November 20th, 2007 at 9:30 am | Permalink edit
MDT – we sell into the initial excitement! This should be at least a 50% gain, which is nice for our first trade so we’re not going to mess around once it tops off. I’m hoping for a run to the gap at $51 so it’s OK to sell 5 now ($10KP has 10) and hold 5 for a bit but if we get $2.25+ then we really can’t let it pull back on us can we?
November 20th, 2007 at 9:31 am | Permalink edit copy
Oh sorry, the same goes for GOOG up $10, good time to re-cover if it falters. Today, if the Nas fails 2,600 I’m WAY more concerned than I was yesterday and if the Dow can’t retake 13,000 by 10, it’s probably over for the week. S&P must hold 1,430.
November 20th, 2007 at 9:36 am | Permalink edit copy
Wow, I just got the MDT $50/$45 puts spread for a $3.20 credit! XXX to that one
November 20th, 2007 at 9:41 am | Permalink edit copy
So anyway, very tight trailing stops on MDT (.25) on half, no way do you want to blow that. Once that half goes (or at the same time) you can set a .50 or .75 trailing stop on the other half to give it room to pullback a little but $51 is a critical moving average. If we go above there we’re going to want to roll anyway but I will be surprised if we get a 10% move AND break through the death cross of the 200 and 50 dma at $51.50: http://stockcharts.com/charts/gallery.html?mdt
November 20th, 2007 at 9:42 am | Permalink edit copy
Financials not participating in this rally at all. Oil going nuts on expectations of another Fed cut so now we have to worry about the 2pm minutes killing the rally, not starting one.
November 20th, 2007 at 9:49 am | Permalink edit copy
AAPL – at this point we are selling the $165s for no less than $11 (now $11.50) and picking up another round of $150 puts at around $3.50. XXX That’s 2 more in the $10KP but only after you get the money from the sell!
November 20th, 2007 at 9:51 am | Permalink edit
MDT – that’s it for me!
November 20th, 2007 at 9:58 am | Permalink edit copy
Trestles – hmm, with GOOG up $26, we may not need any major adjustments here… Woo Hoo on our open Jan $660s in the $25KP, that one put us over $100K!
Now financials joining in.
November 20th, 2007 at 10:07 am | Permalink edit
MDT – now I’m taking the Dec $50s at .70 (I sold the all my $47.50s). This is NOT a $10KP play anymore as it’s riskiner but .72 is worth the risk (see how fast the premium deflated – ALWAYS ALWAYS ALWAYS sell into the initial excitement!). XXX
November 20th, 2007 at 10:15 am | Permalink edit copy
Failure – I never look at a chart shorter than 10min so we’re talking about a 20 min trend below 1,430 that looks like it has no chance of recovering by EOD. I know that’s not crystal clear but it depends on so many things, like yesterday the markets were clearly being forced down so I took out my callers and waited despite the total failure of my levels.
Upside failures to look for now are 1,450, 13,100 and 2,625. The SOX are still miles from stable, the Russell needs to hold 750 and I don’t like GOOG having trouble at $650 so I’m 1/2 covering open GOOGs with $650 calls here and will cover the rest if it slips below $645 (again, arbitrary numbers but better than nothing).
AAPL holding $170 is now a must as is GS $220. SHLD $114 is very disturbing and no one seems to care that oil is at $96 but I do.
On the whole, I am slowly but surely covering up here as I think this (up 100) might be it and I KNOW I want to be fully covered by tomorrow so it doesn’t leave me much time to be wrong does it? XXX
November 20th, 2007 at 10:21 am | Permalink edit copy
AAPL – now is the time to sell the $165 calls for $12.50 and buy the $155 puts for $3.50 XXX
November 20th, 2007 at 10:24 am | Permalink edit copy
I think that may be it kids – I’m stopped out on DIA calls and watching very carefully.
