Best online option trading firm?

Would anyone recommend a good online brokerage firm for option trading? I have been primarily using TD Ameritrade all these years, and when it comes to option trading, it is really rudimentary to say the least. I have just looked at OptionHouse and Fidelity (OptionTrader Pro), while both seem much more sophisticated than TD Ameritrade, I am not sure which one is better. My main criteria are:

1. Speedy execution with easy navigation within the system.
2. Pre-set order entry forms for all major option strategies.
3. Essential option analysis tools, especially for P/L analysis.
4. Automated generation of year-end tax form to be filed with income tax.
5. Low commissions and rates are plus.

Thanks in advance!

Have not got chance to review the charts yet, but if there is a gap up tomorrow morning I will actively look for short setups.

Weekend notes on the market and weekly calls

TA on Major indicies

On Weekly Charts: positive momentum declining for the 3rd straight week; stochastic show developing pullback of over-bought condition; volumes came in high for the second week in a roll; MA10 turning down for all major indices for the first time since the Mid-March bottom; candle formations mostly indecisive for the week.

On Daily Charts: bearish short-term MA bow-tie formation in nascent form for NASDAQ/Russell2000 and fully developed for DOW/SP500; negative momentum stalled for the last 3 sessions as the market rebounded; all show signs of over-sold rebound; MACD in solid down trend formation; volume/candle patterns remain bearish bias; NASDAQ/Russell2000 following the footsteps of DOW/SP500 as they decisively broke their May lows and MA50, but reclaimed those key levels by last Friday.

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

1. Technically speaking, all major indices have broken their uptrend that started Mid-March, and now in the process of resuming the primary down trend that started last November.

2. The market is oversold, and more rebound is possible for next week.

3. Something with deep and fundamental long-term impact on the market occurred this past week: Big Ben and Fed sounded alarm of raging inflation, with a never-before-heard hawkish tone. The inflation picture is becoming gloomy as major Asian economy (China and India) started raising rates this week amid the signs of run-away inflation. Some of those inflation will be exported to US, and with out-of-control energy and commodity prices domestically, Fed may be forced to raise the rate much sooner than they would like to. This is the key reason for my overall bearish view of the US stock market throughout this year, if not longer.


Overall Trading Strategy for Next Week

Once again, while some technical rebounding will occur next week, the market/economic conditions are increasingly unfavorable to SW longs. I will use short-the-rebound approach during this oversold rebound, in addition to seeking initial SW short positions in energy and other commodity sectors. My expectation for the rebound: NASDAQ 2490-MA200; SP500 1375-MA50; DOW: 12500-12750. A close above the top of those resist zones will prompt me to reconsider my TA.

Weekly Swing Trading Calls (holding time 2-5 days for the most)

1. AAPL
SW-L2, ez=155-161 (MA200), IDS <150, CSSW-S3, if it spikes towards 180 in the early part of the week, IDS>MA10, CS>180, IT=170.

2. BIDU: CTT between 300 and 360 with a 1-2% stop, don’t trade the mid range.

3. CME: SW-S1, ez=439-459, IDS>462, CS>MA50, IT=400.

4. DRYS: CTT between 65/68 and 84/88 with a tight stop just across the boundaries, don’t trade the mid range.

5. EWZ: SW-L2, ez=85-88, IT=MA50.

6. GS: CTT between 185/195 and 160/163, don’t trade the mid range.

7. MA: CTT between MA50/270 and 300/310, don’t trade the mid range.

8. PCLN: CTT between 120 and 132 with tight stops.

9. FCX: speculative S3, ez=125-127, IDS >130, CS>128, IT=MA50.

10. Steel sectors:
AKS: speculative S3 around 72, IDS/CS>73, IT=66.
X: speculative S3, ez=180-185, IDS/CS>186, IT=MA50.

11. Energy sectors:
APA: SW-S2, ez=142-150, IDS/CS>150, IT=132
CLR: speculative S3, ez=72-76, IDS/CS>77, IT=65
OIH: SW-S1, ez=215-220, IDS/CS>221, IT=MA50.
RIG: SW-S1, ez=149-152, stop just above 152, IT=140

12. Fertilizer/agriculture sectors:
CF: speculative S3 just under 160, CS>160, It=MA50
MON: speculative S3 around 140, CS>141, IT=132
With the lead of AGU, these names may well break to new highs next week, be patient and any setups must be initiated at least in overbought (daily/60 min) with stalled momentum/topping candle formations.

