Hectic Week

I made a few mistakes during the volatile week, destroying a lot of the gains that I'd earned YTD:

• portfolio up 12.72%
• S&P 500 Price Return, up 4.34%
• S&P 500 Total Return, up 3.65%

Tuesday morning I closed out my short DNDN $55 put for a small lose at $10.39.  

Looking back at things I was not ready to stomach owning the AAPL $300 strike put at $65.5.  I looked at managing my delta exposure to Apple, but neglected to adequately take into account how much the put would go up in price if the VIX spiked.  I sold out of the AAPL put at $82.35 on Wednesday morning.  Going into that morning I knew I wanted to get out of AAPL at its current pre-market price, so made my first futures trade and sold a /NQM0 E-mini Nasdaq 100 future short at 1950.50, covering it after closing out my AAPL put position at 1938.00.

Wednesday morning I also closed out my short MTB $85 put for $5.70.  Also, closed out my short VXX position at $23.52 for a loss from $20.27 (this could have been a lot worse).

Going into the flash crash on Wednesday I was still short the AAPL Jan '12 200 put with a Good Til Canceled $20 limit order outstanding for AAPL Jan '11 220 put.  I think the put was marked to $17.75 that morning, so prior to or during the flash crash that order got filled.  Wish I had asked for more on that limit order, and gotten filled at the bottom of the flash crash.  I guess I should be thankful that I don't use stop-losses, although that has been a conscious decision to never use stop-loses.  

On Thursday I closed out my AOL short at $21.68 for a small gain from my $22.35 average cost basis.  I will look to short AOL again on strength if it climbs above $25.  I don't care how great their new management is, this company can not be saved.  And the $11 million stock purchase by their new CEO Tim Armstrong is just an attempt to buy more time.  The man is estimated to be worth $500 million, $11 million is pocket change for him. 

My biggest mistake of all was trying to catch a bounce on the oil futures /QM, a couple different times.  This contract is way too big for the amount of money I am managing and it was a mistake to use it.  The leverage provided by futures is awesome, but I would never put 200% of my portfolio into USO and the same should be true of a future eating up just $2,000 of buying power yet exposing my to P/L of an equivalent 200% USO position.  I lost a total of $575 on these two trades.  I do see the possibility of using these futures in a hedged way in the future, but I promise to be much more patient in choosing buy/sell spots.

So all in all a very hectic week. 

My current positions:

• -1 AAPL Jan '11 $220 Put
• -1 C Jan '11 $2.50 Put (from long time ago)
•  +1 BP Jun '10 $47.5 Put (basically insurance against having my vacation ruined by this oil spill)
• -1 CMG Jan '11 $110 Put
• -1 SPY May '10 $116 Call

Wish me luck out there!