November 20th, 2007 at 10:35 am | Permalink edit copy
GOOG – I’d find some way to sell $650s for $30! I mentioned one yeserday but I love the $630/$650 Bull call spread for $10 net but only if you’re really good at rolling down… As a new calendar, a bullish play is Mar $660/$650s for $30 on the spread and that’s an XXX
November 20th, 2007 at 10:36 am | Permalink edit copy
Oops, that was Mar $660s at $60 and selling Dec $650s at $30 for a $30 net!
November 20th, 2007 at 10:38 am | Permalink edit copy
That might have been a premature top call as I still see a lot of buyers jumping in. Gold stocks coming back nicely but to much extent this is another weak dollar rally, not necessarily something that will last but holy cow look at those energy names come back!
November 20th, 2007 at 10:50 am | Permalink edit copy
C – if you DD’d you should have gotten 1/2 out even leaving us with a .80 basis which we will DD again at .60 and then sell 1/2 at .70 to run forward with a .70 basis on the remainder.
That sell of the GOOG $650s at $30 includes the $25KP! XXX
Applefly – you can sell the $170s, I’m just ttying not to make such a mess of the trade! What we will do, however, is roll the existing $165 puts down to the $160 puts for $1.50 to lock in those gains. XXX
The Apple trade for the $10KP is the iron butterfly in today’s $25KP summary. $10KP players should target those legs 2 units at a time whenever they can get a better entry than they see there.
November 20th, 2007 at 11:06 am | Permalink edit copy
QIDGN – QID ultra-short Jun $40s at $6.70 XXX These move up 2:1 as the Qs move down. I will sell the Dec $42s for $2 or better, certainly by tomorrow. XXX Nasty bid/ask spread so you have to be patient.
Stock picking – my “system” such as it is, is hard to define as it’s very event oriented. I track hundreds of stocks I think are under or overvalued and then wait for a series of events to unfold that I feel will bring that under or overvalued condition to other people’s attention. Although I do use some TA, it’s only a tool as 90% of what I do is hard-core research with price targeting.
That’s why I will doggedly pursue certain positions, I may have gotten killed on GOOG yesterday but I took out my caller, rolled down my calls and went naked as I dared them to take it lower as I would only buy more because I have a very firm, fundamental faith in the stock and I’m willing to stick with it until someone else agrees with me. On the other hand, I’m not greedy and a $25 gain in one day is enough for me so I cover half with a tight stop on covering the other half because I think Google is going to $1,000 – but not this week!
BA – there’s another one. I said yesterday I will keep buying them all the way to $50 (at which point I’d probably DD anyway).
Applefly Corey – So you have 4 naked $150 puts. Now you want to spend $2 to roll them to the $165 puts (but don’t if this constitutes a day trade) which will leave you free to buy more calls if Apple keeps going up as you have downside protection.
Huge buys coming in now, lots of energy and transports. Biotech doing well. PFE may move soon.
November 20th, 2007 at 11:09 am | Permalink edit copy
For some reason telco is getting killed. ERIC 52-week low, NOK is going to follow them down after a gap up NOK $40 puts are a mo play at $1.85, stop at $1.50, looking for .50+
November 20th, 2007 at 11:33 am | Permalink edit copy
Builders heading south.
November 20th, 2007 at 11:43 am | Permalink edit copy
AAPL $165 sell. If you are at that stage of the play in the $10KP then it does go for you as well. $10KP players can only go through a cycle of buy call, sell call, buy put, sell put OR initiate the whole spread at once for a credit but that credit is never going to be as good as legging in. As to elimination of loss on the downside – hopefully, I haven’t had time to do the math but I do know I roll $5 for $1.50 when I can!
Had to up my QID to $7.20 as no one was biting, that filled.
November 20th, 2007 at 11:45 am | Permalink edit copy
Home builders being gang raped – very ugly. SHLD making new year lows.
Cover cover cover!!!
November 20th, 2007 at 12:04 pm | Permalink edit copy
Happy 100 IMCL – rolling to Feb $35s for +$3.70, selling current $40s for $2.20 XXX
November 20th, 2007 at 12:23 pm | Permalink edit copy
MO – I’m not a fan and I don’t see them breaking $75 without a direct catalyst.