Notes on last weekend's blog survey

1. Thanks to those (45 of them) who took the survey even though I was a bit disappointed that the response rate is less than 25% of the readership.

2. I am encouraged that over 95% of the participants have a very favorable view of this blog, and I am especially pleased that over 25% of the participants have financially benefited from this blog. Several folks left very kind and generous words, for which I am grateful.

3. Just over 50% of participants like the idea of turning this blog from a "monologue" to a forum where folks like Razor and PCAGUY can regularly post their comments/trading calls, vs. about 13% opposing and 35% unsure.

4. Nearly 80% of the participants expressed their willingness to do their part to increase the readership of this blog. While I very much appreciate that, I am unsure about the outcome from such intention.

In addition, both Razor and PCAGUY favor the idea of a forum where a small group of traders exchange their market insights and trading ideas aimed at improving each others trading, and I am all for it. On that regard, I would like to ask anyone who is interested in that to shoot me an email at flyingwabbit@yahoo.com, and I will figure out the best way to do that while still keep this blog as a valuable resource to the rest.

For reasons I stated last weekend, while I will try to do my best, I might have to cut back the posting a little bit, especially for next couple of months.

I will post a brief version of weekend note/trading calls later today.

TGIF!

Not sure about you, but I am glad the week is over and I came through alright and closed week all in cash. The roller-coast week ended with a draw between the bulls and bears, which means that the battle will intensify next week.

For the day, I bought puts in both POT and AAPL, exited with a tiny profit, just enough for a fancy dinner tonight with my girl, maybe at some Japanese restaurant, and do some sake-boarding.

Learned lots of old lessons this week, well, sort of, just like every other week, but will likely forget most of them and make the same old same mistakes all over again soon. However, I have made one decision: starting next week, I will no longer day-trading. I will start with small position sizes and learn how to sit tight, especially when things are moving in my direction. In other words, I must become cool and sharp, just as Razor. Being ballsy like PCAGUY but without his experiences and deep pockets, the FlyingWabbit will end up as a rabbit stew served at some raucous parties of the bulls or bears, sooner or later.

What's your lesson for this week?

Feeling GASy laterly? No worry, inflation will be as tame as it has been!

Bulls jumped higher on beer and oil in the early going today, only to gap and almost crap as they found that the mixture was not exactly a shot in the arm. Tomorrow's CPI probably will bring a lot of volatility and bulls better hope that the bad news has been priced in the precipitous drop in the past few days.
While I will still seek bottom-fishing setups, I am turning more cautious after reviewing all the charts tonight (especially GE): I will further lower the ez for my stalking list (AMZN, BIDU,DYRS, EXM, CRM, CSIQ, EWZ, LUK, MA, PCLN, GS). On the other hand, if the market gaps up in light of CPI, I may consider shorting AAPL, APA, GS, CF, MON, POT, FSLR, AKS.

The bottom line: with relatively low VIX reading (meaning not enough fear), the expected technical rebound may not worth the risk of further downside, especially given next weeks ER from troubled financial sector plays such as LEH, GS, etc. This might be especially true for those who plan to hold the bottom-fished position for more than 2-3 days.

Kung Fu Bears!

Bulls, especially the tech bulls, gave bears plenty of black eyes since Mid-March, and along way, they started to mistaken the black-eyed bears as the fun-loving, bamboo-eating, trash-talking comic relief pandas, and they paid dearly for that mistake in the last four sessions. With today's drop, NASDAQ (and QQQQ) and Russell2000 finally joined DOW and SP500, breaking both MA50 and May lows. All major indices are oversold on the 60 min charts, but are still 1-2 day away from oversold on the daily charts.

