I have not been posting as much lately as I have said because of my preparations for the upcoming CFA level 1 exam. I am currently sitting back at my previous highs in terms of returns. I am still slightly bullish biased waiting for the market to make the next move. I feel like that move could come tomorrow on the GDP report which I think will be better than expected and spark the next move higher. I am tempted to buy a futures contract now and let it go but that could be fairly risky so I'll wait till tomorrow and see how things shape up before the report. If we break to the upside tomorrow I'll exit my puts and look to get long some commodity plays. I will still keep things fairly light until after June 6th.
Total Return for 2009: 161%
Friday, May 29, 2009
Friday, May 22, 2009
Eventful Week
Well the week has been eventful for me, more so outside of the markets which is the reason for the lack of blogging the past few days. Weds I saw more rebound getting back a couple percent lost on monday. Thursday I gave that back then a little more and Friday I ended up back where I started on Tuesday.
Outside of the markets I got my wisdom teeth out which is highly annoying to deal with and I would rank it up there with having a sprained ankle. I am sure it will be glorious to eat whatever I want again just like it is glorious to be able to walk around and run with no limp after a sprain but for now it is simply a pain in the ass(or mouth rather).
Turning my attention back to the markets I am thinking that it may be time to get back into FOREX because it seems to be where all the action is these days. With the Euro hitting 1.40 recently that is a huge move. One I was looking to happen but obviously didn't know when it would so going long the euro may have tested my patience and stopped me out. Now that it has moved however I could go long on a pull back but may look at other currencies instead.
The odd thing with the market is the fact that we broke down on the $VIX yet the market is trading fairly poorly like it could also break down on the next wave of bad news. I guess this is good for option buyers either way but makes it hard to look for clues of the next move. The drop in the VIX along with the rise in 10 year treasuries seems to be fairly bullish for stocks. Agriculture stocks are on fire and IPI(which I got stopped out of) would have likely been a better trade than FCX was had I stock with it. It would be nice to get a larger pull back to get into those names to better manage risk. Besides the first 2 days of the week the moves in my account have been fairly boring which is fine for the next 2 weeks until I am done with my CFA test. I would like to get some type of conviction soon, buyers show up at 880 and sell at 900 for the moment.
I see more and more commercial real estate for sale signs around me yet the IYR continues to hold up much better than I would expect. I am thinking we could digest some bad news over the course of June then look to rally in July/August especially if earnings stay decent and last quarter "improvements" aren't a blip up in a downtrend. Bad news we likely need to discount still is GM Bankruptcy, continuing job losses and rising unemployment over projections, commercial real estate deterioration. I still feel that materials and Ag will be the out performers as we can already see inflation expectations taking its toll on the 10 year rates. With more bad news discounted and a larger pull back in stocks I would be fairly comfortable going long again for the longer term. I have seen an increase in job postings locally but that will only offset some of the other job losses occuring but is a positive step.
Total Return for 2009: 157%
Outside of the markets I got my wisdom teeth out which is highly annoying to deal with and I would rank it up there with having a sprained ankle. I am sure it will be glorious to eat whatever I want again just like it is glorious to be able to walk around and run with no limp after a sprain but for now it is simply a pain in the ass(or mouth rather).
Turning my attention back to the markets I am thinking that it may be time to get back into FOREX because it seems to be where all the action is these days. With the Euro hitting 1.40 recently that is a huge move. One I was looking to happen but obviously didn't know when it would so going long the euro may have tested my patience and stopped me out. Now that it has moved however I could go long on a pull back but may look at other currencies instead.
The odd thing with the market is the fact that we broke down on the $VIX yet the market is trading fairly poorly like it could also break down on the next wave of bad news. I guess this is good for option buyers either way but makes it hard to look for clues of the next move. The drop in the VIX along with the rise in 10 year treasuries seems to be fairly bullish for stocks. Agriculture stocks are on fire and IPI(which I got stopped out of) would have likely been a better trade than FCX was had I stock with it. It would be nice to get a larger pull back to get into those names to better manage risk. Besides the first 2 days of the week the moves in my account have been fairly boring which is fine for the next 2 weeks until I am done with my CFA test. I would like to get some type of conviction soon, buyers show up at 880 and sell at 900 for the moment.
I see more and more commercial real estate for sale signs around me yet the IYR continues to hold up much better than I would expect. I am thinking we could digest some bad news over the course of June then look to rally in July/August especially if earnings stay decent and last quarter "improvements" aren't a blip up in a downtrend. Bad news we likely need to discount still is GM Bankruptcy, continuing job losses and rising unemployment over projections, commercial real estate deterioration. I still feel that materials and Ag will be the out performers as we can already see inflation expectations taking its toll on the 10 year rates. With more bad news discounted and a larger pull back in stocks I would be fairly comfortable going long again for the longer term. I have seen an increase in job postings locally but that will only offset some of the other job losses occuring but is a positive step.