Applefly – yes we are waiting to sell the $165 put for $11+
Opt – You are more bullish than $700 in December? Also, that’s why it’s March, if they finish at $700 in Dec it’s not break even, you roll him to the Jan $720s and his $50 covers your $40 of intrinsic value in March plus your $50 in premium and if it goes to $770, you will roll him to Feb $790s where his $50 will cover your $130 of intrinsic value and $25 in premium and if it goes to $840 at the end of February, you will roll him to the March $860s for $50 which will cover the $200 gap between your $660s and his calls quite with a pretty nice cushion. If you are more bullish than that, I really can’t help you!
I pick them based on a realistic assessment of the movement over the period of the caller vs. the period of my calls. I like March because you get an earnings period in and those are always good for high premium selling and high V.
RIMM is still one of my favorite stocks to sell calls against.
Financials – I like them too in 6 months but this is now and now I don’t like them so much.
DIA strangle – nice idea but how about the Jan $130 puts and calls for $9, selling $127 puts for $2.17 and the $133 calls for $1.81 for a $5 strangle into next month? You can take out/roll whichever side doesn’t work and bide your time on the other side as the chance of anything not pulling back is near zero. XXX
November 20th, 2007 at 12:40 pm | Permalink edit copy
Minutes – I love my little QID play from this morning. Selling the $42s for $2 as it didn’t top $43 on the big dip on the 12th.
Apple fly credit – I don’t remember what we started with but it was under $2 in risk I think.
Covers – that’s a good point Film. I am prone to cover because I’m out of here after lunch tomorrow and will be with family Friday and traveling home on Monday so I know how to take the money and run but I still think it’s the right call in general. As to Apple, if there was anything I was ever going to leave naked Apple would be it but the market reality is they are a high flyer and will be unduly punished with the rest. Also, no matter how much you love a position, that is no reason not to rent it out short-term when people are willing to pay such outrageous rates for it.
MA – Buy $165s for $21, sell $160s for $26 – you can’t lose but if the stock drops $15 the spread will be $11/$13 and you make $3 XXX 10 in the $10KP and $25KP as long as you can fill for $5 credit and don’t forget you can not spend that money on anything!
November 20th, 2007 at 12:53 pm | Permalink edit
Wow, isn’t it amazing how fast all those gains can evaporate?
31.40 – as a rule of thumb, I don’t quibble over 5% if I thinkthe trade is going my way, better to be in it in that case. Of course I scale in so I figure the entries work out over time.
November 20th, 2007 at 1:03 pm | Permalink edit copy
MSFT – I love them long time, no change. I even hear someone is buying Zunes but I want to meet that guy.
C – not at .48, at this point I will roll out if we don’t get a fed rally but I really don’t see how they can drop below $31, certainly not $30 as I’ll be on a plane to Japan to set up an LBO deal at that price. They can’t possibly lose enough money to justify a $60Bn loss of market cap, this is a massive overreaction but, as Marble just said, the market can remain irrational longer than you can remain solvent so I will retreat to a longer call and let someone else (you maybe?) eat that last .48.
SU – also irrational but good call BBD. You did convince me to take most of my SU puts off the table!
AAPL – yes, isn’t it amzing, here we are looking at selling the next set of puts already! The $170 puts are at $10.15 and we want $11+ but if we get to $11 we’re likely to see $13 as it will be a nasty breakdown for Apple. XXX
November 20th, 2007 at 1:14 pm | Permalink edit copy
MDT/any calls – not now, markets getting pretty ugly.
MA spread – no way, it dropped too fast but logistically, whenever you see a call spread like that and you are even a little bit bearish, it’s always worth seeing if you can get them. The hardest part if you do it a lot is remembering not to use the cash against your margin for the duration. When I see a free spread it means that it was recently gettable but I have no interest in paying more than maybe .25 for them but, once I pay that I will put in a sell for .50 on 1/2. Otherwise, I’d just as soon save it for another day.
