Recover a cash secured trade that went south - TNA

J

JBM

I'm looking for some advice. I have a trust that was setup after my father died and was traded by my godfather. He was doing cash secured puts (CSP) and trend trading and was averaging 20-24% return over the years.


He was diagnosed with cancer last year and his attention moved from the trust to his health which I fully understand. During this time a csp that he placed was triggered when TNA fell during December. It was for 9 contracts at 80, and since it was a trust I was unable to take any action on it.

I have now been given the trust but I am sitting on 900 TNA at 76 (Cost basis after many rounds of OTM calls). TNA is sitting at 54-57 right now and I am looking at the best manner on how to bring down the cost basis to free up and move away from the CSP strategy.

Should I keep the 900 and keep writing calls or shall I average down then do calls until I break even.

I lost a lot of opportunities with this account based from earlier this year when it was at 30-40 and I am just trying to recover this. My other accounts are covered call strats and are doing great but this one is one I am trying to save. Appreciate any advice. Thank you.
 
what's your macro view? this is my personal opinion, I think the market is going to be lousy over the summer so small caps are going to be monkey hammer, this thing is going down three times as fast as the index its based on. I would just cash out now and buy something that's more defensive or move normally with the market.
 
None of those leveraged ETFs should be held long for the long term. I'd dump TNA and buy ATW, AZO, BRK.B, DIS, JPM, LNKD, ORLY, TSM, WFC. Also buy some jan '18 puts on sears because it's probably going to zero by then, especially if the overall economy turns south.
 
All above. I know that they shouldn't be held for long and we have been good at it, but his cancer relapsed and I was sitting there unable to trade the account due to restrictions on it.

Long term, I feel the market will be going sideways or down as the market makers and big banks lose the cheap money. There will be options available to play that but this summer will be one of correction.

I am moving to dividend stocks/ETFs and maybe throw some calls on them, to capture it but definitely moving to lower vol. stocks/options.
 
Playing with a 3x ETF is a game that most of us and 99% of all traders wouldn't touch with a 10 mile pole...especially not for more than a couple of days.

You seem to have been comfortable with this game in the past but don't like it any more.

The cost basis of your holdings is only a measure of how much you paid for what you are holding... it in no way predicts where TNA is going in the future.


TNA is at 57.43. It doesn't matter WHAT you paid for it...it's still at 57.43.


Why are you holding TNA ??

It pays no dividends.

Is it because you think it is going up and is an investment that fits your goals ???

OR

Because you lost too much money on it to bail out now??

Anyone with any experience at all can tell you that the later reason is the road to sure ruin.

Cash is sure... all else is speculation.
 
I am not holding it and I wasn't trading it. The Trustee was trading it with monthly CSPs that have returned +20% after taxes annually for the past years. He took 40K and turned it into 120K. We did not have a losing trade until cancer reared its head again.

Now that my trustee is on his deathbed I'm not going to be a doucher and discuss the cost basis of TNA or anything like that. I have taken over the trust and recouping it.
 
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