I just can’t buy into this rally. I want to, I really do but it’s based on such a poor premise…
You can still make the DIA trade, currently the $135 puts are $3.40 and you would be better off selling the Sept $134 puts for $1.25 (I had sold the $135s for $1.75 to provide upside protection but now I’m rolling those to the $134s). XXX
BIDU – sold 5 at $5.40 and 5 at $8.25 yesterday, now $17 so I roll to 20 $260s at $10 (assuming it rolls over here) and, if the market runs, I will buy Oct $270s to cover, now $18.05 which cuts my margin requirement and guarantees I collect the $8 premium. I then set a stop on the Oct $270s to go back to naked at $15 since that means I’m back on track on the calls I sold. I can even set an automatic rebuy if it crosses back over $15 to recover if we have another run. XXX (but hell on margins!)
PCLN – $80 oil is bad for travel. Period. I’m holding unless I get forced out by the Fed.
BIDU Jan ‘10 $230 puts at $58, will sell puts later. XXX
DIA – no I sold the $135 puts against them, taking them out here, hoping for a rejection at 13,500.
BA just had someone drop projections on them. As to general rolling to October – I’m already bearishly positioned as I have held many in the money Sept callers so, at this point, there is no reason for me to switch as my Sept callers will take a penny for penny hit to the downside while the Octobers I would roll to will only increase in value on the upside. Still this is simply incredible….
NILE – BBY numbers showed very strong high-end consumer spending.
Rolling – I very rarely do a roll as a combo, usually I’m hoping to guess a top or bottom (again!) and I add the roll position first and then hope for a bounce with a tight stop so I can get a dime or two back on my older position.
13,600 was the upper level of the range we’ve been watching.
DIA – Originally I had the Oct $135 and $133 puts, which were getting beaten up so I sold the $135 puts to stop the bleeding at $1.75, now 1.40 – I’m taking these off the table as .30 is hard to come by and I’m now selling the $134s as it gives me an extra 100 points of leeway but they are down to $1.02, which is an unattractive sell right now so I’m hoping we drop a bit first and I can get $1.25 or better.
Oil – I was on the other side of the trade from $40 to $60 but once oil hit $60 it just got way overpriced. At this point I wouldn’t be surprised to see a $15 sell-off in a 5-day dunk so I really do think there is going to be a bigger score on the downside than the up but possibly we will have to get XOM back to around $95 first so I initiated positions that I will roll up (in strike) and out (in time) for about 3 months before I give up.
I did a DD on the Oct $135 puts at $3.20, now $3.10 XXX
Out of GS Oct $195 calls at $7.70 but leaving the ones that were covered by $190s. XXX
Posted September 18, 2007 at 12:06 pm Permalink (Edit)
Based on this morning’s action, I am very wary that we will go up after the Fed, regardless of the statement as the most logical reason to take the market right up to a critical level like 13,500 is to use the Fed as an excuse to rally on whatever they say, creating a frenzy of retaill buying and a short squeeze (just tested) that could take us up to 13,700. That would be a 66% retrace (Fibonacci number) of the drop from 7/20 to 8/16 (30 days) in just about 30 days and would either be a very critical breakout or a “lower high” that may be followed by a deep correction.
I still like my Dec QQQQ Dec 31s $50s for upside balance and I bid on some more at $2.15 (no bites yet) as I think they can go nuts if they break $50.50. They are also a little less damaging to the downside than the DIAs.
BIDU is now $230 puts, rolled for $3 and looking at possibly rolling to $240 puts for another $3. I sold the current $250 puts against that position for $9.30 so I am not too concerned about that side of it.
Cancelled my QQQQ order for now, internals took a nasty turn, MSFT got ugly and GM may cause huge damage if a deadline is set (not to mention I still think a .25 cut will at least cause an early head fake down).
IRBT – that was a first entry to test waters but the waters are cold so I’m waiting right now. My Dec $20s are down 28%, not enough to bother doing a DD and I’d rather roll to the $17.50s at $2.15 as those are down .50 from when I decided I didn’t want to buy them so at $2 I will buy an equal amount of the $17.50s and then decide what I want to sell against the set (if anything).
IBM – still have the sold calls, not impressed enough with today’s move to give my caller a .90 premium for 72 hours.
LVS – of course I have puts! I have the Oct $115 puts at $5.18, now $2.65 and I sold the Sept $120 puts against them for $3.10, now .90. Depending on the Fed I may roll my putter to the $130s to pick up another $2.40 in premium but I am not rushing into anything that puts me in a more bullish position until 2:16 other than the Qs as I need some upside cover.
SHLD and YHOO not joining the party, transports don’t seem very enthusiastic with oil at $81.
I really DON’T like the kind of stocks that are rallying (ouch on BIDU by the way, I had to cover) as it’s FRE, RDN, BX, MCO… lots of beaten down companies with no news other than the Fed waving their magic wand at 2:15.
