Friday, May 23, 2008

Weekend notes -- May 24, 2008

I will be leaving this weekend for a business/leisure trip to San Francisco (Stanford Univ.) and won't be back until next the end of next weekend. As the result, I mostly likely won't be able to trade or blog, though I will try to monitor the market.

Position Update:

I decided to close all the positions mostly because of the trip.
AAPL calls: the second half was closed today near 181.
DRYS calls: took a small losses on the remaining position when it was around 89.
EXM calls: exited the remaining position at even.

I also bought GS June 170 calls near 173 around the noon when it rebounded, but stopped out after it broke 172. I probably would have held the position if I would not be around next week.

Briefly on the market:

Today's drop capped a miserable week for bulls, and not only the 2-month rally came to a screaming halt, but the scenario of testing the March bottom becomes a real possibility.
On the weekly chart: the bears fought back by posting yet another counter bearish engulfing candle, and the volumes rose noticeably; positive momentum decreased for the first time in 6 weeks; stochastic turned down from overbought; other indicators are mixed for the near term direction.
On the daily chart: DOW led the market down with a breaking down through both May low and MA50; SP500 also decisively broke the May low and barely closed above MA50; NASDAQ is the strongest as it managed to close above the May low and enjoyed a comfortable distance from its MA50; for all major indices, momentum finally crossed down to the negative side and rising; both stochastic and RSI2 are approaching oversold.

My feeling is that more and more people start to realize that while the acute stage of the credit mess might be over, the hope of a speedy recovery might simply be a wishful thinking, which is now wilting as oil advances relentlessly and inflation signs can no longer ignored. Technically, the market might have a oversold rebound early next week, but the burden is now on bulls to prove that the primarily trend is no longer down. Personally, I will take next week's rebound as opportunity to close long positions and set up some initial short positions. I will definitely keep an eye on the long side, but probably have to be patient to let the decline run its course.

Have a great holiday weekend, folks, good luck!

The Wisdom Forum: Option tradings according to PCA Guy

Thanks a lot to PCA Guy for kindly sharing his playbook! I sure hope others will do the same instead of just taking in my gibberish :)

As WABBIT pointed out I am crazy for a 62 year old guy.

I had about 7 stocks represented in 11 different strikes going this morning plus actually on PLCE puts I had a total of 55 puts at 3 different strike prices (not normal). It's hard to keep them straight.

Yesterday I had decided to use a blanket approach on my trades figuring that one or two might be big winners and the rest not so good. That turned out to be the case. AAPL good, RIMM bad. POT good, MOS bad. The AAPL trade was the best overall trade, followed by LDG, SAFM, and POT. RIMM is the worst trade followed by MOS. PLCE and CRM each made a small profit.


When I buy my position I place an order to buy 5 contracts at a lower price than it is trading. If it is something I like say POT then I place an order to buy at 20 cents less, and 40 cents less, and 6o cents less and so forth. This is how I got to 45 contracts today on POT because it dropped so much. My highest cost was $13.10 and my lowest cost was $11.0 for PYPFV today.


Normally I fish around for the best price when I only have a few trades going using a limit order. This morning I had been holding 2 different calls on AAPL,& RIMM, and one position each on POT and MOS.

Because the market opened down and AAPL and RIMM opened up in the first half hour I did use market orders to sell my 4 different call strikes on RIMM & AAPL but I knew the stock price was good. I also used a market order to sell my 20 POT calls and it's a good thing because POT never got back to that price today. I just had a feeling it was going to drop more and was lucky. I picked up a total of $4258 on my AAPL, RIMM, and POT call trade closeouts. Lost money on RIMM but made real good money on AAPL. Still holding 5 MOS calls at a loss right now.
I used limit orders to sell my PLCE, LDG, SAFM, and CRM puts.
I picked up $2840 profit on those 4 positions when I closed them out. Fast Money guys seemed to say that people should buy CRM and PLCE last night so I was willing to let them go with thin margins.

I found nothing I was willing to short today in this down market and I realize I am gambling against the current trend on POT, DRYS, and OIH. But these are stocks the Fast Money boys will gloat over so I took a risk that they will get behind them again.