It is quite obvious that at this stage, the easy/fast money from the short side has been largely made for most short-time-frame (3-5 days) swing plays, and like many of you, I would actively bottom fish. However, keep the following in mind when conducting such risky fishing business:

1. The overall market has now resumed its primary down trend that started Oct'07. Be very careful whenever trading against the primary trend, especially when it is going the same direction in every time frame.

2. Bottom fishing here is only for the technical rebound, so try to initiate as close to the possible bottoms as possible (deep oversold+key support), honor your stops, and don't be greedy when taking profits.

3. Watch the momentum and candle formation, especially on the daily chart. Currently, these two indicators strong favor more downside in the near-term.

4. Keep eyes on Leh and WM, if they keep dropping like a rock, the market won't go higher in a hurry as the fear of something terrible persists.

5. Speaking of fear, even the major indices went down a notch today, VIX did break
the earlier high. As I said before, no fear, no bottom.

Position update

I exited my AAPL July 185 calls early this morning when it broke the opening low around 183.5. I need to be a bit more patient with AAPL under the current market conditions. As a restless wabbit, I exhibited extraordinary patience today by sitting tight on cash, resisting urges to go long on stocks such as AAPL, MA, PCLN, DRYS, and GS. I feel that I might get better entry prices in next 1-2 sessions.

As for tomorrow, I might start some fishing if the market gaps down at the open, I will refrain from chasing the long side if it gaps up at the early going.

A special note:

When answering question #4 in my survey: "If a significantly increased readership will drive me to maintain the current pace at the blog, are you willing to help out on this by means such as recommending it to your friends or/and post your recommendation on other venues such as Yahoo stock discussion boards?", about 80% of the participants said yes, and I do appreciate that. May I ask those folks to follow through their words in next couple of weeks whenever you think a post is worth recommending. I will see if there is any noticeable increase in the readership.

Thanks in advance.

Big Ben turns hawkish?!

When Big Ben turns hawkish, the real inflation picture is likely to be worse than most would imagine, and that casts a long shadow for the market in the months to come. In the meantime, bulls tried very hard to hang in there, and they might get some bounce tomorrow. I hope many energy/commodity names will move up in next few days so I can find better entry points, possibly use backspread puts as initial top catching strategy.

I bought AAPL July 185 calls this morning when it broke 183.5, and exited half near 186, while holding the rest for tomorrow. I did not keep all for tomorrow mostly because I am getting concerned that something bad might occur (just look at the charts of LEH and WM) that will drag the market down. I keep half of the position because even though it failed to close above MA10, it formed a nice bullish engulfing candle today. With any help from the overall market, I expect AAPL to test the 188-192 zone in the next day or two, at which time I might exit half of the remaining position, while leave the rest for a possible run to 200.

Also bought GS July 170 put around 169, but closed out for a small gain. This market is becoming very difficult for me to have any convictions.

Another day, another old lesson, duh!

First, thanks to all who took the survey, I will talk about the survey results and my thoughts next weekend.

Position update:

I took a good slap on the face today for my last Friday's AAPL July 185 call position. I managed to cut the loss around 183.5 before Jobs gave the presentation, and later, scrambled a DT put trade when it snapped back near 184 and exited just above 179, and luckily even out the earlier loss and then some. However, last Friday's call entry was a terrible decision as it was NOT based on any technical analysis, but on some kind of "great idea" that supposedly reflecting my incredible insights and convictions. Folks, this is yet another my same old same mistake that almost always cost me dearly. Though I had not committed it for quite sometime, I am extremely disappointed and amazed how sometimes I could so effortlessly leave all my painful lessons behind in the heat of the actions. Disgusting stuff like this makes me wonder if I should just give the whole trading thing up for good.

Let me say something about AAPL while we are at it:

AAPL is at a very tricky point, another bearish candle and close below 180, a test of MA50 would be a given, and a test of MA200 or even the gap near 156 is not out of the question. On the other hand, if it manages to close the gap near 185.5 and closes above MA10 with a bullish candle, it may test 192 or even 200 before July 11. I will keep an eye on how it opens and behaves if it approaches 185/186 before deciding which way to go. Along with the new iPhone, there were also some business model changed announced today, and I wouldn't be surprised that big boys are figuring out the math today before move in/out tomorrow, we shall see. I wonder if you all feel bullish/bearish about AAPL right now.