Anyway, moral of the story is that after spending 4 hours looking for a reason to be bullish I’m actually more bearish than I was this morning so I’m tighening up my puts, concentrating on the DIA Oct $135 puts and I will keep my finger on the triger of the Dec Qs as upside protection but not until the Nas breaks 2,600 along with the Dow 13,500 and the S&P 1,490 but I really think that even a 50-point cut is already fully reflected in these levels, where we were in early August and there is nothing that has happenied since then that justified making a new base at 13,500, up 1,500 from August of last year.
I’m sorry to be bearish and I promise to go with the flow if we break those levels but right now I think the market glass isn’t half full, I think it’s all full and about to spill…
CHK – won’t need to roll when they exprire worthless.
DIA spread of Jan $140 calls at $3.90 and $130 puts for $4.05 is a nice way to work back into a longer strangle where we would add to or roll down whichever side happens to be losing as we build into the position. XXX
Filled the back end of my BIDU ‘10 $230 puts at $58 as it finally turned down.
Uh-oh! Check out AAPL, GOOG and XLF – that’s not a good GOAX turn…
50point cut! Damn!!!
Wow, way too may people hitting refresh. Bounce off 13,600, let’s watch Nas 2,625, S&P 1,500 to confirm breakout but obviously this is mega bullish until people regains their senses.
They cut the discount rate too, this is the kind of thing you do in a collapse. I can’t wait to see the minutes but that’s a long way off, this is that short squeeze we expected but I’m not dumping my puts into the excitement and I am keeping tight stops on my calls as a 100-point gain after getting everything Cramer wanted just won’t cut it.
The Fed did say inflation remains a concern but that’s not bothering the oil patch at all. The 10-year is holding 4.5 for now, 30-year at 4.80, those numbers need to be watched, energy patch is out of control, TOL up 5%…
Short have not covered! OXPS totally crapped out, it’s going to be tough to get orders in if everything is like this, cant’ get anything executed at limits and forget market orders!
I took DIA $139 puts to hopefully cash in on some profit taking as I simply couldn’t get out of the lower calls fast enough, now I could really use a nice 100-point drop but this is really amazing.
Russelll up 3%, that’s major, energy sector and financials out of control…
Trading curbs!
X went nuts.
Time to not panic if you are short, you don’t want to jump into or out of things if you are caught either way at this point, we have to see what sticks
13,700 coming up, so much for logic! Oh well, have to retrench and see who’s lagging but at least the LTP is in good stead.
September 18, 2007 at 3:45 pm Permalink (Edit)
OK general answer to questions is don’t panic. Your puts got hosed on the spike and your callers also got a huge boost but they will still lose all of their premium by Friday and you will be able to roll them to October so the worst thing that happens is you lose a month.
If you are in a losing position, consider rolling back a month or simply buying a longer option and using your dead september position as a backstop to make a very aggressive sell.
We have to assume things will keep going up here as we have multiple breakouts and we have to expect big numbers in Asia too. The best things to pick up right now are beaten down positions that are slow to recover a couple I’m picking up:
SHFL Jan ‘09 20s at $1.45
BSX Jan ‘09 $15s
TINY March $10s 1.60
SHLD Jan 2010 $140s at $33.50
BA ‘09 $100s $13.30
If I had to guess a top, I’d say it’s here but I’m not putting any money on it. Seems like volume tapered off and my puts shot up in value but it’s tomorrow that’s going to be key.
Well, on the whole that was very nasty, I was weighted too bullish AND my dumb idea of waiting until after the Fed to buy the Qs cost me when I couldn’t get an execution.
I will say the same thing to bears that I said to bulls around Aug 16th, you have to ride these things out and assess the situation, not jump to a quick decision. I’m going to go through alll the questions and see where we are later and feel free to ask me about saves of October or later positions but there’s really nothing to be done about dead Septembers except hope and pray…
NYMEX closed at $81.51 and they dumped 48M barrels!!! Contract longer than Jan ‘10 were NEGATIVE! At this point I think picking up Jan ‘11 barrels for $70.01 is a pretty good virtual portfolio hedge. XXX for you commodity traders.
NILE – the thing I don’t like about selling calls and puts is I’m always betting against myself but it’s a good, safe(ish) strategy. On the whole I think NILE is just breaking up and should hold $80 very well on a downturn so I’d spring for the ‘10 $95s, which are a bargain at $24.65. Rather than buying the puts and calls for $30, you are spending $5 less and giving yourself 12 extra months, which is just as effective for downside protection. You can sell the Sept $95s for $2 right now but I’d want to see how the morning goes first, there’s no hurry and no worries as you can get $6.50 for the Oct $95s and $4.05 for the Oct $100s. That’s enough downside protection to let you roll down to the $85s (now $29.35) if Nile does take a sharp downturn. With a p/e of 109 this is a be careful stock but as long as you’re getting $6 a month for selling calls, it’s probably going to be a rewarding relationship. XXX
