SCALP TRADER

SCALP TRADER

I trade Options when I have a strong directional opinion on a stock, but expect volatility to remain high for at least another few weeks. In the examples below, I took advantage of the extremely rich premiums in VRX Puts to unlock meaningful profits.

VRX Short Put #1 (+80%):

21-Oct-15 12:29 ET	SCALP	VRX Thoughts -- Selling some of the Jan $55 Puts This thing is in freefall, but wanted to point out that I've started selling some VRX Puts here. Jan $55 at $7.00. Plan to continue adding exposure in days/weeks ahead. Right now, I'm at about a 1/3 position. Not putting on more quiet yet simply b/c of the level of volatility. Wouldn't completely surprise me to see this down into the $80s, so may have a chance to increase size of position at better prices in coming days/weeks. The Puts are currently trading with a $7.00 bid and $7.30 offer.
21-Oct-15 13:20 ET	SCALP	Increasing the position to a 60% position by selling more of the Jan $55 Puts for $10.20...
21-Oct-15 14:45 ET	SCALP	VRX Put Update As VRX shares rebound sharply off lows, seeing price of the Jan $55 Puts fall to $3.80. Sold some at $10.20 and $7.00, so sitting on profits of +6 pts and +3 pts on the respective legs of the position. These options were trading at $0.40 this morning. If VRX can stabilize and find a trading range above $100, these Puts should melt down pretty quickly. That said, I'm going to lock in profits on 1/2 of the position here and move stops on remainder to around $7.00. I'm doubtful that the Puts will get this rich again, but will be keeping an eye open for future opportunities to do this trade again.
23-Oct-15 11:00 ET	SCALP	VRX Short Put Position Update Locking in profits on remainder of position for 80% With VRX finally showing some initial signs of stabilizing, seeing the Puts we sold earlier this week continue to erode. Sold (Shorted) the Jan $55 Puts at $10.20 and $7.00 for an avg price of $8.60. Today, the Puts are trading for $1.75, equating to a profit of $6.85 (or 80%) thus far. Given that we still have almost 3 months until expiration and that we have quickly taken most of the meat off the bone of this trade in just a few days, I've decided to lock in profits on the remainder of the position.

BRIEFING TRADERS SAY:
"Great VRX trade"

I just covered half my VRX puts at $1.80 for +5.50 pts. Not worth the risk for me to wait for only 1.8 pts. Thanks again for that one, I would rarely have gone that deep."

SCALP TRADER

VRX Short Put #2 (+73%):
I trade Options when I have a strong directional opinion on a stock, but expect volatility to remain high for at least another few weeks. In the examples below, I took advantage of the extremely rich premiums in VRX Puts to unlock meaningful profits.

09-Nov-15 15:09 ET	SCALP	VRX Options Trade Wanted to point out that I sold/shorted 5 long-dated VRX Puts today.Specifically, I sold the Jan 2017 $40 Puts for $7.50. I think the Puts are rich and, at this stage, I'm okay with owning the stock if it got put to me at a $32.50 cost basis. Still think there is headline risk in this name, which is why I did not put on a larger position. Will be hoping for another flush in the stock in order to increase size. Last trade $7.20.
01-Dec-15 14:31 ET	SCALP	VRX Put Position Update (97.87 +7.91) Continue to see a slow, steady melt in the VRX Short Put position. Currently, Short eight Jan 2017 $40 Puts from $7.50. Price has fallen to $4.20 today, putting the position 44% into the money. No plans to take anything off yet. My plan is to let them expire worthless (which would produce a $6,000 profit), but if we get to 80% in-the-money over the next month or two, I may go ahead and start to trim profits. Had actually been hoping for one last leg down in VRX so I could have doubled the position at $8.50 or higher, but the stock has seen a vertical move out of that $70 area. As I noted at the time of entry, I felt very comfortable owning VRX at a $32.50 cost basis, so I was willing to ramp up the size of the position beyond my normal exposure.
23-Dec-15 14:31 ET	SCALP	VRX Short Put Update -- Closed out position for 73%, $4,400 profit • With still a year left to expiration, decided to go ahead and lock in profits on the VRX Short Put position for a 73%, $4,400 profit. • As detailed on the page, I was Short eight Jan 2017 $40 Puts from $7.50. I bought them back today for $2.00. Last trade went off at $1.80 ($1.65/$2.15) so you should be able to buy them back for less than $2.00. • Have had good success trading the VRX options. You may recall that in Oct I Shorted the Jan 16 $55 Puts and closed them out two days later for 80%.