“In for a penny, in for a pounding.” LOL, you are rolling today Film!
OIH spread – I say take it for 50%, silly not to, maybe we can reenter next time they’re down. XXX
November 20th, 2007 at 1:27 pm | Permalink edit copy
OIH – yes, not 50%. I did 50, paid $27,500 and I’m up $7,000 and the most I can be up is $22,500 so that’s what I keep my eye on but in a down market I’m not too bullish on OIH so I’ll take $6K and run if it heads down.
MA in the $10KP – no, with a $5 credit it’s a no-risk trade, that’s the best way to build a small virtual portfolio!
AppleFly double puts – yes we should take 1/2 off if it’s more than we need for the next leg, especially if we are not getting a good completion. Actually if Apple breaks $168 we may as well kill these puts entirely for now and hope for a better shot next round but, if we can get $13 then we should sell all 4 and buy 2 more calls to start the next up leg (I will try to make a bottom call but $11 is mission accomplished and anything else is greed).
November 20th, 2007 at 1:32 pm | Permalink edit copy
GOOG $700s – what were the entries?
Corey – good discipline!
No Fed speak, just minutes of last meeting. Totally meaningless really but the mareket will do whatever Golman planned it to do within second of their release.
November 20th, 2007 at 1:43 pm | Permalink edit copy
SHLD – I think opportunity but not enough to put fresh money in.
HOV – Spread was good enough, can be rolled down, and this is just a normal down market cycle for builders. The builders don’t care that the people who bought homes couldn’t afford them, they can get through slow demand periods, especially a family business like HOV in the busy northeast. That damn caller still wants .25 and my calls dove to $3 so I’m trying to roll to the $5s for $1.50. I also like the current Jan $7.50s at $1.23 XXX
November 20th, 2007 at 2:05 pm | Permalink edit copy
Spreading the middle – basically, whenever any part can be improved I’ll do it so it’s not intentional, just following my rules to reposition. There is no sense trying to anchor around a strike with a stock that moves this much, just work into the best possible spread on each side and, if you keep adding with that goal, the strike will take care of itself – kind of like tracking max pain, it’s a self fulfilling prophesy.
Fed Minutes look meaningless to me. They sure don’t want to cut and they sound so out of touch saying there is no inflation I think it blows their credibility.
November 20th, 2007 at 2:09 pm | Permalink edit copy
OK now we’re going to see how low we can go.
November 20th, 2007 at 2:21 pm | Permalink edit copy
If Apple doesn’t break below $166 by 2:30 that’s probably it for going down, if they break $168 to the upside, that’s probably it for going down.
CTSH – you are taking away $2.50 of position from your putter for $1, that’s the answer right there.
HOV – yes, sadly naked but the Fed failed us so it’s going to be tricky but I’m not willing to sell Decembers yet.
C – having trouble getting filled at .48 on my DD (really someone needs to stop me – if I get exercised on these I’ll have a controling interest in the bank!)
November 20th, 2007 at 2:27 pm | Permalink edit copy
Oops, no problem filling C now! Holy cow.. time to sell the $32.50s before they go lower than $1 XXX next move is to roll to the Jan $32.50s for + $1.80 if it starts coming back but othewise just make the money off the call spread.
November 20th, 2007 at 2:39 pm | Permalink edit
MA – dead trade, forget it!
BAC may have already been in so deep with CFC that the bankruptcy would have cost them substantially more than $2Bn. The best way to get a lot of money from a bank is to get enough to hurt them, then threaten to lose that if they don’t give you more. Once you get past the first round, most banks will just keep writing checks to keep you afloat rather than write you off on their balance sheets.
C – signs of life? As long as the $32.50s fetch $1+ I can wait but this is a scary level for sure.
I’m getting the feeling we’re being flushed here based on the sells I see crossing my screens – there’s nothing I want getting killed, that means someone is buying the 100+ stocks I like which is too coincidental to be random so I think we’re getting some rotation but not a real sell-off. I’ll let you know if this changes but other than AMGN and ERTS there is just a lot of crap being sold at the moment.