Total Return for 2009: 157%
Tuesday, May 19, 2009
Flat Day Rebound
Today helped bring my account back up nicely but not completely. Commodity and materials related stocks were flying high today which is where most of my positions are to the long side. My puts had smaller losses and my puts on the IYR had a gain. Partially due to frustration and partially due to the fact that I am taking the CFA Level 1 exam in a couple weeks I decided to cut back on my positions so I didn't feel inclined to check it as often.
I actually for the time being exited the two long positions at very good prices. ANR and 5 of my 8 contracts on DSX I exited near the highs and they pulled back significantly into the close. Obviously as the market pulled back I wished I had all my SPY puts still on but I sold a majority of those as well and only kept 3 so I am still long biased. I will stay long biased until we break back below 900 which may happen soon. Today had a worse than expected housing starts like I had wanted but it was much worse and I was surprised to see the materials and stocks in general up after news like that. If we hold 900 tomorrow I think that will be bullish for stocks and set us up for another leg higher as long as jobless claims stay in check. I doubt my projected worse than expected jobless claims numbers will hit until later in June as more people hit the job market unable to find jobs. If that doesn't happen we could see this rally gain some momentum.
I am willing to play the market either way obviously I just wish it would pick a direction that is consistent like before but I doubt that will happen. I feel like since the market psychology is that overall thing will get better people are optimistic making a bearish bias a little bit harder than being long, but right now the longs lack the catalyst to make it worth it.
Total Return for 2009: 157%
I actually for the time being exited the two long positions at very good prices. ANR and 5 of my 8 contracts on DSX I exited near the highs and they pulled back significantly into the close. Obviously as the market pulled back I wished I had all my SPY puts still on but I sold a majority of those as well and only kept 3 so I am still long biased. I will stay long biased until we break back below 900 which may happen soon. Today had a worse than expected housing starts like I had wanted but it was much worse and I was surprised to see the materials and stocks in general up after news like that. If we hold 900 tomorrow I think that will be bullish for stocks and set us up for another leg higher as long as jobless claims stay in check. I doubt my projected worse than expected jobless claims numbers will hit until later in June as more people hit the job market unable to find jobs. If that doesn't happen we could see this rally gain some momentum.
I am willing to play the market either way obviously I just wish it would pick a direction that is consistent like before but I doubt that will happen. I feel like since the market psychology is that overall thing will get better people are optimistic making a bearish bias a little bit harder than being long, but right now the longs lack the catalyst to make it worth it.
Total Return for 2009: 157%
Rally=Undesirable Losses
Yesterday made me very irritated because insteading of gapping down and allowing me to cover my puts we gapped up and ran. This just puts me in kind of a no man's land position because we weren't over 900 yet and technically nothing would be confirmed till the end of day so do I sell my puts assuming we don't reverse? In hind sight that would have been the less costly thing to do as I sit here with a large loss on my SPY puts. I of course have more calls than puts but clearly my put position on the SPY was too concentrated so it made it act like I was much more bearish.
The whole point of staying partially balanced is to limit losses at any given time. My goal was to keep losses below 5-7% but today I gave back 12% which is unacceptable. This puts a large kink in the movement upward but the even worse effect is the mental one it has seeing my account drop close to levels I want to stay above which makes me less inclined to take risk. The even worse thing is if I let these losses continue and don't just follow what the market is telling me, which is that it wants to go higher. The other problem I had today raises the question of hard stop losses. It would have saved me over a third of the losses but again I am not sure if it would have been at a level really confirming a break of trend. I guess the thing to do would be to have it in place and hop back in if we failed to hold 900 instead of not having it there at all. I am generally fine with selling to limit my own losses but I will admit in this scenario I felt a little unsure. My idea now is technically we are supposed to test 900 before continuing upwards so I'd like to get out at those more favorable prices on my puts but I have to be willing to admit that may not happen and just cut the loss. That could be determined by tomorrow's Housing Starts number if it comes in better than expected. If by the end of the first hour we haven't broken below the gap up(if we do) then I will exit. I become concerned that once I exit of course I am much more exposed to the downside.
Right now futures are trading slightly higher. If housing starts are worse than expected we may give up most of yesterday's rally but I think it would have to be severely worse than thought for that to happen. What I hope for is that it is simply in line or slightly worse, so we sell off and hold 900 so the uptrend stays in tact and I can re-gain my losses to the upside.
Total Return for 2009: 149%
The whole point of staying partially balanced is to limit losses at any given time. My goal was to keep losses below 5-7% but today I gave back 12% which is unacceptable. This puts a large kink in the movement upward but the even worse effect is the mental one it has seeing my account drop close to levels I want to stay above which makes me less inclined to take risk. The even worse thing is if I let these losses continue and don't just follow what the market is telling me, which is that it wants to go higher. The other problem I had today raises the question of hard stop losses. It would have saved me over a third of the losses but again I am not sure if it would have been at a level really confirming a break of trend. I guess the thing to do would be to have it in place and hop back in if we failed to hold 900 instead of not having it there at all. I am generally fine with selling to limit my own losses but I will admit in this scenario I felt a little unsure. My idea now is technically we are supposed to test 900 before continuing upwards so I'd like to get out at those more favorable prices on my puts but I have to be willing to admit that may not happen and just cut the loss. That could be determined by tomorrow's Housing Starts number if it comes in better than expected. If by the end of the first hour we haven't broken below the gap up(if we do) then I will exit. I become concerned that once I exit of course I am much more exposed to the downside.
