Morning Thoughts – Oldinvestor

Well If it isn’t South Central storage getting some temporary relief, then it’s LNG showing some recovery. Probably a little of both and some other factors I’ll never know about. I really believe $2 for prompt NG pricing is not out of the question next week. A lot can happen over the weekend to ensure that or squash it. I can choose to stay short just on shares of KOLD or I can choose to sell another put against my shares.

BOIL and KOLD positions as of close 7/23/20
My redneck spreadsheet of current BOIL and KOLD positions (P/L included previous premium scraped)

So KOLD is killing it for me now. I exited the put when it was nearly a $700 gain. At that time my short share position was negative $1100 with KOLD at $72. Since I exited the short put, I collect that profit and the shares recover to near break even, and i have some profit from the previous put I sold and scraped near $200. I’m leaving the put on my spreadsheet, but the numbers should be accurate since I did exit the put at $2.6, which is what I’m showing above. I can’t put 0 in that cell because it would count $260 more profit that I didn’t get from that trade. Now…. I can re-enter the put and ride down to $55 and still make whatever amount is still left in premium on the put.

Let me ‘put’ it this way… If I stay out of the put, my account balance will vary based on my shorted shares. If I re-enter the 55 strike put, I can collect say $4, more in premium down to $55/share on the KOLD shares. Why would a sell a put now?

Price projection sheet

If I believe that NGU20 can get to $2, then I should wait, I could actually make more in a shorter time frame than I expected. Now if I think prices are going to continue to be weak, I might go ahead and sell the 55 strike put again to collect more premium on that trade. If I can sell it for $4.6, then I’ll have collected $200 from where I bought it back (at $2.6) and where I’d be selling it again (at $4.6). I’d also collect the $4.6 in premium as long as the share value stays above $55 by expiration, and even if it doesn’t, I’ve increased my max gain from $1766 to $1966 if KOLD shares drop below.

I’m not sure why I’m explaining this so poorly, well I do… I mean I don’t know why I’m bothering to explain it at all. If you don’t know options, then I’m doing a piss poor job of explaining; and if you do know options, you don’t need me to explain…. ahh geez.

So I’m still holding 80% of my funds in UNL and waiting for gas to make that big comeback. or at least get close to $8. I’m showing the KOLD and BOIL trades, because I’m bored with waiting on UNL, and I would expect anyone reading this would be bored as well. BOIL was intended to wait until December, so it’s a pretty boring trade as well. As for KOLD, if I can sell the 55 strike put for $4.6, I’ll be happy with that. I’ll have scraped $200 in a few days and will continue with my best trade in a while (the KOLD covered put). $4.6 may be reaching for that put, but that’s the order I’m going to start with and will adjust it some to get back in.

I want to be in a protected trade, not just short on KOLD shares. I’m ok with being directly short 100 shares of KOLD. I just prefer to go with a more protective trade, which was my reason for selling covered puts from the beginning. I know I’m doing following the standard for selling covered puts/calls, but I’m learning more about how I want to approach this, and I’m certainly happy with this KOLD trade. If it weren’t for the decay and hard to barrow deal with ETFs, then I might not do the covered put trade. Sorry about another messy post today.

Basically there was a large move in favor of the longs, time to secure a little of those profits. Good Luck