Wednesday, July 02, 2008


I felt sad all day long. You all know that I have been calling tops on the coal sectors in the past few days, and on Monday, I finally picked PCX and bought 10 puts@$8 when it was around 154 as a SW trade. But yesterday, in the first concrete sign of breaking down, I once again could not resist the temptation and exited at $8.8. Well, it got destroyed today with the puts closed at $19.7. In other words, I made $800 on a potentially $11700 movement and maybe counting, and that is not even 10% of the move. I have never known what a demoralizing victory is until today. Even though I made over $1000 today and on my way to 13th consecutive winning week, I felt low and blue because I see the cold reality: I just never learn from my mistake. I will take the upcoming weekend to think what I need to do here, maybe I should stop trading for a while, I don't know.

Trading update:

1. APA: bought puts when it was around 144 and exited when it was testing 137.

2. AAPL: bought puts when it was around 176.3 after saw the intra-day top, exited around 174.5, another poor execution.

3. Things did not get any better as the day went on, bought AAPL calls in the closing moments, and still trying to figure out why I did that.

On tomorrow's trading:

The market showed real fear late in today's session, and with jittery already spreading through the tech sector thanks to NVDA's ER warning in AH, a much worse than expected June job report tomorrow morning could really trigger a capitulation. I suppose that if we see a 2%+ drop in major indices, we could start nibbling a bit from the long side. My focus will be primarily on ag/fertilizers tomorrow, and I will avoid coals from the long side despite of the huge losses in those names today, they will rebound for sure, but could drop another 10-20% before that occurs.

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