Dang near bot puts on FLS but Karen Finerman really touts this baby on Fast Money.
Next Tuesday's earnings reports don't look favorable for a straddle that I could find.

I hope I'm not too windy but I wanted to answer your question.


Thursday, May 22, 2008

Hang in the balance?

Despite of the breaking down of quite a few high flyers, the bulls not only defended yesterday's lows, but even managed some small gains. If they can accomplish the same tomorrow, things make look a bit brighter next week. However, if the major indices break yesterday/today's lows with decent volumes, watch out below!

Position update:
AAPL: still holding the remaining half calls and did not catch that quick drop to 172 (well, I do have a day job). I might exit the position if it fails to break today's high or breaking 172 on volumes. On the daily chart, it is still a couple of days away from real oversold condition.

DRYS: Took a small profit on half of the call position because of razor's bearish view, will keep the remaining half with IDS just below 88, CS just below 70 on bearish candle. Technically, while it is quite possible that DRYS will rebound above 100 in no time, the huge volume sell-off and extremely bearish candle pattern in the past 4-5 days could signal another inter-mediate term top or at least a trading top. I suppose Razor might sense the same thing as he bought the 70 puts to hedge against his remaining long position.

EXM: Exit half position in the closing moments with a decent gain, which now I regret, will keep the remaining half with IDS just below 46, CS just below 47.8 on bearish candle. EXM acted much better than DRYS, but then again, DRYS is the leader of the pack, if it goes, EXM will have a tough time to stay afloat.

Some random thoughts:

1. On PCA Guy: some nice plays, but you are a crazy dude with too much ammunitions for sure and too much time on hand :) I have never seen anyone who trades options with such rapid fire, just insane.... BTW, liked your post ER puts on CRM as it seems often to jump post ER, then drifting back to where it was shortly.

2. On ESLR: I tend to agree with razor's second thought, today's action appears to be a textbook big-boy dumping case, IMHO. I would not take the long side unless either it drops to 9-10 or it breaks today's high or closes above 12 on bullish candle.

3. On AAPL: I am reconsidering my original rationale of long AAPL for its upcoming new 3G phones release. I looked at what happened to RIMM since its release of a seemingly killer new phone, and I also noticed that RIMM even made a new high before that. Somehow I start to feel that AAPL may be nearly as bullish as I thought, who knows, maybe it will backfill the gap around 156 like Razor said.

4. On MXC, fate and destiny: I remembered I looked at MXC yesterday and I was so bummed out that it does not have options because I was ready to go all in on the puts and I had such a strong conviction that a sizable pullback is inevitable. Well, it dropped over 15 points today, I would've been crushed under the weight of all the gold coins I would've won, instead, oh well, guess it is my fate to make the money the hard way.

Position update

DRYS: Bought June105 calls at 3.1 when it spiked down through 92, stop at 88/90.

EXM: Bought June 50 calls at 3.1, stop 45/46.

Not out of the woods yet by any means, but I like the r/r ratios at this level.

On the second thought, may stop out all long positions if all major indices break yesterday's lows on large volumes late in the session.

Position update

AAPL calls: exited half position when it spiked towards 181 in the early going as planned, will keep the remaining half, which I might consider stop-out if it breaks 176 late in the session.

Stalking list:

DRYS: hoping to get in (with calls) as close to 90 as possible, may act near 92.
EXM: looking for calls near 46
RIMM: looking for calls near 125/128
looking for calls near 172
LUK: looking for calls near 51/52

Bulls are trying hard to defend yesterday's lows, I would be very careful on the long side if those lows are taken out in the last hour of the trading session.

Wednesday, May 21, 2008

Got patience? need direction?

Bulls were probably a bit shaken up by the end of the second big sell-off session, after all, it was pretty much smooth sailing since the the March bottom over 2 month ago.

Technically, the multi-week rally is still intact as long as the major indices close above their May lows or MA50s (SP500 around 1380 with MA50 near 1370; NASDAQ around 2410 with MA50 near 2380). Unfortunately, DOW has just broken both May low around 12700 and MA50 around 12600, following two failed attempt at reclaiming MA200, and that could be ominous for the other indices. A solid break down at these key levels could lead the market to retest the March bottom eventually, but it is premature to consider that at this stage.

