Mattress plays – I hate to talk about them while we’re dropping as the worst thing you can do is initiate a play in a panic – NEVER buy into the initial excitement! But, if you don’t already have them the rule of thumb is to take 2X of whatever costs $2 and 1X of whatever is one bracket below that. Right now that is the Aug $136 puts at $2.05 and the Aug $135 puts at $1.67. When the $135s get to $2 you add 1x to them, sell 1X of the $136s and add 1x of the $134s setting .25 stops on the whole group (your 2x position in the Aug $135s will have a blended basis of $1.84.
Sorry, very important to mention that I am currently scaling into 1x DIA $137 CALLS as an upside play and I will roll these down if the $136s get cheap and then possibly DD.
AAPL – WOW! $140s opened at $10 and are now $8.45. Tough call if you didn’t sell yet but if they hold $145 I guess it’s worth riding a little. Obviously the opposite is true for callers – now way do I pay them unless I have to!
Buyers are coming in but it remains to be seen whether they run into another wave of selling. XOM was a very disappointing $2.30 ($1.40 basis) but I’m happy to finally get a win out of them! Now I like the Sept $95 calls at $1.60 (was $2.80 yesterday) in case they announce an even bigger buyback against the Sept $90 puts at $3.25 but scaling in slowly to the puts as I expect at least a little bounce. XXX
NFX – I forgot I had them! Thanks so much Z!!!
CROX – never buy out your caller into the initial excitement. He’s got a massive premium and we are on par with him as the spread cost us a nickel. Again, watching the 1 minute chart will make you make bad decisions every time! We sell callers to get the premium. We get the premium by waiting for it to expire. How many moves do I make on the LTP? VERY FEW! How much does the LTP make? 157% so far this year. If I can make 157% by being very patient, conservative and cautious, does it really make sense to take a risk to try to get 200%?
Nat gas build 71Bcf, a little more than 65Bcf expected, firmly under $6 now on gas. This is nothing for XOM or COP to get excited about but neither was yesterday’s oil number and they acted like it was a major rally point.
QQQQ $50s for .69 good way to play FFIV, AAPL, BIDU, QCOM, SYMC strength. XXX Oh sorry, SYMC still going down so SYMC Sept $22.50s for .35 are a good way to play them. XXX
AAPL – to be very clear, I am still in all my long positions as I stick by my targets from yesterday but I am happy to take non-greedy exits on close calls and lower my risk as well.
The VIX does give me some hope that the markets can still come back but now it’s calming down while the Dow is still down more than 100 and that is a very bad signal.
BIDU – buying 2x $260s for $1.77, they will gain $3 per $10 in the short run. Selling 1x $220s for $9.95, which should gain about $5 per $10 and buying 1x Sept $260s for $5.50, which should gain about $3 per 10, for a net .91 and hopefully some leftover value down the line. XXX but you need margin.
DO – I like RIG better, the GSF deal will make them a powerhouse and RIG will be the symbol they keep. RIG Jan ‘09 $105s are $21.15 and you can sell current $115s for $2.35 $3 out of the money. DO Jan ‘09$100s are worth the extra $5 at $20.40 and the $110s are also good to sell at $2.80. XXX to both of these and if the stocks take off on you they are set up so it’s easy to jump to 2X on the out of the money calls and double up on your sells so it will be hard to get caught short on this one. To the downside, just roll with your caller to a lower spot.
AAPL gathering strength, it is very important for them to break $150!
Goldman et al being decimated, unwinding of deals hits them where it hurts.
PTR $150 puts at $2.50 were my radio call yesterday, looking pretty good!
BG killing me with ATH!
T doing well.
Holy cow, major sell-off now, legging down again, another layer on the mattress with the DIA $135s at $1.85 (for the moment). XXX
Ka-Ching on those XLE puts BTW!
TIE – I agonized over keeping those yesterday and made the wrong decision. I still have 10 Sept $35s, no longer ahead.
XOM – calls are only as a cover to the puts I kept. By themselves they are a very risky gamble. Now it makes sense to spread them with the Sept $85 puts at $1.95 though so you can start with the calls and pick up the puts when/if it runs out of gas on this bounce. XXX
1490 is holding because trading curbs are in again. Fat lot of good that did us yesterday…
QQQQ $50s now .55 so I’ll DD here on the trading curbs, yesterday we got almost a full recovery off the curbs so it’s worth a gamble to prevent me from jumping out of my puts too soon. XXX
DIA $137s – see 9:45 comment. Average entry is $2 and I will now roll to $136s for .40 if I have the chance (when I do this roll I buy about 1/2 of the $136s and set a .10 downside stop on the $137s at which point I buy the second half of the $136s and set another stop on the last of the $137s so that, if I catch a bottom, I have 2 layers working my way).
DIA – currently in 200 $137 calls at $2 avg. Bidding for 100 $136 calls at $2.20. If I get them I will set a .10 stop on 1/2 the $137s, and a .20 stop on the other half and I will try to buy more $136s for $1.80 the $137s are now $1.90 so I expect to lose about .30 on the roll, giving me a .30 basis. Once I am down more than .60 I will consider increasing my call volume to lower the basis a bit (so I can get 1/2 out on a spike to even). If you need more clarification than that it will have to wait for after hours.