BRIEFING TRADERS SAY:
"Hooray for VRX ! Thanks."

"Just sold 6% of my VRX long for +31 pts in 109 area. Lunch is on me. :)"

"I may buy back some of the puts if we go under 2$ today...we shall see."

"Thanks again for put heads up."

SCALP TRADER

SUNE (+20%):
Another example of the short-term opportunities being presented in this volatile market. Caught as much as 20% on SUNE intraday.

24-Nov-15 14:21 ET	SCALP	SUNE Swing Long -- Putting on a Swing Long in SUNE, as stock appears to have found a bottom and looks ready to work off some short-interest. Going 1/2 size and will look to add should we slip back to the $3.00 area. Risking the $2.50 area. (3.43 +0.43) Short-interest currently reported at approx. 33% of the float.
24-Nov-15 14:36 ET	SCALP	SUNE Swing Long Update (3.46 +0.46) As I noted yesterday, my opinion is that the restructuring of management at TERP and GLBL is a negative for those entities, but certainly a positive for SUNE. The move essentially gives SUNE control over the cash at TERP and GLBL. The parent is wasting no time putting this cash to work. This morning, SUNE announced a deal to sell some assets to GLBL and then use that cash to pay down a margin loan it had taken out using TERP stock. Shareholders of GLBL (-5%) and TERP (-1%) have not applauded the news, but the price action in SUNE (+15%) suggests that some speculative money may be moving into the name now that it appears SUNE has staved off its liquidity issue. Moreover, 33% of the float in this stock has been sold Short and I think a good portion of that is fast money that was betting on a near-term liquidity event. If the stock starts to lift, I think you see meaningful short-covering in this name. I'm buying a 1/2 position here and will look to add should we come back to the $3.00 area.
24-Nov-15 15:04 ET	SCALP	SUNE Update -- Given the rather rapid 13% move into the money, I'm going to lock in a piece. (3.89 +0.89)
24-Nov-15 15:22 ET	SCALP	SUNE Update -- Trimming more here for +20%. Only keeping 1/3. Stops to entry. (4.14 +1.14)

SCALP TRADER

ARP Swing (+32%):

23-Dec-15 14:34 ET	SCALP	ARP Swing Update -- Locking in profits on 2/3 of the ARP swing position for a 20% profit. Stops on remaining 1/3 at $0.75 entry price. (0.91 +0.19) As I noted at time of entry on Dec 15, I've been scaling into Upstream Energy names such as ARP and BBEP in anticipation of a price squeeze on the first meaningful up move in Crude. Lot of tax loss selling has occured in this space in recent weeks, in addition to aggressive shorting by Energy bears. Also sold out of the BBEP earlier today, after scaling in all the way down to $0.55.
24-Dec-15 10:58 ET	SCALP	ARP Swing Update -- Locking in remainder of ARP Swing Long from last week for +32%. (0.99 +0.09)

SCALP TRADER

VRX Long (+7 points):
ScalpTrader enters this position in after hours while sitting in a restaurant. The stock stayed around my entry price for another 90 minutes. Even if you had already signed off for the day, email alerts would have sent this trade directly to your inbox, providing plenty of time to participate in this overnight position.