Today, I was itching at pulling triggers on shorting ACI, MON, MOS, JCG, CF, and long BIDU, GS and MA. But I lost focus while choking on the sour apples. I will go through them again tomorrow.

As for the overall market, let me just say this: if I shorted before last Friday's plunge, I will not exit just yet, and since I did not, I will actively look for the short-the-rebound setup.

The worst is behind us, right? right?!

*************************************************************************
I appreciate those who have voiced their views via the survey, for those who have not done so but care about the future of this blog, please take a minute to complete this very short survey.
************************************************************************

The market rallied off the March’08 bottom for nearly 10 weeks on the notion that the worst was behind us. The rally stalled for 2 weeks before showing signs of reversal in the last week or two. Both DOW and SP500 completed the 1-2-3 reversal last week, while NASDAQ and Russell2000’s break-out on last Thursday have all the looks of a head-fake following the huge sell-off on Friday.

On Weekly Charts: positive momentum all declining; both stochastic and RSI show initial signs of over-bought pullback; volume patterns bearish for the past several weeks with last week’s drop came in on the highest volume since the mid-March bottom; extremely bearish candle formation for both DOW and SP500; MA10 turning flat for both DOW and SP500 while still upwards for NASDAQ and Russell2000.

On Daily Charts: MACD crossed down and pointed down with negative momentum on the rise; DOW/SP500 in oversold; volume/candle patterns clearly bearish; NASDAQ/Russell2000 following the footsteps of DOW/SP500 with their latest failure of reclaiming MA200; DOW/SP500 solidly broke through MA50 while NASDAQ/Russell2000 still have some decent room; all major indices are now at major support levels.

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

1. Technically speaking, the market is at a precarious point: a further break-down of the market leaders NASDAQ/Russell2000 would confirm the trend reversal of DOW/SP500, and puts the testing of March bottom in play. The tenacious tech bulls are increasingly beleaguered, and their chance of lifting the rest of market is slipping.

2. Last Friday’s job report highlighted a new ominous trend: after weeks of overall benign/neutral headlines, the macro-economical conditions are going down a notch, which can be seen clearly in the banking/brokerage sector (breaking down to new lows) and housing sector (approaching previous bottom).

3. Oil price, shot up with the help of short-squeeze in the past two days, has the momentum to go higher in the near term. However, it is getting closer to the end of its parabolic movement. On this notion, I will start to actively seeking SW short setups in oil and all related sub-sectors.

4. The market reaction to AAPL’s new product release on Monday now becomes extremely important: a big sell-off could drive the tech bulls into the woods and a big run-up may re-ignite the tech bulls and save the market, well, for at least another day or two.

Overall Trading Strategy for Next Week

While some technical rebounding will occur next week, the market/economic conditions are increasingly unfavorable to SW longs. Personally, I am leaning to short-the-rebound approach, in addition to seeking initial SW short positions in oil and other commodity sectors. The key is that making sure you only long extremely oversold conditions (both daily and 60 min charts) and short the extremely overbought conditions, and ideally you have solid S/R in the vicinity as the stop references. As the battles between the bulls and bears in white-hot, be agile in locking-in profits.

Weekly Trading Calls

1. AAPL (for Monday):
SW-S1, IF it closes below 179/180 with a bearish candle/good volume, IDS around 182.5, IT=MA50;
DT-L1, if it spikes towards 170 following Job’s presentation, IDS just below 169, IT=175/176
SW-L1, IF it closes above 192 on a bullish candle and good vol, IDS just below 189.5, IT=200.