GOOG flirting with $500, not pretty if it falls.
DIA – darn I forgot to mention and it’s very important – I don’t just roll like an idiot, I stopped out and I’m waiting for things to settle but the losses are 300% offset by the gains on the puts. XXX
We may be heading for -500 at this pace!
I don’t think you can put a lot of stock in calls on this kind of fall into curbs. Curbs mean that nowhere near the sellling that is demanded is being filled. That makes sense when there’s an event like 9/11 or some crazy rumor but this market is dropping because of reality and that’s not going to go away if people sleep on it. What is going to happen is people are going to start realizing that Phil Flynn and Larry Kudlow and Jim Cramer are idiots who’ve sold them a bull of goods and wouldn’t know fundamental market issues if it bit them in the ass. When people lose faith in their bullish religious leaders, the collection plate (the market) suffers quickly!
SCI – when the dust settles but don’t try to save them.
13,500 held well but 13,600 was the 50 dma so if we don’t retake it, there could be a lot more trouble ahead. Sorry, I meant to say A LOT!
YHOO – I have the $30s so it’s out of the question for me. See my comments on YHOO earlier, I’m simply hoping there’s a buyout rumor before October so I can get the hell out but in a $10KP I can’t take that chance on selling a close call like that. I do endorse rolling down to the $25s for .43 and selling the $25s for .47 though. XXX
Holy cow, PTR down $5.84 – I love being right on a national broadcast (even if no one actually watches it…)
I think I menitoned I moved a lot of my DIAs to the Sept puts this week so that also helps as it let’s me effectively day trade the Aug contracts with tighter than usual stops as I still have the strong and long protection of the Septembers.
Every time they lift the curbs programms start fighting to sell – very bad action and I’m not buying any calls, index or otherwise until I see 13,600 prior to the day’s end (and even then I’m not too keen on them).
DIA – well I still have all of mine up to $139 because none of those stopped out (the benefit of length) but I’m up to (down to) Sept $133 puts, now at $3.25.
Understand this: They are halting electronic trading every 50 points or so. 90% of trading is electronic so 90% of the sell orders are backing up until the lower the curbs so do not read ANYTHING into a pause or even a small bounce in the indices! There is nothing to buy and may not be until we get all the way to 12,500 with a test of 13,000 being a near certainty if 13,200 doesn’t hold.
QQQQ rather than buying DIA calls again I am going to roll down my 200 $50s at .62 (avg) to the $49s at ,74 for + .35 and then DD at .74 to end up with 400 at .92. If I get a bounce here, I will be taking at least 1/4 off but the Nasdaq is down 3%, same as the Dow and the S&P but I think if we are going to have a recovery it had better be led by the Nasdaq or I won’t be buying into it anyway. XXX
XOM down $6! This is so great! Sept $95s are holding up well at $1 so I’m just going to wait and DD rather than roll. Maybe at .80. XXX
JOSB – hmm, I rolled to 5 $35s and sold 4 Aug $35s but that isn’t as attractive now. At least roll to the $40s for .75 and sell 4 $35s for $1.40 to get in a better position at no additional cost.
DIA puts, I’m looking more the other way now as this bottom finally held. $136s for $1.93 are the way to go at the moment.
XLF $35s for $1.50 also make nice upside protection in case the Fed says something calming into the weekend. XXX
OIH (now you know it’s cheap!) Oct $195s were $8.75 on Monday, now $5.50 XXX
SNE – do not bet against! Weak Yen may have made them mega-bucks.
SHLD – looks like Uncle Eddy may have stepped in at $138, if we see another floor put in there, it may be a good spot to bet on holding.
Remember how nicely EDU was recovering yesterday? Now it’s back to $5.80 so I’ll DD. XXX
Be careful here as Paulson said subprime is contained and added 120 pts to the Dow, all evidence is to the contrary and they slapped curbs on the NYSE to lock in those gains so I’m not too sure this is real right now. It’s all about tomorrow but I’ll reestablish a neutral stance for tonight with my Qs and the DIA calls against the DIA $135 puts, now $2.78, the rest are off the table.
Josb – did I miss that one? Sorry then, I do try to log all of those. I think when I made it I was thinking it might be risky but it did seem to work out so far. Still down $700 on the position though.
Rally next day. Also a high probability that it’s a false rally so be doubly careful!
Cash is very good – make no mistake I am 80% cash, this is just fun trading…
If the FXI is a good predictor of the Hang Seng, we could see a 1,000 point China drop tomorrow to get us rolling!
http://finance.yahoo.com/charts#chart12:symbol=fxi;range=1m;compare=^h si;indicator=volumema+macd;charttype=candlestick;crosshair=on;logscale =off;source=undefined
Posted July 26, 2007 at 3:40 pm | Permalink (Edit)
XLF – sorry $33s!!!!
Wow 97% of S&P 500 is negative!
CME and GOOG recovering.
EDU offered $5.80 for Jan $55s but no takers.
