First, the good news: Our long portfolio is doing quite well with several names up double digits since last month’s letter. Camping World (NYSE: CWH) shot up 25% in the past month and now is bumping up against my $30 target. I’m revisiting the fundamentals to see if I can justify a higher target. All things camping are doing well, with Patrick Industries (NSDQ: PATK) and the recently sold Drew Industries (NYSE: DW) up 17% and 14%, respectively. Long-standing portfolio favorite Brunswick (NYSE: BC) is up 11% and U.S. Concrete (NSDQ: USCR) up 13%.

But we’ve had losses in recent option trades. Options are mercurial things. They can double or disappear overnight, and I’ve experienced the agony and the ecstasy of both in one short month. After enjoying five enormously profitable option trades this fall, I was slammed with three big losses this month. Our put option on PVH Corp. had been down significantly only to turn around and deliver a 68% gain due to a two-day decline in the stock. Such is the nature of these volatile creatures.

I take these trades seriously and lost quite a bit of sleep over them. Even though I got the news I was looking for on two of the names (PVH and L Brands), the stocks did not initially move as expected. Luckily I held on to PVH because of the poor fundamentals and the stock finally fell. All of the losing option trades were put purchases, bearish bets on a stock.

Those of you familiar with my newsletter know how much I emphasize the difficulty in timing bearish bets. Not only do you need to have the news agree with your thesis, but the stock also needs to move down. And all of this needs to happen before the option expiration date.

A Postmortem

My market timing with the bearish bets was unlucky. The first trade was placed on Nov.15, just before a huge move upward in the retail sector, where all my bearish trades were. Unfortunately, I was under water in most of the option trades before the respective news events hit.

This is not an excuse, but simply the postmortem that I perform with all of my trades, winners and losers. If there’s any silver lining it’s that this difficult process helps me formulate more-profitable trade recommendations.

I kept my PVH Corp. put trade open as the company’s quarter was not terrifically strong. PVH is a serial abuser of giant adjustments that don’t conform to generally accepted accounting principles, which gives the company a lot of wiggle room when reporting earnings per share. Recent sales reports from department stores are bad, with significant discounts required to entice customers. Macy’s, in particular, has not excluded Tommy Hilfiger and Calvin Klein (PVH’s two largest brands) from promotions as it has in the past. Based on recent weak sales reports for the two clothing brands, I may be looking to enter a new bearish trade with these puts.

L Brands gave me the news I was hoping for but the stock did not drop. Massive discounting of merchandise forced management to lower estimates for the critical fourth quarter. Even when reporting a November sales number a week later, management warned that, despite hitting its sales goal, profits would be less than hoped for because of the markdowns. Investors chose to ignore that warning and the stock jumped again. I may revisit this stock when the market is friendlier to the bears as I believe earnings estimates are still too high.

I still expect Big Lots to have some serious problems, but the company delivered a strong quarter. I was simply wrong on Dave and Buster’s.

Pharmaceuticals Resurrected

I expect my newest option trade to deliver the desirable balance of sector timing and strong fundamentals. I’ve been working all month to find what I think is the best value in pharmaceutical stocks. The fear that price controls would be introduced decimated the sector. Mutual funds and hedge funds likely already have sold any large drug positions to take advantage of booking year-end tax losses, which can be used to offset gains.

The pharmaceutical group has had some life to it. I am looking for some positive news about newly launched drugs when Novartis presents at several brokerage conferences in early January. Novartis has one of the strongest new drug pipelines in the industry, partly due to its 2015 purchase of Glaxo’s cancer portfolio. With a handful of fast-growing newly approved drugs and at least two in line at the Food and Drug Administration, Novartis can likely grow earnings and revenue next year.