Right now futures are trading slightly higher. If housing starts are worse than expected we may give up most of yesterday's rally but I think it would have to be severely worse than thought for that to happen. What I hope for is that it is simply in line or slightly worse, so we sell off and hold 900 so the uptrend stays in tact and I can re-gain my losses to the upside.
Total Return for 2009: 149%
Monday, May 18, 2009
Which Way?
So Friday showed me a small gain. All my short positions expired worthless minus the one June position I have in NVAX which will almost certainly expire worthless being a 200% move away from the strike but I am almost tempted to just close it and not care about the remaining 50 bucks. The good thing about having things expire is that you get the rest of the premium if there is any and you don't have to pay a commission on the closing side of the trade.
I was actually pretty excited that futures were down last night doing exactly like I wanted. I had wanted a gap down to 875 and then I would sell my puts and either buy futures or just hold my long options. However, Lowe's came out with really nice earnings and that made futures rebound and now turn positive by 1% so we are going to have a gap up instead which I think I am less positioned for. I am overall long but so far the moves in my long positions pre market will not out pace the move in the SPY and IYR so my losses should be greater than profit. Since this is fairly positive data and we may get more with Home Depot later on, this could push us back above 900 but we will see when we get there.
Overall Return for 2009: 161%
I was actually pretty excited that futures were down last night doing exactly like I wanted. I had wanted a gap down to 875 and then I would sell my puts and either buy futures or just hold my long options. However, Lowe's came out with really nice earnings and that made futures rebound and now turn positive by 1% so we are going to have a gap up instead which I think I am less positioned for. I am overall long but so far the moves in my long positions pre market will not out pace the move in the SPY and IYR so my losses should be greater than profit. Since this is fairly positive data and we may get more with Home Depot later on, this could push us back above 900 but we will see when we get there.
Overall Return for 2009: 161%
Friday, May 15, 2009
Direction Needed
Yesterday WMT is basically inline with expectations, reaffirms guidance but falls. Jobless claims are worse than expected, both things I didn't want, yet we rallied anyways. Seems like the market wanted to test 900 as well. I got back into puts on the SPY slightly early since we had that weaker data come out but I was able to get into IYR puts at near the high yesterday.
Now we need to either break 900 again or 875. We have yet to test 875 but I suspect once we do it will hold at least the first time. People on tv seem to think we will be in the range of 875 to 900 for a bit which could be and could give the opportunity to trade that channel. Ultimately I'd like to have a break down and retest 850 and possibly 800. After retail sales dropped I started to think about the upcoming scenario even for the summer and it didn't seem promising. We have new graduates coming out so potentially even more jobless pushing unemployment higher quicker than forecast. This continues to cut consumer spending and makes a more quick recovery nearly impossible. This could in fact lead to the credit card defaults and eventually bad commercial real estate loans causing issues as Meredith Whitney and others have claimed(as much as I don't like her).
I had actually been surprised by the more positive data as of recent even though I was long it was good but now seems more like an uptick in a downward trend. Do I think we re-test the lows or go lower? Very doubtful in my opinion but we could see a decent retracement now farther than I thought before. I am still long biased since we technically have not broken 875 yet but if that happens I'll look to get bearish.
All of my short option positions are currently sitting OTM, AAPL shook me out which is annoying because that would have been another one that worked out. This is a subjective analysis but I want to say out of 10 times I have had short options it only hasn't worked once, i've had to buy them back for a loss. The win percentage is great but the risk/reward will still never match a good directional play but can definitely be used to lower cost basis or generate a more steady profit stream. We could see some volatility today as stocks get pinned to certain strikes for expiration. Monday will be the day to start paying attention again.
Total Return for 2009: 159%
Now we need to either break 900 again or 875. We have yet to test 875 but I suspect once we do it will hold at least the first time. People on tv seem to think we will be in the range of 875 to 900 for a bit which could be and could give the opportunity to trade that channel. Ultimately I'd like to have a break down and retest 850 and possibly 800. After retail sales dropped I started to think about the upcoming scenario even for the summer and it didn't seem promising. We have new graduates coming out so potentially even more jobless pushing unemployment higher quicker than forecast. This continues to cut consumer spending and makes a more quick recovery nearly impossible. This could in fact lead to the credit card defaults and eventually bad commercial real estate loans causing issues as Meredith Whitney and others have claimed(as much as I don't like her).
I had actually been surprised by the more positive data as of recent even though I was long it was good but now seems more like an uptick in a downward trend. Do I think we re-test the lows or go lower? Very doubtful in my opinion but we could see a decent retracement now farther than I thought before. I am still long biased since we technically have not broken 875 yet but if that happens I'll look to get bearish.