22-Feb-16 17:29 ET	SCALP	VRX Long Decided to pick up some VRX in after hours following WSJ story that indicates that VRX is considering some minor accounting restatements. Think this news may actually come as a relief to investors. Stock had been getting pummeled in recent days partially on concerns that a major negative event would be disclosed. This was being fueled by company's delay in announcing when it would report earnings. Stock is trading at $70.13 in after hours vs $75.92 close. Will be looking for oppty to scale into the position. Risking about 4.5 pts.
23-Feb-16 06:26 ET	SCALP	VRX Update -- Selling my VRX position for +7 pt profit. Picked up 300 shares of VRX in after hours last night at a $70.30 avg, noting that WSJ report of minor accounting adjustments should be a relief to investors that were concerned a far more serious disclosure could be forthcoming due to the delay in the company scheduling its Q4 earnings report. Co issued press release late last night explaining details of accounting adjustment (approx. $58 mln) and has scheduled the earnings report for Feb 29. Stock is currently trading at $77.50.

BRIEFING TRADER SUBSCRIBERS SAY:

"Scalp idea--thanks for the great call of VRX after close."

"Good catch of VRX by Scalp yesterday after hours. I give him lots of credit for that. Wanted myself to buy at 68 couple of times, but when i saw Scalp also likes it long, i joined around 70.3."

SCALP TRADER

SCO Options Short (+40%):
After researching a number of approaches to making a long-term investment on Oil prices eventually rising, I came to the conclusion that taking advantage of rich Options premiums in SCO was the best way to capture this opportunity. I sold Jan 2018 $360 Calls for $75.50. They are already in the money 40% and I’m expecting them to return 100% if held to expiration.

12-Feb-16 09:16 ET	SCALP	ScalpTrader Thoughts I've started scaling into SCO Options trade I mentioned on Wednesday -- selling the Jan 2018 $360 Calls. This trade is a long-term investment on the idea that Oil will be higher in the next two years. It also takes advantage of the extremely rich premiums of options in Oil-related ETFs. Oil could very well go lower in the near-term, which is why I'm scaling into the trade. I currently have about 1/8 of the size that hope to eventually get on.
12-Feb-16 11:12 ET	SCALP	SCO Options Trade One reader asks: "Today you said you were "selling the SCO jan 2018 360 calls". I'm curious why not buy the puts to reduce exposure." Well, I looked at buying Puts and Calls in various Oil-related ETFs to play a long-term recovery in the price of Oil. However, the issue is that the premiums are just super-rich right now. After thinking through the idea, the trade I came up with was to take advantage of the rich premiums by selling Calls on SCO (there are no options on DWTI). I was able to get them off at $75.50. Trading against this leveraged ETF also takes advantage of the long-term decay that will occur as Oil prices stabilize. Of course, writing options is not for everyone and this is a very speculative trade that requires financial staying power. Since I'm not certain that Oil has bottomed, I'm hedging this initial piece of the Options trade by purchasing a much smaller Long in DWTI (3x Long Biotech), which I waited until the sharp pullback this morning to purchase. This will give me some protection in the event Oil tumbles in the near-term. My plan is to scale into this Options trade over time. At some point, the options should start to lose their rich premiums and the decay will kick into the leveraged ETF. I don't know the exact time frame, which is why I'm scaling in and allowing time to work on my side.
22-Feb-16 10:01 ET	SCALP	SCO Short Call Position Update -- Would consider locking in a piece for approx 40% Approx. 40%, or $6,000, in the money on the SCO Short Call Position. On Feb 12, I sold 2 contracts of the SCO Jan 2018 $360 Calls for $75.50 a piece, as a multi-month swing play on an eventual uptick in Oil and mechanical decay in SCO, which is the 2x Short Crude ETF. I fully expect these options to expire worthless, producing a profit of 100%. However, given the duration of the trade (almost 2 years left), I think it would be reasonable to lock something in here. Midpoint of the current bid/ask spread is $46.45.

SCALP TRADER: ENERGY OPPORTUNITIES

The Energy space is providing a great deal of opportunity on the trading side. Once I think Oil has bottomed, I’ll begin buying up stocks for long-term capital appreciation. However, in the current environment, I think it is prudent to scale in and scale out when short-term price moves too far in either direction.

