Hiatus

Well I haven't had much activity lately. The reason is I have been busy and I have been letting things pan out in the market. Currently things are not looking too good if you are bullish. S&P is cracking below 1300 levels and oil is close to that 140 level.

I am sitting back as I am helping my GF move and am out of town, I'll be back watching things and trading more in July after the 4th. Unless there is something very compelling.

Levels to watch is 150 for oil, if we hit 150 I am taking a contrarian viewpoint and buying puts on oil and buying stocks because I think that could signal a bottom, who knows my view could change as it approaches but I think all this is result to oil pressuring inflation as well as commodities due to a weak dollar. The psychological level of 150 in oil could be the top and then we see it drift lower, which will then possibly be followed by commodities and allow the fed to raise rates as inflation gets under control so the dollar strengthens and oil and commodities continue to go down and we see a gradual recovery.

I'll continue watching and start trading once I get a consistent internet connection and time to watch, I may take some more day trades to see how that goes as well. stay tuned!

The One That Got Away

Today, Lehman reported and came in with the loss they had previously announced, which was apparently positive for them and the rest of the financials. GS reports Tuesday and if it also has a good report I think there could be an ease in the credit fears and the market could move back higher. GS actually broke and finished above 180, which would have signaled me to get long some calls but with earnings coming I don't want to gamble since I am currently down. I was positioned bearish ahead of LEH's report on LEH, GS and MS. All had rallied recently and I thought if there was any kind of news not already out it could take them back down. That did not happen and I cut my losses shortly after the open. This proved to be very smart because GS then moved up 7 points after at its peak and both MS and LEH moved 4%+ on the day which would have killed my calls.

The largest disappointment was missing the trade on AAPL, and when I say missing I mean I took the trade but didn't get filled. My bid was 1.75 and AAPL was following a nice trendline and I assumed a retest and I would have gotten filled, but no the ask was 1.78 and it then broke out. My order was for 25 contracts. The stock moved and I assumed if we could break above the previous close we could get to 175, which was precisely what happened(actually closed above 176), so my option when I checked it again was worth 4.65. Had I paid up an extra 3 cents I could have been up an extra 7k in a single day and trade without having risked more than 2%. The frustrating thing is more so missing the extra capital, had I made 7k I could take 14 more losses before I was back to where I started and in that time I should hit one or two more big trades like that. The comment was made that "those things happen every day" meaning the stocks move like that every day, which is true but the likelihood of me getting in like I could have and getting a return like that does not happen every day. Who knows, maybe it could happen again tomorrow and I am in the trade, however the odds are not in my favor. Speaking of which I have to work tomorrow for most of the day so I probably won't be in any trade.

I have to look forward, that sucked and I am sure it will happen again but I am glad I cut my losses, that is half of it. The other half is taking advantage of those large winners and being along for the ride.

Ping Pong Game

So Tuesday I entered into two call positions after selling out of my AAPL position and all other losing positions. I bought calls on CLB that had a break out and then a pull back, as well as FCX that had a bull flag breakout. The next day on a large market down day they were showing me nice gains, today they give it all back. FCX broke below support and I sold out, as I should have. CLB is still a small loss but still held above support.

Today I was planning to buy puts on the indicies at the close, unfortunately I should have done it mid day at resistance because it turned over and headed back down. If we see any strength tomorrow I will likely get into some puts.

This week was a lesson in cutting losses, because had I not, I would be hurting way worse than taking my small losses. I considered AAPL puts just because there seemed to be a concern about Steve Jobs, and I think if it comes out that Steve Jobs is in fact having a cancer recurrence, which would be terrible for him, the stock could easily lose 20% of it's value. I am thinking of looking for an opportunity to get some puts if AAPL comes back a bit after this large drop. With the prospect of Jobs' illness and the apparent market headwinds I think AAPL is temporarily done going up.

I again tried to get some put plays on both GS and MS as they rallied today, missed my fill on GS by .05, same on MS, both I assumed would rally slightly more, i'd get filled and be good, but that did not happen and the stocks sold off. It's hard to look at that, I sometimes will just pay the ask to get in, and I have good conviction, but of course the cheaper I can get it, the more of a gain I can start with or the less of a loss I can take to find out if I am wrong.

It's scenarios like this where I'll have a big up day then it reverses the next day that really tests my patience and ideas that staying with the trend till the end is the best thing. Of course having more plays to balance myself would have helped in the overall picture, individually I stuck with these till they did not work, again as I should do.

I have to work tomorrow so I don't think I'll be able to do much, but I'll keep an eye on things.