2. DRYS: DT-L1 if it spikes towards MA50/MA200, IDS just below 80, IT=88.

3. FSLR: CTT between 220/230 and 275/MA50. no mid-range trading.

4. GS: L3, ez=160-166, IDS just below 160, DT-IT around 170, SW-IT around 180.

5. SOHU: SW-S2, ez=88-90, IDS just above 92, CS just above 91 on bullish candle, IT=75/MA50.

Initial short setups in oil and related sectors:

CLR: extremely overbought on weekly/daily; huge run-up in recent weeks; speculative-S1 around 80, with a stop at 5% price move; IT=MA10

RIG: SW-S1 if it spikes towards 150/152, IDS just above 153, IT=MA200

APA: SW-S2, ez=139-145, IDS just above 150, CS above 142 on bullish candle, IT=120.

ENER: speculative S3 around 70, stop just above 75, IT=MA10.

Initial short setups in coal sector:

ACI: speculative S3, ez=80-85, stop just above 85, IT=65

JRCC: speculative S1, ez=42-50, stop just above 52, IT around 35

WLT: speculative S2, around 100, stop with a CS above 100 on bullish candle, IT=85/90.

I will also keep eyes on agriculture/fertilizers (AGU, CF, MOS, POT, MON) for possible initial short setups, but I will be more patient on this group.

Thoughts on the direction of this blog

While I enjoy writing this blog, I feel increasingly difficult to allocate the time and efforts needed to maintain the current pace. This is mostly due to my work demand, which will put a lot pressure on me throughout this year.

I have thought about lighten up the blog a little bit for weeks now, but have not done so because I feel there are many folks reading this. However, now I think more about this, I really don't know if/how much my blog benefit the readers. After all, I have only had less of 10 folks in last several months who have posted comments here, which represents not even 5% of the regular readership. In other words, I am really not sure if it is worth the efforts and time to keep it up if the regular readership is less than 500/day, and discussion participants are less than 5% of the readership.

I feel lucky to get to know folks like Razor and PCAGUY in the blog, whose regular comments/discussions benefit me a lot in both thinking and trading. They are really what I have got out of my efforts so far. One thing I am considering about for the future direction is maybe transforming this blog into some kind of forum where folks like them can post their comments and trades in real time. I myself feel that such format will help me a great deal, however, I am not sure if majority of the current readers will feel the same.

Before I make any decision on this subject, I would like to first hear your views. If you value and care about this blog, please take a minute to complete this very short survey. Obviously, a low response rate on the survey indicates most of the readers don't care much about this blog or whatever I want to do with it.

Thanks a lot!

Click Here to take survey

What a week!

Hog wild, no? Just 24 hrs ago, tech bulls were triumphant but by the end of the week, it is the bears who are on the top of the world! There is little doubt that both bears and bulls got hurt badly this week, I feel lucky as it turns out to be one of the best trading week I have ever had. Unfortunately, the week is littered with the same old mistakes: fear when I should be hopeful! I exited early in both FSLR and SOHU, capturing less than 50% of the entire move. Something has to be done to snap me out of this misery groundhog day!!!

Position update:

** SOHU: exited before I left for work when it was near 86 for a 0.9 point gain in puts, had I hold it, I would've been gained 2.2 points by close!!!

** AAPL: bought July 185 calls around 12.55 when it hit 186 in the closing minutes. I figure it will at least run up a bit on next Monday before Steve Job's presentation, who knows, AAPL might hit 200, but rest assured, I will once again have an early exit.

Got cures?

Tech bulls rule! More to come?

Well, tech bulls answered my last night's question, at least for today as it powered the entire market up. Looks like everyone is betting on a good job report tomorrow, I hope it will be, and if that triggers a big gap up, I might consider fade the gap on some stocks (AKS, CF, FSLR, GS, MOS) for quick DT using recent highs as stop. If the break-out remains intact into the close, the better SW short setups will come next Tues/Weds. Will also keep an eye on AAPL, and may go long if tomorrow's job report comes in worse than expected and it gaps down in the open.

Today was a very weird day in which both oil and market went up big, and both gold and dollar went down. Tomorrow could be even more hogwild, I think some bears and bulls are losing their mind in the heat of the battle.

Stay cool!

Tech bulls keeps running, but for how much longer?

You got to be impressed by the tech bulls' tenacity as of late, without which the market would have rolled over by now. With financial sector breaking down, recent leaders from the energy and solar reversing, and both DOW and SP500 are completing the 1-2-3 reversal, I wonder how much longer the tech bulls can march on alone.

