Weekly Wrap-Up

Another great week!

This is starting to be some sort of pattern and we have been firing on all cylindars with our picks.    Not buying into Friday morning's rally capped off a perfect week where we were able to make nice improvements in our virtual portfolios across the board.

• Short-Term Virtual Portfolio posted a 31% gain for the week as our oil puts came roaring back.  Getting out on Thursday was a very good call as we took the money and ran although we still have SU, BP and EOG puts but nowhere near the size of the bet we had down last week.
• Long-Term Virtual Portfolio gained just 6% but we repositioned our callers and now, with 2 weeks left to expiration, we can have fun watching them give up their premiums.
• Day Trading Virtual Portfolio was heavily hedged to protect our already big gains but our oil puts were magic there as well although we sold a lot of puts to cover and didn't make the massive gains that the larger STP made.  As usual, Google was very, very good to us and we picked up 7% on the week.
• Our $10,000 Virtual Portfolio is now our $16,969 Virtual Portfolio, up 69% since it's 2/19 start date and 11% for the week.  We're actually rooting for oil to bring us over the $20K mark in that virtual portfolio! 
• The $25,000 Virtual Portfolio improved to $29,486, up 18% since inception (2/19) and up 7% for the week.  We've taken some huge hits (CROX, HUM, TASR) that have just trashed our performance in this one so I think we're due for something to go our way.
• Even our boring old Stocks Virtual Portfolio had a nice week, gaining 9% as ABK came back from the near-dead.  The virtual portfolio is up 63.5% for the year and will be shut down next week so we can start a fresh stock virtual portfolio during the CNBC challenge.
• Complex Spreads is made up of GOOG, AAPL, BIDU, CROX and MA, with CROX 100% covered it turned out to be a huge combination that jumped another 48% on the week, bringing our year-to-date gains to 294%.

Hopefully we won't regret not selling in May and getting out of here as this is a very nice spot to be in with 7 months left to they year.  In addition to a fresh start in the Stocks Virtual Portfolio and the Day Trade Virtual Portfolio next week, I'm also going to start a new $10,000 Virtual Portfolio as all the $10KP positions are also in the $25KP and the smartest thing for a $10KP player who is up 69% to do is to put $6,900 in the bank and start back with $10K.  That way, if we lose 1/2, you are still better than even and, if we make another $6,900 in 60 days, you can join in the next $25KP.  The markets are still tricky and cash is still king (we are about 70% cash overall).

I'm a little concerned that we'll get some bad news on Monday from the financial sector (or why would the Fed have put 50% more liquidity into the system on Friday?) but if that doesn't happen and if YHOO doesn't tank the markets, we could be off to the races again.  Of course oil is still a bother over $100 but the strength of our market will strengthen the dollar and correct oil anyway.  Let's not forget that oil topped $100 in late October and the market topped out over 14,000 at the same time.  I do not think we can sustain 14,000 with + $100 oil but we can sure get back to 13,500.

Just last weekend, wrapping up another great week, we were going to be happy just to see oil back off $120 and for the Dow to hold 12,750 ahead of what we knew was going to be a rough data week but I warned:  "Cramer’s TheStreet.com and lots of technical traders are still growling that we are in a Bear market and there is a lot of work being put in by the MSM telling you NOT to buy at this bottom and people listen to them, even though these are THE EXACT SAME GUYS who told you to BUYBUYBUY at 14,000, prior to the recent 10% correction.  How are you ever going to make any money if you let clueless trend followers tell you what to do?"

Playing the channels is what trading is all about, you can't spend your trading career chasing momentum and, especially with options trading, you need to take profits off the table WITHOUT Jim Cramer having to make cash register noises.  Stocks have momentum up AND down and we try not to fight momentum in our plays but we also like to jump off the trains when they slow down – waiting to "confirm" are reversal can be very costly in options trading and stock trading as well.

We went against the grain picking up our banking stocks at the lows and in last weekend's "How to Buy a Bank" we reviewed our option strategy for what to do when the bottom you call isn't anywhere near the actual bottom, as well as some new plays we recommended:

• The C 2010 $25s are still $5.62 after dipping as low as $4.80 after the Fed, you can still sell June $27.50s for $1, an 18% return in 6 weeks!
• BMO is up 4% from Monday's entry at $49.
• HCBK hasn't moved much, up .41 from Monday's open at $19 (up 2%) but the Oct $17.50s came in low at $2.45 and closed at $2.75 after flirting with $3 (up 12%).
• IBN picked up 4% on the week and the Jan $40s finished at $11.25, up .50 from Monday's open and up 16% from our post-Fed buy at $9.70.   The June $45s did not get to our $4.95 sales target, topping out at $4.40 for the week but now there is no pressure as the stock is on it's way and the $50s are paying $2 already (17% for 6 weeks).
• RBS had quite the up and down week, falling from $7.15 on Monday to $6.80 on Thursday and gapping up to $7.36 on Friday – even small buys work better when you scale in.
• WM is still in the dog house and the 2010 $10s are still the same $4.60 they opened at on Monday but the $13s sold for a full cover have dropped 50% from .45 to .22 over the week.  If the stock looks weak, the June $12s can be sold for $1.10 (.92 premium) a nice 24% return over 6 weeks.  Can WM really be that bad that they have to pay you 18% a month to hold it?
• XLF was also a gem, with the Jan $26s giving us a nice $3 entry and finishing the week at $3.50 (up 16%) after briefly touching $4 on Friday's gap open.  As predicted we did get the opportunity to sell the $28s for .60, now .38 (another 10% gained)!