All of my short option positions are currently sitting OTM, AAPL shook me out which is annoying because that would have been another one that worked out. This is a subjective analysis but I want to say out of 10 times I have had short options it only hasn't worked once, i've had to buy them back for a loss. The win percentage is great but the risk/reward will still never match a good directional play but can definitely be used to lower cost basis or generate a more steady profit stream. We could see some volatility today as stocks get pinned to certain strikes for expiration. Monday will be the day to start paying attention again.
Total Return for 2009: 159%
Wednesday, May 13, 2009
Premature Put Exit?
So at about 885 on the S&P I decided to sell 7 of my 10 puts expecting a bit more of a snapback short covering into the close. I wanted to shift my bias because this was a fairly significant sell off with the break of 900 and the reason we sold off somewhat changes the picture like I was thinking. In the short term i figured we went from overbought to oversold very fast so we could see some relief rally. The ideal scenario for me would be for Walmart to report better than expected earnings and guidance and we have a better than expected jobless claims and we have somewhat of a relief rally and then I would look to buy puts again at 900.
The problem is that we may continue down to 875 wihtout that happening and I am left with not much insurance left to the downside. I have watched my call positions go from large profits to break even, which is very annoying but at least my puts outpaced them overall. I saw a couple of low risk opportunities so I went long but it could be premature if things start to get worse.
JBLU continues to annoy with another 6% down day, and what do you know? The most open interest is at the 5 strike which is somewhat helpful to me but I'd rather be up at 6 with no worries of it breaking down with the market. I will watch it closely tomorrow along with the broad market and act as necessary. I feel like the next leg will be to the downside and create the best profit opportunities but I'd like to get a rally first to get better prices.
Total Return for 2009: 154%
The problem is that we may continue down to 875 wihtout that happening and I am left with not much insurance left to the downside. I have watched my call positions go from large profits to break even, which is very annoying but at least my puts outpaced them overall. I saw a couple of low risk opportunities so I went long but it could be premature if things start to get worse.
JBLU continues to annoy with another 6% down day, and what do you know? The most open interest is at the 5 strike which is somewhat helpful to me but I'd rather be up at 6 with no worries of it breaking down with the market. I will watch it closely tomorrow along with the broad market and act as necessary. I feel like the next leg will be to the downside and create the best profit opportunities but I'd like to get a rally first to get better prices.
Total Return for 2009: 154%
Tuesday, May 12, 2009
Bullish or BS?
So today we had what I would consider to be some market shenanigans as a result of options expiration week. Basically the scenario I just talked about happened. We started up, filled the gap then started to break down below 900 and as this was happening the VIX was lower on the day. At a time when you would assume panic is setting in and we are off more than 1% breaking critical support the VIX is down? I would consider it a bear trap, sucking in more shorts and shaking out weak longs before reversing to be flat on the day. JBLU was down nearly 10% on the day for what I think is no good reason. Oil was up but JBLU is specifically known for good hedging techniques and has been profitable. This ate up over half of my cushion in a day and the timing is obviously suspect.
I was positive or negative on the day depending on when I looked but ended up down on the day. I would need to be very active to try and squeeze out extra profits in this type of environment. Had I thought 900 was the ultimate short term low I would have exited my puts. As of right now it appears that people bought that dip again and we could move higher. I need to have my exit in mind for my puts becuase it has been very aggrevating to watch calls lose value, puts gain, then vice versa without any action. The market could have different ideas than I do so I need to be ready for that even as irrational I think more upside is, the saying is that "the market can stay irrational far longer than you can stay solvent."
If the market indeed wants to go higher I'll look to get some more long exposure but a lot of the easy money has already been made. I really want a pull back to 850 and I will buy with a lot more confidence but it could be a while before we get there and I have to look for opportunities in the mean time.
Total Return for 2009: 151%
I was positive or negative on the day depending on when I looked but ended up down on the day. I would need to be very active to try and squeeze out extra profits in this type of environment. Had I thought 900 was the ultimate short term low I would have exited my puts. As of right now it appears that people bought that dip again and we could move higher. I need to have my exit in mind for my puts becuase it has been very aggrevating to watch calls lose value, puts gain, then vice versa without any action. The market could have different ideas than I do so I need to be ready for that even as irrational I think more upside is, the saying is that "the market can stay irrational far longer than you can stay solvent."
If the market indeed wants to go higher I'll look to get some more long exposure but a lot of the easy money has already been made. I really want a pull back to 850 and I will buy with a lot more confidence but it could be a while before we get there and I have to look for opportunities in the mean time.
Total Return for 2009: 151%
Pullback Profits
Since we finished right at 930 resistance Friday I held my puts, which ended up being smart as the market pulled back nicely yesterday and let me profit as my puts and short call positions outpaced my long calls. I was actually hoping for more short term downside and liked that we were trading lower overnight but it is hard to keep this market down, China news is sending futures a bit higher today, financials aren't participating at the moment which is good for my positions and could help keep a lid on any rally attempt today if it continues. I partially feel like the move friday was a fake out and the old me likely would have been shaken out of position which seems to happen around expiration week. We seem to get moves that test your resolve, prices will move just beyond support or resistance making you get out or in before they reverse course and you get screwed. I am hoping to avoid that this week. As of right now all my short option positions will expire worthless and I'd like to keep it easy and clear cut.
