Luck to Everyone

I have been telling you for a while that I do not own any stocks. This is not entirely right because I DO have 2 positions that include long stocks. However, the goal is not to hold the positions indefinitely, they are meant as short-term trades. In essence they include the stock and long puts with sufficient contracts to cover 2x as many shares. It is like married puts, only I own 2x the number of puts.

This form of trading takes advantage of the swings of the markets, as I can adjust the puts in the following ways:

1. I can roll down the puts by selling high strike prices to lower strike prices, if the stock declines.
2. I can roll over to next month as expiration approaches.

The idea, however, is not to panic buying puts because I think the stock is going down, but rather as an approach to judiciously maintaing Delta neutrality. If the stock continues to go down, I do step 1, if expiration approaches I do step 2.

If the stock rallies, then I can do two things:

1. Sell stock if I think the rally is temporary.
2. Add a ratio back spread if I think that the rally is for real and may last long.


The objective here is to keep Delta neutrality, and only modify the trade as we go along, taking profits, but keeping neutral.

I have two of this positions, one in AAPL and the other on ISRG. I will post these two trades shortly.