I use a combination of fundamental, technical and sentiment analysis to determine my entry points. Ideally, I would catch the low of every move, but that’s not always the case. This is why I usually start off with a 50% position and look to scale in on weakness.

Below you will find some of the Energy trades I’ve made in recent weeks. These names were identified after performing extensive research and patiently timing the entries.

ENERGY OPPORTUNITY #1: HK SWING (+103%)

20-Jan-16 10:08 ET	SCALP	Spec Long: HK -- Picking up some of distressed energy play following 75% collapse in less than two weeks; risking 0.17 level; stock is currently down 30% on the day. (0.231 -0.09)
20-Jan-16 11:04 ET	SCALP	HK Update -- Would tighten stops to $0.22 area following +10% move into the money; would consider trimming some if it makes sense based on your position size. (0.266)
20-Jan-16 11:09 ET	SCALP	HK Update -- Trimming some here for almost 20%; stops at entry. (0.2799)
20-Jan-16 13:54 ET	SCALP	HK Update -- Locking in more here for +32%; stops on last piece at 0.28 (0.31)
20-Jan-16 15:22 ET	SCALP	HK Update -- Going to take the last piece overnight as a Swing Trade; stops around $0.24. Currently in the money about 27% on this piece. (0.30 -0.027)
21-Jan-16 09:43 ET	SCALP	HK Swing Update -- Closing 1/2 of remaining position for +78%; stops on last piece in the $0.32 area. (0.419 +0.099)
21-Jan-16 09:56 ET	SCALP	HK Swing Update -- Closing out last piece of HK swing for +103%. Pretty nice gain for just a 24 hour holding period. (0.48 +0.159)

BRIEFING TRADERS SAY:
"Thanks for all the sub beat up energy plays... bought a bunch and sitting on ridiculous percentage gains... HK up another 28% today as an example...keep them coming, I have my son's tuition to pay!"

"AWESOME!"

ENERGY OPPORTUNITY #2: LGCY Swing (+36%)

29-Dec-15 09:35 ET	SCALP	LGCY -- I'm starting a 1/3 Swing Position in Upstream MLP. Will look to add about every 0.10 lower. (1.47 +0.11) Taking advantage of the dive in price to pick up shares of Upstream MLP that now has a market-cap of less than $100 mln, decent hedges and pretty good liquidity. I'm expecting another distribution cut, but believe that is more than priced in at this point given in the current yield of 40%.
31-Dec-15 09:31 ET	SCALP	LGCY -- Adding another 1/3 to the LGCY Swing position (1.27 0.00)
04-Jan-16 10:09 ET	SCALP	LGCY Swing Update -- Using strength to trim 1/2 of LGCY Swing Position for +36%. Stops on remainder at $1.37 avg entry price. (1.87 +.12) Entered a 1/3 position Dec 29 at $1.47 and another 1/3 Dec 31 at $1.27, putting my avg cost at $1.37.

ENERGY OPPORTUNITY #3: SD Swing (+23%):

15-Dec-15 11:00 ET	SCALP	SD Spec Swing Long -- Starting a 1/3 Swing Long position in distressed Energy name Sandridge Energy; same rationale as the BBEP and ARP positions; will add every $0.04 lower. (0.2184 +0.01) Co is certainly distressed, but sitting on a mound of cash, so could still come out the other side of this downturn if Oil prices turn higher within the next 6-9 months. Stock is trading at such distressed levels, I think it is worth picking it up as a lotto ticket on any type of meaningful bounce in Oil. As of Nov, co had $1.2 bln of liquidity including $699 mln of cash Net debt was $3.3 bln No bond maturities before 2020. Market cap $127 mln
15-Dec-15 15:54 ET	SCALP	SD Swing Update -- Stock is up 28% on the day, giving us a 23% profit in just a few hours. Going to lock in profits on the position here. Will probably buy it back again should we see a retracement back to the low $0.20s. (0.2646 +0.586)

ENERGY OPPORTUNITY #4: UWTI (+14%)

Leveraged ETFs have become a great tool for short-term trading of Commodities such as Crude Oil and Natural Gas. For example, a 3% intraday move higher in WTI Crude should translate into about a 9% gain in UWTI.