I still have yet to determine a good way to profit from expiration week. Although I assume the best way is to sell premium because market makers want options to expire worthless and overall they can't keep the market pinned but in the short run it seems to be possible to manipulate it. I am no conspiracy theorist, I am just trying to exploit realities for gain if possible. I may look into the which options have the most open interest on stocks and see where they finish friday and if there is a correlation. Options expiration is almost like a mini earnings event in that we see volatility generally contract(again benefiting sellers).
Oil is higher today which I hope helps my CHK position, however it is near 60 a barrel which is likely going to produce some resistance in the short term for energy stocks. I doubt the overall market will make any dramatic moves in either direction until after options expiration. I could be wrong but that is how I see things going and hope that they do but am willing to react if necessary.
Total Return for 2009: 153%
I still have yet to determine a good way to profit from expiration week. Although I assume the best way is to sell premium because market makers want options to expire worthless and overall they can't keep the market pinned but in the short run it seems to be possible to manipulate it. I am no conspiracy theorist, I am just trying to exploit realities for gain if possible. I may look into the which options have the most open interest on stocks and see where they finish friday and if there is a correlation. Options expiration is almost like a mini earnings event in that we see volatility generally contract(again benefiting sellers).
Oil is higher today which I hope helps my CHK position, however it is near 60 a barrel which is likely going to produce some resistance in the short term for energy stocks. I doubt the overall market will make any dramatic moves in either direction until after options expiration. I could be wrong but that is how I see things going and hope that they do but am willing to react if necessary.
Total Return for 2009: 153%
Friday, May 8, 2009
Blink, You Lose
I am at the point of annoyance with this rally now. Obviously part of the reason is because I have not participated as much as I want as of late, but the other reason is because I feel like there is optimism to the point of stupidity now propping up stocks. We pulled back from 930 as one may "expect" to happen and I had nice paper profits because of it, however I literally had to make those moves in the morning and sell in the afternoon because by the end of today they were right back where they were yesterday. It's ridiculous, a 20% range in the XLF in 2 days. My nearly perfect entry points were undone today. I only lost about a third of my gains from yesterday which is fine in general but had I just exited again at the close yesterday I would have given back nothing and gained a lot more.
Of course I am frustrated being on the wrong side of constant optimism, if I were totally long I would love if I had bought at the bottom yesterday. I know the market operates on psychology of humans which are at times irrational which in my opinion is partially why it can be exploited for gain. However, I feel like people are going over board. We have had signs of recovery, not even positive growth again at all and stocks most notably some financials are near old highs.
The S&P did finish below 930, barely but wasn't as weak as I had hoped, in fact it ifinished on its highs but did not break out. I am only sitting on a small loss now on my puts but it is so frustrating to see a large gain turn into a loss. I feel like we will rally the beginning of next week so I get sucked out of my positions, and people get pulled into calls, then pull back so those calls become worthless.
Alright enough bitching, in terms of my positions CHK was the big winner today but was more than canceled out by my put positions...but limited my losses. Going into next week if we rally I will lighten up my longs because they are getting closer to my targets. That reversal day failed to follow through if we finish above 930 I feel like 950 is the next logical level and it could happen in a day if it does. Overall I am making steady progress higher even if it isn't as fast as before I still am taking low risk entries, there were a couple I looked at today but didn't take ahead of the weekend. If financials continue higher into next week I'll have to buy back my short calls as no bearish position seems safe in this market environment.
Total Return for 2009: 148%
Of course I am frustrated being on the wrong side of constant optimism, if I were totally long I would love if I had bought at the bottom yesterday. I know the market operates on psychology of humans which are at times irrational which in my opinion is partially why it can be exploited for gain. However, I feel like people are going over board. We have had signs of recovery, not even positive growth again at all and stocks most notably some financials are near old highs.
The S&P did finish below 930, barely but wasn't as weak as I had hoped, in fact it ifinished on its highs but did not break out. I am only sitting on a small loss now on my puts but it is so frustrating to see a large gain turn into a loss. I feel like we will rally the beginning of next week so I get sucked out of my positions, and people get pulled into calls, then pull back so those calls become worthless.
Alright enough bitching, in terms of my positions CHK was the big winner today but was more than canceled out by my put positions...but limited my losses. Going into next week if we rally I will lighten up my longs because they are getting closer to my targets. That reversal day failed to follow through if we finish above 930 I feel like 950 is the next logical level and it could happen in a day if it does. Overall I am making steady progress higher even if it isn't as fast as before I still am taking low risk entries, there were a couple I looked at today but didn't take ahead of the weekend. If financials continue higher into next week I'll have to buy back my short calls as no bearish position seems safe in this market environment.
