Well that went pretty good for my first day. I hadn’t anticipated being so busy during the day but all hell broke loose after that congressional hearing…
Clarification first. I always make trade recommendations assuming 2 things: #1 we are trading in the money call options – not stocks, I don’t understand why anyone buys stocks except when they intend to sell options. #2 we look to sell as soon as we make 10%. As a rule of thumb, once I make 10% I set a stop at 9%. If I am feeling very frisky, I might sell half to lock in my 10% set a 5% stop on the other half and repeate at each 10% level so remember that whenever I propose a trade unless I specifically say otherwise.
For the sake of virtual portfolio tracking, we will assume that each trade is for $10,000 – again unless I state otherwise. Review of today’s trades: I already had Genzyme and was thrilled with today’s comeback – so much so that I did not sell even though I passed 10% on my $75 option which went from .50 to $1.20 for a 140% profit! As predicted, Marvel was a no trade as it opened at $14 and pretty much stayed there all day – I think people were too shell shocked to trade it.
I know many "professional" stock pickers would take credit for a $4 call but I can’t trade pre-market and I’ll assume you can’t either. So no trade here. People are so shocked about this drop that the Nov. $17.50 put is only $3.50 – no premium. I wouldn’t take this trade due to a possible dead cat bounce but, as I stated, I think this cat still needs to be buried at least another $1.50 so maybe the December 15 put for $1.35 is the way to go. If you buy that and sell the November 15 for $1 you will have an in the money put for December for .35 but, if the stock crashes between now and the 18th you will have to buy out the call which will effectively raise the price you pay but you will still be in the money for almost no premium with a month left to trade.
Oil kept me busy all afternoon. I actually posted a buy on Haliburton but failed to hit post or something which is very sad because I said to buy it at $59 when the 55 call was only $4.20 and we got out at $5.30 for a 25% profit. I hit the Conoco 60 at $6.25 and got out of that for $6.90 – not a bad one. I also hit the Volero call, in at $3.20 but overly optomistic when it shot up to $4.6 and didn’t get out until $4, still that’s 30% in 90 minutes. I was watching a lot of them but I don’t like to have too many balls in the air – Sunoco was a great one that I missed.
AIG never hit my $64 target, people were not as dumb as I thought but it did go from $65 to $66.50 today. I expect it will float around $65 until the 18th but then I will want to see it again.
SNDK was our trade of the day. If I can be this right every day we will all be very rich! Got the $65 put for $6.3 and never sold the November 55 because I was too cheap. The stock dropped so fast that I missed selling for $7 and ended up selling for $7.75 – 22% profit in an hour!!!
I could kick myself for getting out of Google, I hate that stock. My put went to $13.50 after I sold it at $9. Not only that but I was so busy messing around with Oil that I missed Google falling through my break point of $391.70 where it self destructed for the rest of the day all the way to $379.15. I still say it hits $360 before turning back but it’s too risky to bet and Google options are the most overpriced I have ever seen.
Lastly, I did not follow my 10% rule on the SNDK 55 puts because I bought them with free money from my earlier SNDK trade. It went to .75 so fast I was having delusions of the thing actually falling below 55 over the next 7 sessions.
That brings us to my rule #3. Take virtually any option profit off the table within 2 weeks of expiration!
Last, see the sheep that bought up IRBT’s IPO this morning, they jacked the price up from $24 to $34 so fast you would think it opened there. The stock closed at $26.70 and somehow they call that a profit for the day of $2.70. IRobot makes roombas, which are cool but not enough so that I would give them $110 Million dollars to come up with an electric dog walker or whatever they want to work on with the money.