Stalking list:

Below are the names I am monitoring for next two days, especially after the Friday's May employment report. Most long side plays are for technical rebound, which means you should not be greedy when it comes to taking profits.

1. CME: getting oversold on all time frames, L2, EZ=340-361, IDS just below 340, CS just below 350 on bearish candle, IT=395.

2. DRYS: L1 if it spikes towards 80/82, IDS just below 80, CS just below the MA50/MA200 area on bearish candle.

3. EWZ: L2, ez=86-90.3, IDS just below 86, CS below MA50 on bearish candle, IT=95

4. FCX: L2, ez=100-106, IDS <100, CS < MA200, IT=115

5. FSLR: L2, ez=220-231, IDS <220, CS <225, IT=248.

6. GS: S2 if it spikes towards 180, IDS >182, CS > 180, IT=172.

7. RIG: L2, ez=130-138, IDS <130, CS
8. WLT: L2, ez=80-85.2, IDS <80, IT=92

9. X: S1, ez=176-180, IDS >180, IT=170/166.

10. MON: unlike PCAGUY's decisive action, I pondered over 1 freaking hour yesterday when it was around 136, and chicken out in the end. I am now looking for re-entry.

Open Position

I took an initial put position in SOHU today when it was near 91, the decision was based on bearish momentum divergence, overbought condition, and recent parabolic bull run, I will add to the position if it gaps/spikes up, with stops just above 100. IT around MA10.

Who are scared? Who will blink first?

Well, the answer to the first question is that both bulls and bears are scared as seen in the last two hours of trading today when panic selling followed by panic buying. The answer to the second question is yet to come.

On trading

Was too busy to write something during the day, but I bought some AAPL calls in the last hour of yesterday, and exited in the early going today for a small gain. Then I bought some put just before the big drop, but exited a bit too early for yet another small gain.

Random thoughts

1. Following DOW's step, SP500 became the second major indice to break its May low and closed below MA50. Bulls better hope that NASDAQ won't follow the suite or things could get very dice in a dime for bulls. On the other hand, if oil pulls back to 100/110, bulls might get some temporary relief, however, a much steeper drop of oil or the failure of another major bank could place bears in the driving seat. The battle for the supremacy is white-hot!

2. The Lehman mess reminds me a widely circulated report SP just weeks ago saying that because of the aggressive write-offs by all the banks/brokerage, not only the worst is over, but there might be some upside in the coming months. Sometimes you have wonder if those well-informed analysts are not as sharp as we thought, or they were just playing games on retailer stock speculators.

3. Speaking of Lehman, though it might not follow BSC's path, the chart just looking gravely hopeless, I start to think maybe I should buy a small puts just in case....

4. AAPL has been weaker than I expected so far as if it has already priced in the new iPhone release. I still might consider buying calls as close to 180 as possible with a stop just below, but will reduce the size.

Almost back now...

On the trip
Had a very nice trip and really enjoyed the California coast line from SF to Santa Barbara, lots of incredible scenic views. Too bad that I did not have much time, otherwise would definitely do some hiking as there are many great trails, especially in/around the Big Sur.

On trading
Did not get chance to trade much, except got lucky last Friday when my FSLR JUNE 260 put order ($8.1) got hit when it spiked towards 275, and even luckies when it gapped down this morning. Again, I got out too early (at $14.4), but it was a nice gain, which finally pushed my option trading account over the doubling mark, six weeks after I started playing options on a regular basis.

On the market
Looks like the battle is really heating up between the bulls and bears. So far the market is in a well-define trading range, but the momentum is clearly shifting to the bearish side.

Stalking list
AAPL: L2, ez=180-185, stop just below 180, IT=190. I have been very patient so far today.
FLSR: speculative L3, ez=220-242, stop just below 220, IT=260.
CME: L3, ez=380-401, stop just below 380, IT=440.
BIDU: L3 if it spikes towards 320, stop just below 310, IT=350.

Patience is needed for any long side entry.

I am going to be pretty busy with my work for the rest of the week, will try my best to write something here.