Total Return for 2009: 148%
Thursday, May 7, 2009
Prepared for Pullback
So after I got done saying not to trade in the first hour I did it again today, however it worked out perfectly this time. We gapped up to 930 on the S&P which was where I planned to take a short and apparently so did others. I Sold calls on the XLF then bought puts on the SPY. This ended up being a good play as stocks and financials staged a major reversal today ahead of the stress test results. I now have a good cushion on my short call position for expiration next week I can collect some theta over the weekend.
Natural gas ripped higher today on apparently bullish inventory numbers right back to its bearish trend line. If it gets above this level we could see it really accelerate to the upside which should benefit my CHK position even more than it did today.
The frustrating thing was that my DECK and IYR positions would all have recovered their losses and AAPL calls would have been woth much less giving me more money. Oh well, I had the plan and ability to execute these new positions and they are working so far. Gaps can work in your favor or go against you but either way can pay off big if they work. After hours when the official stress tests results were released we saw the futures trade back up and financials rip higher again. The concern is that we essentially came down and tested 900, although not exactly but close and that could end up being the opportunity people were looking for to buy back in. So the tough decision comes of when to decide to exit my puts. Obviously I am sitting on a nice profit so it is easier to manage but I don't want to give it all back if we are going to keep rallying. I still feel there is more downside but maybe the market doesn't and those on the sidelines will get in and push stocks higher. I will feel better after options expiration where I will then be perfectly balanced with my 10 long calls and 10 long puts.
For my bearish thesis to remain in tact I would like to see us finish below 930 and ideally 920 tomorrow. Options expiration week is always interesting as there is posturing ahead of time that can cause some interesting volatility. Once we have a larger pullback I still feel materials and energy will be where the best risk adjusted gains will come from as long as the economic outlook remains solid.
Total Return for 2009: 152%
Natural gas ripped higher today on apparently bullish inventory numbers right back to its bearish trend line. If it gets above this level we could see it really accelerate to the upside which should benefit my CHK position even more than it did today.
The frustrating thing was that my DECK and IYR positions would all have recovered their losses and AAPL calls would have been woth much less giving me more money. Oh well, I had the plan and ability to execute these new positions and they are working so far. Gaps can work in your favor or go against you but either way can pay off big if they work. After hours when the official stress tests results were released we saw the futures trade back up and financials rip higher again. The concern is that we essentially came down and tested 900, although not exactly but close and that could end up being the opportunity people were looking for to buy back in. So the tough decision comes of when to decide to exit my puts. Obviously I am sitting on a nice profit so it is easier to manage but I don't want to give it all back if we are going to keep rallying. I still feel there is more downside but maybe the market doesn't and those on the sidelines will get in and push stocks higher. I will feel better after options expiration where I will then be perfectly balanced with my 10 long calls and 10 long puts.
For my bearish thesis to remain in tact I would like to see us finish below 930 and ideally 920 tomorrow. Options expiration week is always interesting as there is posturing ahead of time that can cause some interesting volatility. Once we have a larger pullback I still feel materials and energy will be where the best risk adjusted gains will come from as long as the economic outlook remains solid.
Total Return for 2009: 152%
Wednesday, May 6, 2009
Follow the Rules
So today we gapped up and both my put positions were in losing positions. DECK ran up to nearly 63 dollars, and my line was 60 and it was pushing past my loss limit. I didn't completely panic out of it, I let it come back as I saw the market pulling back then exited at what I thought was a better price. DECK reversed completely and ended up down on the day. I also exited IYR as it was breaking to new highs and I assumed it would continue. I bought back my AAPL calls as the market started to recover too. I did all of this in the first half an hour. I was basically "right" on 1/3, DECK would have still been at a loss but not at my limit and still protect me to the downside, AAPL went down as much as two dollars and ended up down slightly but the calls decayed more in my favor which would have recouped more premium.
Overall I prob lost 1% on making those moves, IYR ended up finishing higher than where I sold making the move right for the time being but it was still below resistance and my loss limit so I could have held. I was too eager to cut those positions because I saw the market start to rebound and I thought it could be the huge up day I was looking for but for the most part my positions did what they should. I need to remember trading rule #6: Do NOT trade in the first hour unless absolutely necessary. The hard thing is acting early on pull backs has worked this whole time generally going long. My new position in CHK is starting to work out nicely and I think should continue. One thing I have noticed and plan to analyze is holding long term vs. short term trading. FCX, which I originally had July options on at 26, is now at 52 and I exited at 42, thats significant money left on the table. Of course I did get out before it traded in a range for a while so time in market should be considered but it is still something to think about.
The stress test "leaks" sent financials ripping higher today. I really just want a large up day so I can get some low risk put positions. The 930 target is in sight and that will be the place I initiate some short positions. We will be overbought in most of the major sectors and the McClellan oscillator is near extreme overbought conditions as well. Financials seem like a good place to short except that they keep going up. There are some predictions of a 50% retracement of the rally, I highly doubt that, although it is possible, I'd look for a pull back to 875 still. I will still try to pick relative strength and weakness candidates but likely position a bit more bearish in the short term if we hit 930. My hope is that the retail sales numbers are good tomorrow and the jobless claims are close to ADP and we could see that rally continue and then I will look to take some bearish positions. Overall on the day I only had a small profit.
