An example of bull pullback pattern trade on XHB

Today, I exited the option call June 15, 2018 $44 on XHB when it passed my original target price and then pulled back as shown in the chart below. With the market's relentless rising, I'm in a wait and see attitude to enter new bullish trades.

The XHB was a 36 day position trade that worked out perfectly with a profit of 69% since its entry. On January 5, I rolled up and out for the original call of March 16 $42 to June 15 $44, as the option delta reached 0.8 to take some profits off. Since then there was only one time of a 2 consecutive day price drop. XHB just followed the SPX general market for a month, not outperforming or under-performing.

Trading STLD call over last 6 weeks

I traded STLD long call over the last 41 days. After entering the bull pullback pattern on late November, STLD basically kept rising along with the extremely bullish market. It had not dropped in price for 2 consecutive days in this time frame.

After STLD May 18, 2018 Call $36 had its delta reaching over 0.80, I rolled it up to May 18 $41 call strike so that I could take some profits off the table. It rested for a few days and made another leg up.

Considering it's close the earnings report day more than 1 week later and it fell to undercut the low of the last two days, I decided to exit this position today as shown in the chart.

11/29/2017	BUY	18-May-18	36	4.1	Open
12/20/2017	SELL	18-May-18	36	8.06	Close
12/20/2017	BUY	18-May-18	41	4.5	Open
1/9/2018	SELL	18-May-18	41	5.8	Close

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Bought Call on STLD for a 6 week trade

STLD rose above prior week high in a bullish pullback pattern with higher than average volume at this point. Entered a May 18, 2018 36 call position for a 6 week trade before its earning announcement around middle of January, 20018.

The stock has no weekly options. The call option Delta was 0.64 and the spread of the bid/ask price is around 10%. The material section XLB was performing OK recently compared to SPX.

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Failed Head and Shoulders Breakdown on FXE

Interest rate sensitive stocks reacted to dovish FED meeting minutes in the last few trading days. In general, 30 year bond ETF TLT rose and broke its head and shoulders bearish pattern. Its stock chart did not confirm the head and shoulders breaking down either, as the Euro currency ETF FXE did. However, FXE's breaking down was short-lived. It started to stabilize and generated a sideways and upward bias as shown in the chart below. Although I got a chance to hedge the changing of direction with a short put and collected a small premium, FXE shot up on last Friday, forcing me to exit this trade as it broke above my stop loss point.

Other banking stocks were a bit weak as well. BBT fell below its lower up-trending line support as well. So I decided to exit last Friday.

Removed short call hedge on QQQ as market rises

Market had a couple of strong rises after I bought Dec 8 $155 call on QQQ. I bought back this option to make the QQQ Long position naked. I also took similar action on the SPY short call today.

Each moment in the market is unique and market can give ramdon wins or losses for each trade. The goal is to have long term profits with reduced risks of this type of diagonal spread positions. The targeted hedge cost is under 20% of profits.

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Long entry on XLB from a bullish pullback

Market remained bullish after the strong rise last Thursday. XLB has performed well after rebouncing back from a day below 50 day moving average. It formed a bullish pullback pattern since last Friday. All the secondary indicators in the chart also turned bullish. So I bought the June 15 $56 call with an initial stop at 57.10 for an intermediate term play.

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Bought back BBT short call

Market is rising sharply with the small caps gaining highest percentage. Banking stocks is not the leading sector today. But it had performed well in the last 4 days or so. I closed the short call on KRE 2 days ago as posted in the blog: https://smoothprofit.blogspot.com/2017/11/bought-back-kre-dec-1-58-call.html

Today, my BBT continued its rise along the lower support trend line. I closed the short Dec 15 $48 call to unlock its potiential for large gains. In its rapid sell-off in the last week, I had sold Dec 15 $50 call first then rolled down the call to $48 after Dec 15 $50 call premium made big drops.

The chart pattern of the stock looks interesting. At the entry point, the pattern was a narrower up-trending channel, as shown in the green dotted lines. During the sell-off, it changed to the wider and slowly-moving up-trending channel. I did not sell the stock since it did not close below my stop loss point.

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Hedging under weakening market and more distribution days

Since last week, the stock market showed some weakening signals:
1. SPY & QQQ prices drops
2. 7 distribution days on Nasdaq
3. Stock market leaders FFTY continued to retreat
4. New highs - new low index topping
4. MACD/STO signals dropping

The SPX prices have not broken the up-trend yet. So I decided to hedge with short calls on my SPY & QQQ long call option. The short Delta of the call were raised to 0.33~0.34 as the probabiliy of a significant pullback is a bit high.

The chart shows the selling of the DEC 8, 2017 $155 CALL.

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Bought back KRE Dec 1 $58 Call

The long term LEAPS position on KRE Jan 18, 2019 $55 call was entered about 2 weeks ago as KRE broke out of horizontal resistance of $57.38. But it turned out to be a fake breakout as its price fell back to the consolidation zone in the next day.

A short call Dec 1 $58 was entered to hedge when KRE broke the near term up-trending channel. The price continued to drop and touched the 200 day moving average., where I tried to roll down the short call. But the order could not be filled due to a couple of cents of difference in my limit order.

Today, as the KRE continued to bounce on the 200 DMA support and the bullish MACD histogram and STO, I decided to close the short call for a small profit.

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Bought back time decayed short call to close hedge on XLV Call

Since the entry of XLV June15$79 Call 6 weeks ago, XLV reached its top uptrending line in about 3 weeks, then quickly pulled back. The drop passed a few support levels, based on which no short calls were entered to hedge the naked long position.

The short call was entered after XLV fell below its 50 day moving average on Oct 30. Since then, it moved about 2+ weeks and the short call Nov 24 $83 reached about $0.04 as a result of time dacay. So, it was bought back as XLV sits on the major support around $80.82. No new calls were sold due to the support line and the rising MACD historgram and STO.

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