE Bullish Diagonal

XLE was pretty flat 2 weeks ago and then rose last week. On Thursday the 24th I uncovered XLE by buying back the 6 Apr 81 calls for 55 cents. Then because my longs were less than 90 days to expiration I rolled them out from Jun to Sep for a 0.90 debit. On this roll I reduced the number of contracts from 6 to 5 to keep the debit close to 0. Ideally at the time of the long roll my delta would be above 0.80 enabling me to roll the same number or increase the number of contracts, but that didn't work out this time. Overall profit is now 570% on the XLE position.

UA Bullish Diagonal

UA dropped quite a bit 2 weeks ago, especially that Thursday and Friday, then last week was pretty flat. On Tuesday the 15th I covered UA after 2 down days by selling 3 Apr 70 calls for 2.10. I picked the 70s because it was the closest to the delta I was looking for, although I used a ratio to get to the delta ratio I wanted (3 shorts, 4 longs). With the continuing move down the short dropped to 20% of its initial value on 3/23/11, so I rolled out to the May 70 strike. I sold 4 of the May 70s for 1.51 as they were at the delta I was looking for. Then UA bounced enough that on 3/24/11 I uncovered the position by buying the May 70s back for 2.2 debit. Overall profit is now 146%.

DECK Bullish Diagonal

DECK's price followed the action of NOV and XLE the last 2 weeks, dropping 2 weeks ago and rising last week. On the 18th I rolled down from the 95 to 90 call for 0.42 credit when the short dropped to 20% of its initial value. DECK was uncovered on 3/24 by buying back the 90 calls for 0.80. Overall there is a loss of 34%.

Update 3/11/11

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This was a bad week for the bullish diagonals, especially on Thursday with the big drop in the market. One thing to expect from them is there will be some big swings in profit/loss at times and it takes some patience to stick to the plan when things are swinging down. I did see Matt mention that on his blog recently and it is one of the hardest things to deal with when trading diagonals. Fortunately things bounced back some Friday making the week more tolerable.

NOV Bullish Diagonal

NOV went down the first 4 days of this week and on Wednesday I covered the longs by selling 9 Apr 85 calls for 1.60 credit. Technically on Thursday I could have rolled the shorts down as there was a 33% profit in 1-2 days, but the strike with the delta I needed to roll to was the 85, the same strike I already had sold. Fortunately NOV bounced up 2.30 points today. Profit was down on the week and now stands at 498%.

XLE Bullish Diagonal

XLE followed the same price pattern and on Tuesday I covered the position by selling 6 APR 81 calls for 0.92. Overall profit is currently 375%.

UA Bullish Diagonal

UA bucked the trend and was up 3 of the 5 days this week. There were no trades made so the position is still uncovered. Profit was up in this ticker this week and has now reached 213%.

DECK Bullish Diagonal

DECK was also up 3 of 5 days, but it was down about 3 points on the week, as the down days were bigger than the up ones. On Thursday I covered the longs by selling 2 Apr 95 calls for 1.30. There is currently a loss on the position of 27%.

Update 3/4/11

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NOV Bullish Diagonal

NOV went down Monday and Tuesday, then reversed Wednesday and Thursday and with the 2 up days and 2 up MACD days my trigger was hit to uncover the position.

So late Thursday I bought back the 8 short APR 85 calls for 2.30. Since my longs were under 90 days to  expiration I then rolled them out to August. I sold 11 May 75 calls and bought 9 Aug 75 calls for 0.89 debit. To hit my target delta of 0.65 to 0.7, I needed to roll to the same strike in August, which meant I could not keep the same number of contracts without a significant debit (adding risk to the position). I chose 9 contracts as it added less the $1.00 additional debit to the position. NOV fell again today but was up some on the week and profit is up to 681%.

XLE Bullish Diagonal

XLE continues in the upward channel it has followed since September this week and no new trades were made. 

The trigger to cover would be 2 down days coupled with 2 down MACD days. Tuesday was down in price and MACD but Monday and Wednesday were up, so nothing has triggered yet. Friday was down also so if Monday confirms with a down day and MACD I will sell the appropriate Apr calls to cover the position. Profit was up some this week and stands at +548%.

UA Bullish Diagonal

UA's price and MACD was up last Friday and Monday they were up again so I uncovered the position by buying back the Apr 70 calls for 1.95. Then UA went 2 down Tuesday and Wednesday and they were coupled with MACD going down as well. 

I was out of town Wednesday when this trigger hit and normally I would have covered the position near the close Wednesday. I did not want to make that trade from my phone since I could not see option deltas to verify the correct strikes to sell, so I decided to wait until the open Thursday to make the trade. UA gapped up Thursday and rose all day, so though I had a stop limit order to cover, it never filled. Today UA was higher as well, which would have given a signal to uncover again, which I didn't need to do as I was already uncovered. So it turned out to be good fortune that I was unable to make the covering trade on Wednesday as my profits would have been lower had I made that trade. Overall profit in UA is now 159%.

DECK Bullish Diagonal

DECK had a big 5% drop on Tuesday and the short call dropped to 20% of its initial value. So I rolled the short from Mar to Apr at the same strike for a 0.72 credit. The 100 strike was chosen to maintain a 0.4 delta difference with the long call. On Thursday and Friday DECK was up and MACD was up giving the trigger to uncover the position. 

So late today I bought back the 2 Apr 100 calls for 1.30 debit. DECK is down 3 points since I opened the position giving a loss that is currently 10%.