Overall Return for 2009: 143%
Overall I prob lost 1% on making those moves, IYR ended up finishing higher than where I sold making the move right for the time being but it was still below resistance and my loss limit so I could have held. I was too eager to cut those positions because I saw the market start to rebound and I thought it could be the huge up day I was looking for but for the most part my positions did what they should. I need to remember trading rule #6: Do NOT trade in the first hour unless absolutely necessary. The hard thing is acting early on pull backs has worked this whole time generally going long. My new position in CHK is starting to work out nicely and I think should continue. One thing I have noticed and plan to analyze is holding long term vs. short term trading. FCX, which I originally had July options on at 26, is now at 52 and I exited at 42, thats significant money left on the table. Of course I did get out before it traded in a range for a while so time in market should be considered but it is still something to think about.
The stress test "leaks" sent financials ripping higher today. I really just want a large up day so I can get some low risk put positions. The 930 target is in sight and that will be the place I initiate some short positions. We will be overbought in most of the major sectors and the McClellan oscillator is near extreme overbought conditions as well. Financials seem like a good place to short except that they keep going up. There are some predictions of a 50% retracement of the rally, I highly doubt that, although it is possible, I'd look for a pull back to 875 still. I will still try to pick relative strength and weakness candidates but likely position a bit more bearish in the short term if we hit 930. My hope is that the retail sales numbers are good tomorrow and the jobless claims are close to ADP and we could see that rally continue and then I will look to take some bearish positions. Overall on the day I only had a small profit.
Overall Return for 2009: 143%
Tuesday, May 5, 2009
Will Stress Tests Spoil Rally?
Today was pretty much a flat day in the market. I had a fairly decent day with a majority of my positions working the way they should. This was a nice change of pace. The new risk I took has paid off so far with my calls outpacing my puts. I had a dilemma today because DECK broke back above 60 which is where I planned to exit however I felt there was still more downside risk and didn't want to only have one true put position since I added a new call position today. So I decided to hold due to the fact that it is still not at my loss limit and the extra protection is worth it to me.
This could be a good move as a report is coming out about BAC needing 34 billion more in capital which is way more than anyone ever guessed. Who knows what they will say about it when they are officially announced but as of now the futures are down by over 1%. This could cause the sell off I'd like to have happen before being comfortable getting long again. My new call position could be in danger now however a lot of the selling likely occured today after earnings were announced so I am hoping that has alleviated a lot of the pressure.
JBLU had a huge move up today giving me a 20% cushion going into expiration. If it holds up decently well tomorrow I think i'll be fine. AAPL is still my only concern right now because new news could come out ahead of June and send the stock over my strike price but if we have a pull back tomorrow and get back below 130 I should be ok.
Overall I have 2 long call positions and 2 long put positions so I am decently balanced there. I hope in a pull back my puts outpace my longs and at least limit my losses if not help me profit in the pullback. If we have a good pullback going into the stress test announcements it could create a pop if things aren't as bad as feared. I want to test 875 and hold it before getting long in any size.
Total Return for 2009: 143%
This could be a good move as a report is coming out about BAC needing 34 billion more in capital which is way more than anyone ever guessed. Who knows what they will say about it when they are officially announced but as of now the futures are down by over 1%. This could cause the sell off I'd like to have happen before being comfortable getting long again. My new call position could be in danger now however a lot of the selling likely occured today after earnings were announced so I am hoping that has alleviated a lot of the pressure.
JBLU had a huge move up today giving me a 20% cushion going into expiration. If it holds up decently well tomorrow I think i'll be fine. AAPL is still my only concern right now because new news could come out ahead of June and send the stock over my strike price but if we have a pull back tomorrow and get back below 130 I should be ok.
Overall I have 2 long call positions and 2 long put positions so I am decently balanced there. I hope in a pull back my puts outpace my longs and at least limit my losses if not help me profit in the pullback. If we have a good pullback going into the stress test announcements it could create a pop if things aren't as bad as feared. I want to test 875 and hold it before getting long in any size.
Total Return for 2009: 143%
Monday, May 4, 2009
Short At Your Own Risk
This rally seems to be unstoppable. The more frustrating thing is the fact that the largest moves have happened in the materials stocks I wanted to get back into. ANR could have been another FCX or more if I would have pulled the trigger. The tough thing now is a lot of longs are very far away from reference points, so you either have to be very patient and wait for a large retracement or take a long position off a smaller retracement and hope it doesn't go lower where you get stopped out then it goes up without you.
AAPL ripped higher today and took away most of the gains I had on my short call position. I was afraid this may happen but its still below the strike so I may as well wait and see what happens this week and cut it loose. The incredible thing is that it has moved over six dollars to even get back to where it was before earnings. Those market makers have it made. AMZN is still fine and will likely expire worthless. JBLU moved up nicely giving me more cushion for those to also expire worthless.
