BRUTAL week

So I woke up this morning to news I got 900 shares of ESV put to me!

OUCH!

Back in November I set up a March 37/36 credit put spread in this name, playing 10 contracts. Since that time ESV and the rest of the offshore drillers have continued their precipitous drop. This thing has been a cancerous position for MONTHS! 

Interestingly enough, I've been talking with a guy in the comments section on my past two blogs about ITM options getting exercised and "put" to you. This ESV spread has been in the money for MONTHS... and I mean DEEP in the money. So it's ironic that today I get those shares put to me. However, this can happen with deep ITM options this close to expiration. My ESV play expires in 2 weeks. 

Either way, the putting of those shares at $37 forced me to exercise my $36 puts. All told, on 9 contracts, including my original $420 credit and commissions, I lost $489.55.

A devastating blow.

These are the kind of losses I'm working so hard to avoid. The problem is I set this trade up last year, before risk management meant anything to me.

Of course these days it's my top focus, and because of that my other losses this week were not near as destructive. And yes, I took A LOT of losses with very very few wins. 

Have a look at my trades for today... red highlighted box = positions stopped out of for a loss, blue box = positions stopped out for gains.

Alright lets move on to the rest of my option plays, specifically my naked puts. I closed out my TWTR $46.50 weekly put for a profit this morning. Obviously I could have let it expire worthless, but I didn't want to chance it with the market rolling over AND my other naked put position already in the money, the $49.50 strike.

And speaking of that position... I decided to let those shares get put to me. Why in the heck would I do that you ask? Well looking at the chart I believe we are close to support. It's very possible we move back toward the $49 to $50 range next week or the week after. If we get that kind of move I can sell my shares, or I can sell a call against my position, collecting even more credit while potentially exiting the trade by getting my shares called. Remember, I originally booked a $101 credit on the sale of that $49.50 put, so my cost basis is $48.49 and I'm OK with that for the time being.

The bottom line is this... I was going to lose $200 today closing out that $49.50 put. I think I can lose less or even make a small profit by taking the shares, being patient and getting out at the right time. That's the main reason I let it expire in the money.

And since I believe TWTR is heading back up, I sold to open a 3/13 weekly $47 put, collecting a $104 credit. However, I'm keeping this trade on a short leash. If we break the recent low after the earnings gap, $45.57, I'll close the trade.

I also sold to open a March MO $53.50 put and a March 3/13 weekly FB $79.50 put. As you can see I decided to sell to open a PM weekly put too, but I changed my mind and closed it for a $41 loss.