Some random thoughts and ideas

1. On AAPL: I got in it (June 185 call at $6.05) primarily because of the pending release of new 3G phones in about 2 weeks. The way it is going now, there is a real possibility that it might test 170 in next few sessions. So to PCAGUY: I might consider stop out the current position if it breaks 176 tomorrow, and may take partial profits if it spikes towards 181 in the early going tomorrow and let the remaining run. I definitely look for more long position with ez=168-172, stop just below 168.

2. On DRYS: Razor is one the best trader I have seen in last several years who give a lot of focus on one stock, cumulatively, I think he has made well over 70 points on DRYS in the last 6 months or so, just some razor sharp executions. I will keep an eye on DRYS with ez=88-95. In the meantime, razor, could you kindly share your strategy on DRYS for the next several days?

3. On agriculture/fertilizers: I kicked myself for not taking short positions yesterday on AGU, POT, MON. PCAGUY: I will not go long on them until they are close to their MA50.

4. On oil/natural gas stocks: I spit on myself for not acting on APA and DVN today despite of the action plan! I will continue to look for initial short positions in this sector. Personally, look at the way the oil and many oil-related stocks have been shooting straight up lately, I feel energy/oil is approaching a mini-crash.

5. On the airline stocks: speaking of possible sizable pullback of oil, I start to look at the airline sectors, especially AMR, UAUA, CAL, for some long plays. But I have not figured out what is the best strategy here, right now I am seriously considering writing puts. Say, any folks here who can recommend the best airline stock for the bottom fishing play based on FA? Thanks!

Position update

Just bought AAPL June 185 calls when it spiked down near 178, hopefully it will close above 180 today, a bit risky right now, but risk is well defined here.
I am also eying on DRYS, may consider calls if it could spike towards 98 today.

Market is dropping like rock, but bulls still got some lives left at this stage.

Monday, May 19, 2008

Sell in May and Go Away?

Today we had the second intra-day last session high volume dump in last four days, and this time, they started at 2 pm instead of 2:30 pm (last Weds). There were some intriguing similarities between the two sell-off: market was steadily making new highs despite of some negative news, bulls were not only buying dips but methodically cornering the seemingly out-of-breath bears, and then all the sudden, some sell programs kick in....

Is it me or some big boys are becoming anxious as May winds down? So far the sell-offs have been done in a orderly manner, which are likely perceived by retailer bulls as yet another buy the dip opportunity, and if you look at just the daily charts, you might not even tell there have been such sell-off. But something smells here, and I wonder if there will be some blood on the street when the third sell-off hits.

Tighten up the stop-loss on your long positions and refrain from initiating new SW longs.

Sunday, May 18, 2008

Weekend notes on the market -- May 18 ,2008

Something got to give?

Too busy this weekend so I am going to be brief here:

On the market:

Bulls have been clearly running the show in the past few weeks, and it is impressive how they shrug off any negative news and buy all the dips. However, the consequences the rocketing oil price, which just broke out, just cannot be overlooked for long. Either oil will experience a mini-crash shortly and the market marches higher, or the oil continues the advance and the market pulls back. In other words, I just don't see the scenario in which both keep rising for extended period, no way.

On the major indices:
1. They are either in or near overbought on all major time frames (weekly, daily, 60 min).
2. The weekly charts still favor more upside movement in next couple of weeks as the positive momentum continues to rise overall.
3. The daily charts show ongoing bearish divergence in momentum. The major indices are either yet to claim or set solid footing on their MA200.

On the overall trading strategy for the coming week:
While there are not a lot of serious warnings signaling the end for the ongoing 2 month long light volume rally, initiating new SW long positions at this stage may not be wise unless you believe that the market will test or even make new highs by this November. On the other hand, trading from the short side must be nimble when it taking profits and stops must be honored.

Weekly Trading calls:

1. AAPL: either S2 using 192/193 as reference, or S2 when it closes below MA10 on bearish candle, IT=170.

2. Natural Gas plays:
looking for small SW-S3 initial positions on DVN (near 130) and APA (near 150).

3. Steel plays: looking for small SW-S3 initial positions on AKS (near 80) and X(near 200).

4. CTRP:
SW-L2, ez=48-MA200, IT=63

5. MON: SW-S2, ez=128.8-132, stop just above 133, IT=MA50.

6. WFR:
SW-S2, ez=78-82, stop 84/86, IT=70/65

7. SOHU: looking for speculative SW-S3, ez=90-100, IT=75.

ER Plays:


Friday, May 16, 2008

Saved by the bell!

Well, I really meant it! The dangling profits from the MA backspread ER play and the CTRP bull put spreads ER play finally fell into the pocket! They were close calls, to say the least!

Well, bulls won the week by counter-engulfing the bears, and that added more confusion to my already clouded mind, in other words, TGIF, it is high time that I shall use some crispy and chilled beers to cleanse my mind and open up my eyes. Who do you think would look stronger from my beer goggle? Bulls or Bears?

Enjoy the weekend!

Wednesday, May 14, 2008

Are big boys still sitting tight?

It was mysterious, yet like a clock work, at exactly 2:30 pm, the first round of sell-off was launched, followed by several rounds of dumping on even higher volumes. For both DOW and SP500, it appears that the bearish engulfing candles on the weekly charts asserted their power at the last moment. As for NASDAQ, well, the underlying momentum just had to drive it up to its MA200. Or, are big boys done the sitting as they cannot help but come in to reap the fat call premiums they had built up for days? Things are getting really delicate now, we all know that bulls have more lives than a cat, but do we know what big boys are up to after sitting tight for weeks?

Looks like I got it just wrong when it comes to how to play CTRP and SINA ER, not sure if the cushion I gave to CTRP will be sufficient tomorrow.

If the market gaps up/spikes up tomorrow morning, I may short AAPL, BIDU, GOOG. On the long side, I will keep an eye on PCLN and RIMM.

Position Update

Ever tasted slow-roasted bear claws whose price is actually dropping thanks to the "what inflation?" report today! Well, we are having that! I cannot wait to see if big boys will crush all those calls by this Friday.

AAPL puts: stopped out yesterday after it solidly broke above 190, again, acted against my initial plan (won't short until at least it reaches 192).

MON puts: stopped out in the morning when it busted through yesterday's high with volume, now eying 128/130 re-entry.

CTRP ER Play: entered a bull put spreads (55/50) for 10 contracts/ea with an initial credit of $650.

don't feel nearly comfortable to take a 50/45 bull put spread, thought about selling May 45 puts, but that felt like a silly play thought with OE so close, the risk is extremely low, we'll see...

In both cases, I decided not to use the straddle play because of sky-high IV...

Sunday, May 11, 2008

Weekly Trading Calls -- May 11, 2008

Overall Trading Strategy for Next Week

As I stated in my “Weekend Notes on the Market”, technically, there are signs that the multi-week rally off the March bottom may be coming to an end; however, the lack of big institutions participation may hinder any sustained trending on either direction.

1. AGU:
CTT between MA50 and the recent high, don’t trade the mid-range.

2. AMZN: CTT between 64/67 and 77/80, don’t trade the mid-range.

3. BIDU: CTT between MA200/MA50/300 and 380/400, don’t trade the mid-range.

4. FCX: CTT between 100/MA50 and 120/123, don’t trade the mid-range.

5. PCLN: SW-L1, ez=130-133, ITS just below 130, CS below 132, IT=150.

Earning Plays:

Saturday, May 10, 2008

Weekend notes on the market -- May 10, 2008

If “the worst is behind us”, what lies ahead?

The surging oil price and the lack of uplifting economic/earning news snapped bulls’ 3-week winning streak, along the way, the major indices fell below some key levels.
On the weekly charts: both SP500 and DOW posted bearish engulfing candles with positive momentum stalled, NASDAQ was less bearish in comparison; stochastic in overbought; weekly volumes remain relatively light.
On the daily charts: for all major indices, the momentum, which displayed bearish divergence in recent weeks, finally flipped to the negative side; MACD has either crossed down (SP500 and DOW) or is poised to do so (NASDAQ); MA10s turning down; stochastic and RSI(2) point to further near-term decline; overall candle formation turned bearish in recent days;
On VIX: while technically it still looks like a broken case, its momentum crossed to the positive side for the first time since late March, and with MACD now crossed up, the chances are that it would continue to rebound in the near-term.

Thoughts and observations about the current market conditions and near-term outlook:

1. Technically speaking, the market is at a crucial point. On the one hand, both weekly and daily charts show many signs suggesting the multi-week rebound might be coming to the end, on the other hand, the pullbacks came in on light volumes. As the major indices now at some key support levels, the lack of big boys participation on the sell side may limit the extent of the decline.
2. As the fuel that has been driving the bullish movement in last 6-7 weeks, such as FOMC rate cut and Q1 ER, is running out, bulls are in urgent need to find new fuel in order to sustain the march. I must say that it hurts my head try to find any such fuel in the coming weeks for bulls.
3. Speaking of fuel, the pain caused by the ferocious advancing of the oil price has finally become too much to be overlooked. The impact is quickly spreading from the daily life of individual people to the bottom line of many companies (just look at FedEx earning warning on the Friday after the close). While I feel that oil is entering a parabolic moving stage that might be followed by a mini-crash, the chart suggests that the break-out run is no where near the end of the course.
4. Any one who holds bullish view on the market for the coming months should be really concerned about this week’s huge jump of the consumer debt. Bulls better hope that both economy and housing market will turn the corner in a hurry, or what are described in this article ("Barely surviving on credit cards") could become the harbinger of what to come down the road.
5. Next week’s inflation report will likely shape the path for the market in coming months. Any hot than expected inflation readings could pretty much extinguish any hope that a new bull market is emerging, to say the least.

Friday, May 09, 2008

Position update

PCLN Long Butterfly Spread ER Play:
Took the chances for non-simultaneous executions: covered MAY 125 call at $13.9 when it fell to near 138; sold both May 115 call (at $26.2) and 135 call ($8.05) in the early going when it was around 141. The net profit is just over $400 (what can you say, Razor's prediction was right!). Had I closed all the positions simultaneously, I would have lost any where between $60-300, which was not bad. The key of this play is that as expected, the IV absolutely collapsed post-ER (near 30% drop!!!).

MON and AAPL puts:
still holding with small profits as my stops are very close.

On the market:
not sure if the market has found intra-day low yet. It is worthwhile to point out that if the major indices close poorly today, there will be a bunch of bearish engulfing candles on the weekly charts, which would spell trouble for the multi-week rally. We will see, maybe bulls can come back later today...

Thursday, May 08, 2008

Butterflies in My Stomach-- PCLN ER Play

This is a tough one, PCLN moved post-ER in Qs, so a long straddle would seem to make sense, except that the IV is extremely high and the premiums are horrendously overpriced. Which means if it does not move more than 10%, a long straddle could be doomed as the IV will collapse for sure. So, here is what I have done today:

Strategy: long butterfly spread

Sold: 4 May 125 call at $5.9
Bought: 2 May 115 call at $11.1
Bought: 2 May 135 call at $2.45
Net debit: $3.5
Maximum loss: $350 (excluding all fees)
Maximum profit: to da moon (yeah, right!)

Also bought 2 puts each for AAPL (June 180) and MON (June 120) earlier today, but did not pull trigger on SOHU June 75 put.

Now, if you excuse me, I just got butterflies in my stomach!

Wednesday, May 07, 2008

Smack down!

Well, guess bears finally decided that they have put up with the arrogant bulls long enough! However, I wouldn't bet on an easy victory by bears just yet, in fact, bears have to push the market below last week's open/low by the end of Friday in order to have any possibility of cap the multi-week rally that started in the Mid-March bottom. For aggressive bulls, maybe it is worth a shot if the market gaps down/spikes down big tomorrow morning; aggressive bears, on the other hand, can take their chance if the market gaps up/spikes up in the early going tomorrow morning. If you are a sheep, sit tight is the best thing for now.

I decide to go easy on straddle plays for the time being while trying to spend some time to really research the issue until I have a quantitative understanding of all the moving parts as well as the potential edges. On the other hand, PCLN keeps flashing in front of me, hmmm

Tuesday, May 06, 2008

Straddle this!

Is it me or anyone else start to get this feeling that bulls are becoming increasingly invincible with just about every passing day? If you do feel this way, you might want to tighten-up the stop-loss of any long positions you have.
I must say I am impressed by what bulls did today, which was best seen in FNM action. I start to think that a leaking ship, even if the leaking is very bad, does not necessarily doom the crew, IF the tide (liquidity) is high and fast, the crew still has the hope to reach the promised land, but to have a good chance, they would either need to plug all the leaking holes before too late OR the tide must keep rising and forwarding. Now, which way will this story go?

Noticed that most of ER so far this week turned out non-event with less than 5% move, which, when combined with collapsing IV, would doom most of long straddle plays. So why not reverse the thinking and play the short straddle on them? I mean, after all, most ER produce less than 5% post-ER movement, right? Hmm, you think I am on something here? OK, that's it folks, I need to do some research on this now....

Monday, May 05, 2008

Now what?

Bulls certainly know what they are doing, but what about bears?

On Yahoo: turned out to be a big mistake not to take a straddle play last Friday, my primarily concern was a prolonged drag on the negotiation process, did not expect MSFT pulled out so swiftly.

Thought about applying the long straddle to NILE/BEXP/PCS/OSIP/ONXX for their ER plays, but ended with an empty hand either because of high IV readings or low volumes, or both. Among those that I may keep eyes on for the rest of week are: CTSH, RIG, CELG, DWSN, LEAP, NVDA, PCLN and VRSN.

Some nightly observations and thoughts:

1. AAPL: someone just asked for my view. Well, AAPL bulls are pretty determined to take it to the new high, which might occur before the expiration of May options. However, it is overbought on every time frame, so I would not be surprised if it pulls back to 170 or MA10. I have no desire to long it at this level, I also won't play a cute bear before it reaches around 192 at the minimum.

2. The steel sector: something was going on in X as it surged in the closing hour on very heavy volume, AKS and NUE are also poised to break to the new highs tomorrow. There are some topping signs, but might not be wise to hit them head on right now...

Sunday, May 04, 2008

Weekly Trading Calls -- May 4, 2008

Overall Trading Strategy for Next Week

As I stated in my “Weekend Notes on the Market”, technically, the market should continue trending up for another 1-3 weeks at least, therefore, aggressive SW-S should be generally avoided. However, over-perusing from the long side could be risky as the major indices in overbought conditions and the big boys continue to remain on the sideline.
I started to dip my toes into the option trading swamp last week with some encouraging successes, especially with the long straddle strategy in ER plays. I will continue the exploration, but may focus more on research of such strategy to find ways to maximize the r/r ratio.

1. AGU: CTT between MA50 and the recent high, don’t trade the mid-range

2. AKS: SW-S3 if it spikes towards 68/69 again, IDS just above 71, CS just above 70, IT=MA50.

3. APA: CTT between 120/MA50 and 135/142, don’t trade the mid-range.

4. CF: CTT between 120/MA50 and 146.5/155, don’t trade the mid-range.

5. FSLR: SW-S2 if it spikes towards 300 again, IDS just above 310, CS just above 300 on bullish candle, IT=MA50/260.

6. MON: SW-S2, ez=123-130, stop just above 132, IT=108/MA200.

7. MOS: CTT between 110/MA50 and 135/140, don’t trade the mid range

8. POT: CTT between 165/MA50 and 207/215, don’t trade the mid-range.

9. V: SW-S2 if it spikes towards 87 again, IDS just above 90, CS above 87 on bullish candle, IT=MA10.

10. WFR: SW-S1 if it spikes towards 70, IDS just above 72, CS just above 70/MA200 on bullish candle, IT=56

Still working on the ER Straddle Play List for the next week.

Saturday, May 03, 2008

Weekend notes on the market -- May 3 ,2008

Back to the bull market?

The growing optimisms aided by the rate cut and better than expected key economic reports, the bulls charged ahead and registered the 3rd consecutive winning week. Along the way, the major indices broke out the 2008 trading range and closed above the key resistance levels.
On the weekly charts: for all major indices, positive momentum rising for the 3rd straight week; both stochastic and RSI(2) solidly in overbought; candle formation remains bullish; weekly volumes remain relatively light.
On the daily charts: for all major indices, positive momentum stalled in recent days as the prices moving higher; both stochastic and RSI(2) in overbought; candle formation overall bullish; short-term MAs in confirmed bullish formation; DOW closed around MA200 while the other two are poised to test their MA200.