I still run into dilemmas of when to get into trades. Do I wait for the end of the day or get in intraday? I guess it depends on your viewpoint. I try to use 1 min charts to get a good entry. The averages were at 900 which is where I thought we would hold and it did hold for a long time until the close. I bought puts on IYR and DECK which both were working until they ripped higher into the close. In this instance had I waited till the end of the day I would have gotten them at much better entry points. I bought VMW calls as well, which also moved up into the close so that is an instance where it worked in my favor. It's annoying because I ended up flat on the day due to those new positions but we do have much more risk to the downside now I just got in a little early. I will have to get back out if my puts keep going against me which sucks, it's almost like always trying to buy in a bear market and getting stopped out thinking that if you go short you're goint to get whipped by a huge reversal. Oh well, I'll keep following the rules and taking risk, the good thing is I waited for good entries, apparently not the best, but good and you have to take risk for it to give a reward.
Housing was unexpectedly strong and China announced better manufacturing numbers so things do seem to be pointing to a recovery. The critical thing will be to see the S&P hold 875, which will now be the entry point I look for to get into my stocks unless they show entries ahead of time. If we hit 930 before we hit 875 I'll look to take more shorts before getting long again.
Total Return for 2009: 136%
AAPL ripped higher today and took away most of the gains I had on my short call position. I was afraid this may happen but its still below the strike so I may as well wait and see what happens this week and cut it loose. The incredible thing is that it has moved over six dollars to even get back to where it was before earnings. Those market makers have it made. AMZN is still fine and will likely expire worthless. JBLU moved up nicely giving me more cushion for those to also expire worthless.
I still run into dilemmas of when to get into trades. Do I wait for the end of the day or get in intraday? I guess it depends on your viewpoint. I try to use 1 min charts to get a good entry. The averages were at 900 which is where I thought we would hold and it did hold for a long time until the close. I bought puts on IYR and DECK which both were working until they ripped higher into the close. In this instance had I waited till the end of the day I would have gotten them at much better entry points. I bought VMW calls as well, which also moved up into the close so that is an instance where it worked in my favor. It's annoying because I ended up flat on the day due to those new positions but we do have much more risk to the downside now I just got in a little early. I will have to get back out if my puts keep going against me which sucks, it's almost like always trying to buy in a bear market and getting stopped out thinking that if you go short you're goint to get whipped by a huge reversal. Oh well, I'll keep following the rules and taking risk, the good thing is I waited for good entries, apparently not the best, but good and you have to take risk for it to give a reward.
Housing was unexpectedly strong and China announced better manufacturing numbers so things do seem to be pointing to a recovery. The critical thing will be to see the S&P hold 875, which will now be the entry point I look for to get into my stocks unless they show entries ahead of time. If we hit 930 before we hit 875 I'll look to take more shorts before getting long again.
Total Return for 2009: 136%
Friday, May 1, 2009
Buyers Emerge Again
What do you know, at around the 860 level buyers showed up again to buy the dip and finish above 875. This is bullish on the surface even if we only finished slightly above resistance. Financials did move back into bull confirmed which is supportive of more upside in stocks, things could just move into an even more overbought condition.
This move is very aggravating because all the positions I wanted to get in have moved by on average 20%. That is not to say I haven't profited from my short options, however there is no comparison to the risk reward that is provided by long directional option plays. I will have to remain patient and look for pullbacks again or look at better lower risk plays.
JBLU managed to finish above the five dollar level so I did not cut it loose but it has been acting very weak. If everything works out the way I hope I could sit and do nothing for 2 weeks and make another 10% if the options expire worthless. One thing I will be looking to do on the next pull back is look to pay for my long positions with some short puts and see how that works out. my only concern is the cost of transactions and having to unwind more positions if they go against me but if I can get paid some premium while profiting that is even better. The other problem is that it will require more margin so that may cause me to not do it if I want to take on a decent amount of positions.
I'll take my slow and steady gains but I'd rather have steady and explosive gains like before, but I don't want to be greedy. If I stay patient and calculated I can have good gains with low risk as I have before.
Total Return for 2009: 136%
This move is very aggravating because all the positions I wanted to get in have moved by on average 20%. That is not to say I haven't profited from my short options, however there is no comparison to the risk reward that is provided by long directional option plays. I will have to remain patient and look for pullbacks again or look at better lower risk plays.
JBLU managed to finish above the five dollar level so I did not cut it loose but it has been acting very weak. If everything works out the way I hope I could sit and do nothing for 2 weeks and make another 10% if the options expire worthless. One thing I will be looking to do on the next pull back is look to pay for my long positions with some short puts and see how that works out. my only concern is the cost of transactions and having to unwind more positions if they go against me but if I can get paid some premium while profiting that is even better. The other problem is that it will require more margin so that may cause me to not do it if I want to take on a decent amount of positions.
I'll take my slow and steady gains but I'd rather have steady and explosive gains like before, but I don't want to be greedy. If I stay patient and calculated I can have good gains with low risk as I have before.
Total Return for 2009: 136%
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