Best thing(and off topic), Celtics come from 21 points down to beat the Lakers and take a 3-1 lead in the NBA finals. The series would be over next game if the league didn't switch to this stupid 2-3-2 rule however I am hoping KG and the Celtics can come up with another win on the road and clinch it.

Apple Bites Back

So for better or worse the main theme of today was AAPL. With the WWDC today and announcement of the 3G iphone and many other critical business components I felt like the volatility could be exploited.

I entered the trade when I saw it break out of a range to the upside above 182, in general my bias was long, I thought today would be an up day overall after the speech was done. So with that break I entered into 25 contracts of the June 195's. The delta was approximately .25, I felt with good news the stock could easily be propelled up to the old resistance level of 190 and if it broke we could see 192-195. Initially the trade was doing fine, the option value increased .20 giving me a nice cushion, the stock came back down and found support at the 182 level that I had entered. This held for a while then started to break down as the speech approached. I had a limit sell order on the long side but not on the down side, however I wanted my downside risk to still only be 2%, in this case that meant .2o of loss. I entered at 2.40 so that would be an exit of 2.20.

The stock essentially plummeted down to 175 for no reason just as the speech was starting and I was unable to do anything as I was going to class. At that point I was faced with a decision, do I sell out, average down or do nothing. My inclination was to average down since I knew this was likely unsustainable making a break even only require only half the movement back or even better a profit possible after a large initial loss. I decided to do nothing because I didn't want to compound my loss. I decided to wait it out and ended up setting a sell limit at 2.20 equaling my desired 2% because at that point it was looking like I would be lucky to get out with that small loss. At one point it got back to my 2.40 price but I had already been filled, of course I never could have known it would get there.

In the end, I got filled and was actually lucky to get out with that loss. Had I continued to hold till the end of the day I would have lost 10% of my account instead of only 2%. Remember we have to survive to trade another day so while I am partially upset I didn't take advantage of the initial exaggerated weakness in the stock, it would have likely been more wreckless to average down and holding would have put me in a weaker position to trade with in the future.

The nasdaq was down significantly today, which was great because all my tickers were 4 letters and calls(stupid). My hope was to get weak stocks to rally to buy puts, which unfortunately did not happen. It is stupid to look back and say "should have" but holding all my positions from last week to today would have been the best move yet and I would have had another very profitable day. The reality is that I didn't have them so I must say "oh well" move on and look to balance myself and get back the losses of today.

Theory vs. Practice

So Friday we saw the Dow lose almost 400 points and the S&P lose 43 points. We gave up the gains from thursday and even more because of exactly the reasons highlighted: bad unemployment and oil. Unemployment came in much higher than forecast and oil has it's largest single day increase evAr(that's right with a capital A).

This is EXACTLY the reason we diversify and what was the result on friday? I had an up day that pushed me back over even and would have put me way above had I not let emotions get the best of me. Thursday I was questioning why I wasn't in all calls(just to make a point). This is the reason. ANF reversed as well as MS, my SPY puts at the close seemed like I had a crystal ball. I don't I was simply making a hedge that happened to work very well and had it not worked I would have exited with my small loss.

This was basically the perfect scenario I have looked for. On a large down day my puts go way down and my calls stay flat or increase. My IPI and AKS calls were actually making money, AAPL was hanging in there until close and GRMN was holding support. I checked the market in the morning, knew I was properly diversified and position sized and decided to go back to sleep and let the market do what it was going to. I came back around 11 and checked to find myself back above even by 2%. In this case, excitement got the best of me. I basically took profits on my positions because the S&P was sitting at 1375 and seemed to be holding that old support level so I assumed I made my money on my puts and wanted to finish above even mainly for psychological well being. No harm in taking a profit however, it severly limited them. Had a held till close I would have been up another 10% on my account. There is no way I could know this of course but patience would have paid off big time.

In the end, I can't complain being up 8% when the broad markets were down 3%! That is how it should work. On monday I'll look to balance myself again as I am now left with only call positions. AAPL has their WWDC so I am hoping for good news and bullish action. GRMN held and bounced off support at 50 so I am still in that trade. I entered some ISRG calls at the close since it was holding support at 280. My target is 300 or a break of 280.

IF we get a bounce on monday I'll look to enter more put positions since the rally will not hold unless we see something drastic. I'll look to enter puts regardless but I want to find good enteries.

Surprise Rally

So today we saw a decent rally in the market. Fueled by better than expected retail sales and a decrease in jobless claims the broader market had a very positive reaction. This was all in the face of a 4 dollar jump in oil prices. The catch is that we could give it all back tomorrow if unemployment comes in worse than expected.