So the Financials were a good sector bet this week and remain so if we make it though this Monday.  Monday morning I was very angry with the very coordinated media attack attempting to push oil through $120.  We called shenanigans in the morning post and got them to stop misquoting OPEC President Khelil and oil never did make it over $120.  Our focus on shorting XOM finally paid off this week as well!

Monday morning I mentioned AUO on the free site, which went from $19.60 on Tuesday's (when we DD'd our member positions) to finish the week at $20.40 and our June $20s averaged in at $1, now $1.27 and I certainly don't think that one is done yet!  The   Our Monday game plan was to watch and wait for the Fed and that served us well early on and my Monday earnings predictions on VZ (up nicely), V (up perfectly for our hedge),  BP (slowly falling), GLW (very nice), MA (too nice), AVP (slow moving but going up) and TSCM (Cramer's gaffes catching up with him?).  SIRI is flat so far and X was better than I thought.  While I was on a roll I broke the CAL/British Air rumor so, all in all, it was a good start to the week!

Monday evening I re-picked the AUOs (I REALLY like them) along with BXP spread that worked very well.  LFG was the disaster I predicted and the Jan $30 puts jumped 50% to $6.10 while the PNRA June $40 puts we sold are down to .35, a 76% gain for us!  GRMN was a bad one and the 2010 $40s dropped $4, with only $1.50 of it offset by the sale of the June $50s but we have 18 months left to get that $2.50 back.  BWLD was a wild one with the Sept $30s leaping from $1.70 to $4.75 on earnings (up 174%).  NOV June $60 puts came in high at $1.60 on Tuesday, hit $2.10 and fell back to $1.75.  TWX was another huge winner for us and possibly even better if MSFT turns around and buys AOL.

CMI worked out well as we got a chance to take out our callers on spectacular earnings and the June $55s that we bought for $4 are up to $12.75 (up 219%) and up 113% from Tuesday's open so not bad, even for late comers!  Note the $57.50 that sold for $3.50 on Tuesday opened Wednesday at under $4, this is the advantage of selling front-month calls with high premiums into earnings – even on a big hit, the volatility crush buffers much of their gains against you.

Those were just the specific Monday picks I made on the Free Site (in the main post) – that's a pretty good value!  My take on FSLR was dead on (puts AND calls both paid off with $25 moves in each direction after earnings), GM did go up despite losing more money, HES is having trouble supporting the run-up…  It's good when I'm on a roll because, as earning season winds down, it becomes much easier to pick our spots and now we are getting our footing in various sectors.  As I say all the time, TA is fine UNTIL you get the facts – then fundamentals tend to make a comeback.

Tuesday morning found us waiting on the Fed and, as I said in the post, we were waiting "for oil to get real."  Little did we know it would get so real so fast, dropping from $119.93 to $110.30 in three days.  Tuesday evening we had another wrap-up filled with earnings predictions with CTX Jan $30s flat so far at $2.08, MUR $85 puts went from $1 Wednesday morning to as high as $4 on Friday and finished at $3.35 (up 235%), even SBUX improved slightly for us.  BKC had good earnings but ran flat and the July $30s dropped 12% to .88.  XOM $90 puts had a wild ride but they were very easy to buy for $1 on Wednesday and hit $2.80 on Thursday and finished the week with a clean double at $2.02.  OSK was another good pick for the first hour of Thursday when our Oct $40s flew up to $5.30 (up 26%) but they quickly fell back to $3.65 for the week (down 13%).

Wednesday was Fed day and the market was up 150 points and then down 200 points from there after the meeting, quite a mess but we were lucky enough to cover up ahead of the announcement simply because we're not greedy.  We had a nice call to short FSLR, which was kind enough to drop $40 from Wednesday's open and it was, on the whole, a fun day.  Despite the market's poor reaction to the rate cut, we remained optimistic in the wrap-up, but not enough so to predict the next day's earnings…

Thursday was a fantastic day for us, XOM's miss allowed us to lighten up on our oil puts, giving us plenty of cash to spend shorting the next round, which came back fast on Friday.  My morning plan was to ignore XOM and CVX dragging down the Dow, saying: "Don't panic, keep stops on the callers because I’m a buyer right now IF we can hold our levels!" and we held 12,800 just long enough to take out our callers before a 350-point market rally (which we shorted on Friday morning).

We even picked up Google puts and Valero calls on Thursday, it was just that kind of week and we were sad to see it end and it remains until next week to see if our luck (and never think it is otherwise!) holds up.  Overall we closed 59 positions for a 53% average gain and kept ourselves well covered as expiration in two weeks makes it very profitable to sell options anyway: