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.


RazoR said...

took 3.9 pts on aapl, bought solf at 20 off to work...

pcaguy said...

Sold all AAPL , POT, calls for good profit early.
Sold PLCE, SAFM, PLCE, puts for profit.
Sold all RIMM calls for small loss early simultaneous with good AAPL trade.
Bot back in POT calls -PYPFV for $12.15 after POT started dropping precipitously.
Bot OIH calls .
Still holding CRM puts and MOS calls at a loss.
Should I go long DRYS at $89.10 ?

pcaguy said...

Closed CRM puts for small profit.
Now in nice profits on 45 -PYPFV.
I voted. Bot 5 contracts June 90 calls -DQRFR at $6.9 when DRYS was 88.85.
Not too sure about this one. I may get to buy more Tuesday for $6
Just like the POT, OIH, DE trades I think this selloff in commodities will reverse itself soon.
I am unable to find a good PUTS candidate. Maybe next weeks earnings ?


RazoR said...

Question: when you guys sell your options do you sell at market, limit or between the spread?

pcaguy said...

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.

RazoR said...

Thanks Pca, any insight into trading is always great knowledge to have, we all have different styles and it would be nice to congregate with a few more members here, just for feedback...Ok one more question, you are heavy on the options, in your experience, do you have better gains buying/selling or writing? Seems to me the writers make it way more consistantly....especially yhoo lol

pcaguy said...

I do better just buying PUTS or CALLS mostly countertrend trading for a short period of time.
I tried buying the stocks like AAPL and OIH and selling covered calls against them but what I found was that when I found a winning rally the stock was called away from me for profits that were nice. But when those same stocks went down the option premium I got did not recover enough of my loss to matter. So that strategy did not work out for me.
What I found out for myself was that I still had to buy the right stock at the right time even using the leverage of covered call options.
I have trouble buying the high fliers like FSLR, DRYS, etc. after they have had a big runup. As IBD points out that is the correct strategy but I have an emotional problem stepping up. I am hoping to overcome that fear by watching the technical guys like you and Wabbit.
Countertrend trading only works when the market is in limbo and can be a big loser if the market moves in one direction for 2-2 weeks so I have to be aware of the market we're in.
Current positions:
Long 30 DE calls at a loss
Long 5 MOS calls at a loss
Long 45 POT calls at a profit
Long 5 OIH calls at a profit

pcaguy said...

Long 5 DRYS calls at a profit