Thoughts and observations about the current market conditions and near-term outlook:

1. Technically speaking, the market should continue trending up for at least another 1-3 weeks. However, there would be a lot of back and forth motions as the major indices in overbought conditions. The climbing may also lose steam along the way as the ER season comes to the end and no other major economic news event for the next several weeks.
2. Big boys continue to mostly sit tight despite of the growing optimisms and bullish sentiment. This, combining the big drop in VIX, may actually setup a sizable pullback as the major indices approach key resistances (SP500 MA200-1440, NASDAQ MA200-2540, DOW 13250-13700).
3. Despite all the bullish chats, macro economic conditions are WORSE than most people think (especially the retailer bulls), just look at the Fed’s rate cut in spite of their increasing concerns over inflation and its liquid injection remains at feverish pace.
4. Market has chosen to ignore the inflation issue right now. However, if we actually never really have had a recession (as some headline reports suggested) and now the economy is rebounding, the inflation consequences may emerge stronger AND SOONER than Mr. Market expects. We all know what raging inflation could do to the market.

Friday, May 02, 2008

MicroHoo or YaSoft?

Thinking about doing a straddle on YHOO as a buy-out play, but could not pull the trigger because I am uncertain about the potential room for any downside move.

Thought about getting back into V put position, but the early stupidity really messed up my psyche today.

In other words, I need do some serious beer-boarding on myself tonight!

Update on position and stupidity

I am really pissed off, and here are what I have done so far today:

1. BOOM ER Straddle Play:
Closed before leaving for work for a profit just over $1150 (about 41% gain), could've been more patient as the puts went up over another buck..

2. WLT ER straddle play:
Closed in the opening with a loss of just over $200 (about 15% loss). I should've waited a bit more as WLT rose steadily after I exited, and it would've been a winner of a few hundreds.

3. FSLR short position:

stopped out near even, was I wise not to take profit yesterday when I was over 11 points in the green?? Was I wise not to stick to my original stop (just above 285)? Why I am half-assed on both accounts?!

Here is what really infuriated me:

4. V -- Short the top play:

Bought June 90 puts when it broke 86 in the early going, took half profit when it was near 83, AND for some reasons, placed a sell order for the remaining half, which was hit while I was on my way to work. So I ended up falling from the wagon with barely 25% gain, what *(&#R%# is wrong with me, I mean, now I start to DT options??

I might just buy Razor a few drinks and ask him afterwards to stab my dumb ass with his razor sharp knife...

Why I am always fearful when I really should feel hopeful? Why I am always hopeful when I really should feel fearful?

Just hopelessly stupid!

Thursday, May 01, 2008

ER plays on WLT and BOOM

Well, here we go again: picked BOOM because it is a very volatile one (I vaguely remember Razor cut himself a quick 5-6 points profit last Q); picked WLT because it has been on the tear and it could move big after ER. Below are the entries:

BOOM ER play -- Long Straddle Strategy
** Bought 5 May 45 put -$1000 ($2, 71)
5 May 45 call -$1875 ($3.75, 70)
Total risk: -$2875

WLT ER play -- Long Straddle Strategy
** Bought 2 May 70 put -$910 ($4.55, 61)
2 May 70 call -$510 ($2.55, 59)
Total risk: -$1420

IV are high for both setups so I might be dragging my feet here. Good sign that as of now BOOM dropped over 10% in AH, need to see good movement on WLT too..

Things are definitely looking very well for bulls, but why the heck I feel so reluctant to go long here?

Position update

AKAM straddle for ER play: closed in the early going with a loss near $700. The lesson learned here: if a stock does not have a recent history of dramatic post-ER move, be careful about the straddle play, at least using smaller sizes.

FSLR: shorted (half position) at 273.78 after it broke 275, stop just above today's high, IT=250/MA50. thought about using the put while it was still around 280, but the puts are too pricey.

The market is rallying big time as the major indices are piecing through major resistance zones. Obviously bulls feel that the recession might be ending and the inflation is not a near-term concern.

Any bears dare to bet on tomorrow's April Job report?