27-Jan-16 10:35 ET	SCALP	UWTI Scalp Long -- risking 0.15; going 1/2 size in 3x Long Crude Oil ETF and leaving room to add. Playing a potential bounce on heels of Oil inventory data. (1.93 -0.06) As I noted in 10:13 comment, looks like Crude Oil is being leaned on by Shorts into the data as they bet that EIA numbers will be as bad as the API numbers reported last night.
27-Jan-16 10:39 ET	SCALP	UWTI Update -- Trimming a piece for +6%; stops to entry area. (2.04)
27-Jan-16 10:48 ET	SCALP	UWTI Update -- Trimming more here for +7%; keeping 1/2 with stops at entry. Locking more in just in case this reverses. (2.07 +0.08)
27-Jan-16 11:26 ET	SCALP	UWTI Update -- Trimming more for +8%; stops on last piece at entry. (2.08 +0.09)
27-Jan-16 14:30 ET	SCALP	UWTI Update -- Locking in last piece of UWTI Long for +14%. (2.19 +0.20)

BRIEFING TRADERS SAY:
"SCALP - well done on the oil call."

"Nice trading!"

ENERGY OPPORTUNITY #5: UGAZ (+7.5%)

UGAZ is the 3x Long Natural Gas ETF. If one wanted to go short Natural Gas, then a long in DGAZ (3x Short Natural Gas) would do the trick. These inverse ETFs are nice when wanting to get Short because you don't have to track down shares to borrow. For example, if I wanted to Short some momentum stock, there might not always be shares available to borrow.

02-Feb-16 09:41 ET	SCALP	UGAZ -- I'm picking up some UGAZ (3x Long Nat Gas) to play a bounce following 2 days of aggressive selling; going 1/2 size and risking 0.20; will add more if we see $1.33 (1.41 -0.37)
02-Feb-16 12:42 ET	SCALP	UGAZ Update -- Putting on other 1/2 of UGAZ Long here; stops at $1.25 (1.35 -0.43)
02-Feb-16 12:52 ET	SCALP	UGAZ follow-up (1.38 -0.40) Took advantage of that flush to new lows to add the other 1/2 of the UGAZ Long (3x Long Natural Gas). Was actually expecting that flush a little earlier in the morning (Oil and Nat Gas like to clear out earlier bounce players before working their way higher).
02-Feb-16 13:28 ET	SCALP	UGAZ Update -- I'm going to lock in profits on 1/2 of the position here and tighten stops on the other 1/2 to $1.39. (1.43 -0.35) Catching about a 1% gain on the first piece and +5% on the second piece. Given the volatility of this ETF, I'm going to lock in some profits and tighten stops to $1.39. Hopefully we'll see UGAZ continue to push higher as the day goes on, but can at least be assured that we will be walking away with something for our trouble.
02-Feb-16 13:44 ET	SCALP	UGAZ Update - Locking in another 1/4 here...For the last piece, stops remain at $1.39...Have about 3% on first piece and 7.5% on the second piece. (1.45 -0.33)
02-Feb-16 15:22 ET	SCALP	UGAZ Update -- Going to close out last piece of UGAZ here for 4% and +7.5% on the scale in pieces. (1.48 -0.30)

ENERGY OPPORTUNITY #6: LABU (+10%)

I have found that it is easier to trade an index of Biotech stocks on a short-term basis vs trading individual Biotech names. While I may put on swing positions in individual Biotechs that I have researched, I prefer to use LABU (3x Long Biotech) and LABD (3x Short Biotech) to trade short-term volatility in the group.