Apple coming down nicely! As this completes a whole round and the markets are in turmoil, I’m not inclined to buy more calls and open another round yet.
November 20th, 2007 at 2:50 pm | Permalink edit
Oil up $3.35 into the close, $97.99! Gold up $20 so this is another dollar down day only this time the markets are not happy about it. If the energy sector wasn’t up 2% and commodities weren’t up 3-4% we’d be down about 200 points.
I’m setting tight stops (.25) on my higher DIA $133 puts and buying some $130 calls for $3 and a 2:1 put spread into the holiday (currently 400:0)
Everyone so bearish – sometimes everyone is bearish because it’s clearly over so do be careful but, in this particular case, there are too many people putting in way too much effort into making us bearish so I’m not buying it.
November 20th, 2007 at 2:59 pm | Permalink edit copy
$10KP – MDT is gone, we sold it and MA was a dead trade. You should have 2 of each leg of the Applefly position and that’s it.
THE APPLEFLY POSITION IS (AND THIS IS THE LAST TIME I WILL DO THIS AS IT’S THE 4TH TIME IN 3 DAYS): BUY THE DEC $180 CALLS FOR $4.50, SELL THE DEC $165 CALLS FOR $11+, BUY THE DEC $150 PUTS FOR $4.50, SELL THE DEC $165 PUTS FOR $11+ This is a net credit of $13 and a maximum risk of $2 with a strike target for Apple of $165 and your goal is to do BETTER than those prices on each leg. If you can roll any segment to your advantage for $1.50 you should do that as it would (if you roll both ends) cost you $3 to reduce your risk to zero. If this is not clear to you DO NOT MAKE THE TRADE – IT IS TOO ADVANCED FOR YOU TO FOLLOW.
November 20th, 2007 at 3:08 pm | Permalink edit copy
Now the good stuff is selling off too, nasty nasty…
November 20th, 2007 at 3:26 pm | Permalink edit copy
We need a resolution trust but that tends to help poor people and the administration has already said there is no way they are bailing out homeowners even though it is the logical place to apply the band-aide.
Oh no – PFE smoking pill might make people suicidal!
C/ ANY spread – anything you can roll down where the new money from the caller pays for your roll you be executed in a down market, you can’t play everyhing as if it’s all coming back next week.
ERTS – out, broken trade.
Oh no, they’re selling CROX again!
NDAQ selling, that’s a bad sign, signals traders fell long-term downturn may be in the cards. Very bad if other exchanges follow down.
November 20th, 2007 at 3:30 pm | Permalink edit
Markets coming back a bit now. Finally sinking in that the rumor de jour (CFC) is false.
November 20th, 2007 at 3:37 pm | Permalink edit copy
I actually proposed this to Buffett but he went out and bought PTR instead so I took it as a no….
Go C go! See, just when you are about to give up is usually the point you should buy more.
Sorry we didn’t do another Apple leg now.
QID – no stop, I didn’t see the Qs busting through the year lows by $1 so the chance of me owing him $2 was very slim.
November 20th, 2007 at 3:43 pm | Permalink edit
C – I’m still naked with a .50 basis, will sell at least 1/3 before the close, maybe 1/2.
ROFL dow up 88 again – the market is such a scam!
November 20th, 2007 at 3:50 pm | Permalink edit
Lots of gold stocks doing well.
November 20th, 2007 at 3:56 pm | Permalink edit copy
GOOG is like riding a wild bull, you can just imagine the people getting thown off with each bounce. We need some rodeo clowns in front of that thing.
DIA puts – I’m 2:1 puts to calls on the DIA (not counting the spread we took earlier). I think it’s madness to go into tomorrow without being very well hedged. Look at C – pushed back down already, we’ll be lucky not to close negative today (and yes I know it’s just 5 mins).
Tomorrow will be a very wild low-volume day.
November 20th, 2007 at 4:02 pm | Permalink edit
Thank goodness it’s a short week because I’m exhausted already!