I am decently positioned regardless of what happens. I am currently still biased to the bullish side with more positive delta, however it is only at a rate of 4:3. It's at times like these you wonder why diversification is good because 5 of my call positions are up, all my put positions are down. Theoretically if we have a down day I'll hope some of my calls stay up or keep up and my put plays go way back down.

ANF is a case, it drops to 68 today's numbers come out and it jumps to 7o.25, that is not a very convincing close to me and given the possibility of a drop tomorrow I'll stay in for the insurance for now. Same with MS.

Near the close I entered into some SPY puts, the S&P closed at 1404, this should have signaled an exit, again this is a hedge and I am only down .5%. None are at my 2% max loss, although ANF is very close. If we have a bullish unemployment number I will likely cut those positions loose very quickly to limit further expected loss.

The number comes out I think before the open so the futures should tell the story in the morning. AAPL is still sitting right below 190, it needs a nudge which could be this number or the WWDC.

On a side but great note the Celtics won game 1 of the NBA finals. Hell yea, do it Garnett! ;-)

Time to Get Neutral

Another down day with financials leading the way again. It's not looking good for the market at the moment if you are bullish. 1375 Will be tested again on the S&P and I doubt it will hold up for long if there is renewed concern(over reaction) about the credit crisis. Banks getting downgraded make them ripe for puts as they are at or making new lows. I plan to diversify with some puts on MS tomorrow if the opportunity arises.

I got into puts on ANF, it finally broke the 70 level today, I entered early but it was a good entry at 69.50, and it ended up nearly a dollar lower. Too bad I didn't get filled with my anticipatory trade at 71. Oh well. My target is 65, with a break back above 70 signaling an exit.

I sold out of my SIRF, at a little over a 1% total loss, good from a loss standpoint but too bad it wasn't a gain. GRMN looks to have broken out so if there is a pull back to close to 50 I will take down a couple calls. RIO broke an up trend so it looks like a good entry for puts as well.

I definitely want to be selective and diversified right now because if we break 1375 I think we could see 1320 again. The only possibility to help that could be retreating oil, but it definitely has not broken its uptrend but USO looks to be sitting right at support at 100. Jeff Kohler mentioned that refiners are starting to get bought which could signal a pull back in oil coming. I'll keep that in mind as we progress here.

POT could be up for a long position again if it pulls back after this break out of a triangle.

we'll see what tomorrow brings. Hopefully large profits, or small losses.

New Week, New Month, New Positions

So since last week I have made a few moves. Took a trade and got out with a loss below my 2% level. However, it was tough because if I waited till the end of the day I would have still held the position. Today that position would be worth a decent profit(about 50%). I had originally bought some SPY puts as we approached the 1400 level as I was not convinced of the rally and decline in oil. On thursday we went up to 1405, I was at that point holding a loss of slightly less than my 2% which was my limit, not to mention a finish at 1405 would signal a break back above 1400. Since I have a loss already I was not looking to make my losses bigger. I gave it a chance to reverse but it behaved just like an uptrend and bounced back off of support. I cut it off and it did keep going up. However, by the end of day it finished back at 1400. Friday was the same, went above 1400 only to finish back at 1400, a break and close above 1400 was my exit. Today it was down to 1380.

This is an example of emotions effecting a trade, which I don't want. The best thing would have been to wait till the end of the day to enter and see we were not going to finish above 1400. I got over zealous looking to make a few dollars ahead of time. I was wrong, I learn and move on.

Today I looked to get into some other trades. PTEN looked to be bounced off of support in a nice channel uptrend. I took down some calls. I also took down some calls in AAPL. PTEN if there is a break below 31 that will signal an exit with my target being 35. AAPL will likely have volatility going into the WWDC event. I am looking to profit off of this, a break above 190 should signal a move higher likely to 200.

I had a couple other positions I was looking to get into but my limit orders were not filled while I was in class. ANF is looking weak, if it breaks below 70 that is huge and I am looking to buy puts.

I am still holding my SIRF and PENN calls, I am likely going to cut SIRF loose as they are June options and it is not moving enough to warrant holding it and watching it decay. I am unsure what will happen with the buyout of PENN, obviously it seems like nothing will happen or the stock would be trading up, but again the point was to take only a position I am willing to lose completely, so I will hold it until there is more conclusive news. I will hope it gaps to 67, but that will be unlikely. The provision of course is that the buyout price increases for every day that it doesn't close. Theoretically I may as well hold till July expiration if I have downside of 2% and a potential upside of at least 12 dollars of intrinsic value. These trades should be few and far between but I am comfortable right now. I need to find other trades, mostly puts to balance which I'll look for tomorrow if I have time.

Time to read Fortune and then go to bed.