03-Feb-16 10:16 ET	SCALP	LABU (3x Long Biotech) -- Stepping in Long here to play a bounce; scaling in with 1/3 size; will add about every 0.30 lower. (5.85 -0.77)
03-Feb-16 10:20 ET	SCALP	LABU -- Just added a bit more to my LABU (now up to 1/2 size); want to have a bit more size just in case we are bottoming here. (5.96)
03-Feb-16 10:26 ET	SCALP	LABU Additional Thoughts -- Given where we are in the pattern, it is very likely that I will hold onto some of this position as a swing trade, especially if it goes even lower today and I'm able to continue building at lower prices. (6.00)
03-Feb-16 11:26 ET	SCALP	LABU Update -- Nice little push here. I'm going to trim a piece of my position here for about +6%. (6.26)
03-Feb-16 11:40 ET	SCALP	LABU Update -- Going to trim more here for approx. 10%; stops to $6.10 area. (6.47 -0.15)
03-Feb-16 12:41 ET	SCALP	LABU Update -- Out remainder on break of $6.10 stop. Actually glad to see this back-and-forth, as will provide an oppty to reload after scaling out of the position into strength. (6.03 -0.59) Not sure that I'll reload the position today, but I definitely plan on getting back into LABU with some size if given another compelling set up. Would be ideal if the large-cap Biotechs could roll over the rest of today and tomorrow.

ENERGY OPPORTUNITY #8: WMB Scalp Long +15%

Energy stocks have been seeing an incredible amount of volatility and just about every news event is being met by investors with a "sell first, ask questions later" mentality. I think some of this negative price action has to do with short sellers pressuring stocks on news in hopes of creating panic selling. In the case of WMB, we were able to take advantage of this early price volatility to lock in profits of as much as 15% in a very short period of time.

08-Feb-16 09:54 ET	SCALP	WMB Scalp Long -- risking 1 pt, going 1/2 size. (10.48 -6.63) Taking advantage of plunge in price related to news that CFO of merger partner ETE has separated from company. Action seems overdone in my opinion. Expecting a bounce off these lows.
08-Feb-16 09:58 ET	SCALP	WMB Update -- Trimming a piece for a quick 8%; stops to entry area. Only keeping 1/2. (11.37)
08-Feb-16 10:01 ET	SCALP	WMB Williams Cos halted down 33% after ETE (buying WMB) CFO is replaced (11.38 -5.75) WMB is down 33% after the ETE (-32%) CFO was replaced; ETE needs financing to acquire WMB; WPZ down 23%.
08-Feb-16 10:04 ET	SCALP	WMB resumes (11.34)
08-Feb-16 10:05 ET	SCALP	WMB Update -- Trimming another 1/4 here for 1.15 pts, or 11%; stops on last piece at entry. (11.65)
08-Feb-16 10:07 ET	SCALP	WMB Update -- Taking profits on last piece here for 1.55 pts, or 15%. (12.06)

ENERGY OPPORTUNITY #9: LABU (+12%)

Leveraged Biotech ETFs have been a great way to trade the volatility this group has seen the past several months. LABU is the 3x Long Biotech ETF. This is a liquid ETF that I trade using technicals and short-term sentiment factors. I find it to be a much better trading vehicle that individual Biotech stocks. The 3x intraday leverage of the ETF also provides a lot of bang for the buck.

12-Feb-16 09:52 ET	SCALP	LABU Scalp Long -- going 1/2 size and scaling in. Looking to play a snap back in market following early Short attack. Risking 0.45 and will add on weakness (5.03 -0.16) LABU is the 3x Long Biotech ETF.
12-Feb-16 10:52 ET	SCALP	LABU Update -- Trimming a piece for +3%; stops to entry area (5.21)
12-Feb-16 11:32 ET	SCALP	LABU Update -- Trimming more for +6%; stops at entry (5.34 +0.14)
12-Feb-16 12:25 ET	SCALP	Trimming 1/2 of remainder here for +9%; stops on last piece at $5.20 (5.49 +0.29)
12-Feb-16 14:58 ET	SCALP	LABU Update -- Closing out last piece of the LABU trade for +12% (5.65 +0.45)