When my February options were expiring I wrote that I planned to jump right back in on a few of my positions, but by the time Monday rolled around I started having second thoughts. I entered a limit order to sell new CVS puts if/when CVS takes another dip as it’s prone to do. I thought about UCO again, but decided I should wait for a dip in oil too. I haven’t entered a limit order for new UCO naked puts yet, but I’m watching it and still considering the trade. The $11 strike is getting closer to worth the risk. I actually enjoyed today’s market movement. There’s nothing like being underinvested while the indexes fall. I lost less than half a percent and the S&P 500 fell over 1.1%.
Although I’ve enjoyed that feeling for the day, I don’t want to miss out on future gains, so I added a little to my portfolio today in the form of NDAQ options. While NDAQ was trading at $18.40 I sold three NDAQ April 19 calls at $0.52 each and three NDAQ April 18 puts at $0.58 each and received $325.72 after commissions. I started off with a limit order for the strangle at $1.15, but after …
I charted the Dow Jones Industrial Average (INDU, DJIA, $DJI) after the markets closed on Friday, February 19, 2010 when it finished the week at 10,402.35
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The DJIA has made a good run from its lows a couple of weeks ago and the Williams %R indicator was an early indicator more positive days were going to follow the initial bump higher. The trick with the way the Dow closed the week is that it stopped at resistance from two different trend lines. I’d be happy to buy in on the Williams %R indicator alone, but I want to see two closes above the two ascending trend lines below. I’d also like to see heavier volume on the positive days. We’ve seen heavy volume scattered in over the past month, but it has predominately been on distribution (down) days.
We saw a little foreshadowing of the move higher even before %R perked up. The short trend line of lower highs broke intraday two days in a row. Each day didn’t stay …
I sold February INTC Puts last month and took a realized gain on the options this afternoon. I considered buying my February puts back and leaving it at that, but decided I could take a little risk on INTC since I think the downside is limited. INTC has been working through a trading range for months and is at the high end of it right now. That leaves a few paths for INTC to take by April options expiration. It could fall back into its trading channel and finish lower eight weeks from now, but ready to rebound or it could finish about where it is now (which oddly is where it was when I sold the February puts) or it could break out from this consolidation phase. Whichever way it goes, I think if I’m going to be invested in the markets, INTC is a key core holding while we come out of a recession and by using naked puts my chances for a profit increase significantly.
With all of that in mind, I rolled the February puts to April expiration. In other words, while INTC was trading at between $20.87 and $20.77 (yes, it …
I let this week slide by without making any real attempt to open any new positions. The only order I entered was for ORCL March options, but left my limit price too high and ORCL only went up which left it outside of my portfolio. While the markets have been moving higher, I’m still cautious about it due to the low volume on the positive days compared to the higher volume on the down days. If I found an option I liked with an April expiration I might have gone for it. I have plenty set up for March expiration already so it’s time to look farther out for me.
February really turned around for me compared to how I thought it might end. My big mistake was closing my AXA position the day before it hit a near term low, more than $2 below its current price. I closed it to cut my losses, but I ended up just locking in losses I wouldn’t have had to take. I thought the US Dollar’s strength might be hurting AXA, but the dollar is close to where it was that day and AXA is up, so I was …
I charted the S&P 500 ($SPX) after the markets closed on Friday, February 12, 2010 when it finished the week at 1,075.21.//
The good news for the bulls was that on Thursday the S&P 500 broke above its trend line of lower highs. That opened the door for the index to move higher, but that pesky 1,080 level wouldn’t give in. The area that was support a few weeks ago became resistance this week for three of the last four days. The 10 day moving average swung in there to add to resistance too, but the SPX managed to close above the 10 day moving average on Thursday by a hair and then closed on it on Friday. It would be better for the bulls to see a solid few days above the moving average to give a rally a true fighting chance. Each day the index trades below the moving average intraday the more the bears think they have a good fight going still.
The 10 day moving average was in play this week, but the true moving averages to watch still are …
A few weeks ago I opened a small SSO position with the idea that if it went up I’d just pocket the profit and move on and if it went against me (which it did) I wouldn’t lose much and would probably add to the position if SSO fell further. SSO has done that and I stuck with my plan. While SSO was trading at $34.93 this morning I sold two SSO March 32 naked puts at $1.10 each and received $218.57 after commissions. This pulls my S&P 500 exposure up to the equivalent of almost $20,000 since I’m using a double ETF. I have less than $10,000 of underlying value at risk if the world ended and SSO went to $0.00.
I chose this trade because I think that over the next five and half weeks the S&P 500 only has a likely downside of no more than 5% to put it in line with the 200 day moving average. The trade kind of just developed on its own from there. Using the 5% downside assumption for the S&P 500 I checked what a 10% drop in SSO would be. At the time SSO was trading at $35.09 and I …
I charted the S&P 500 (SPX) after the markets closed on Friday, February 5, 2010 with the SPX at 1,066.19.//
A couple of weeks ago when I charted the S&P 500 I claimed the technicals were weighing heavy. My call proved accurate including my warning that the following Monday could be no more than a dead cat bounce. Since then we’ve seen the SPX trade down and sideways and down again. Two weeks ago in reference to Williams %R I said “Watch for a move out of the oversold area and then after two days confirmation I’ll consider it more of a rally worthy bounce to chase.” You can see in the chart below that Williams %R did come out of oversold, but faltered before the second confirmation day. Watching that indicator could have kept you from over-committing too soon.
Thursday and Friday of this past week gave a good view into how fast the markets can still fall. It almost seemed that once there were no more road blocks on the path towards the 10% correction I’ve been calling for it …
I hated to do it, but I think it was the smart move to take my loss on AXA and move on. It broke support a couple of weeks ago and fell below my strike. That’s when I should’ve gotten out, but I thought it was going to be a long term hold for me. Then they came out and announced they were voluntarily delisting themselves from the NYSE. Perhaps there was some knowledge of out there in advance or some insiders took advantage of it. Either way, the stock fell, but then it recovered and I thought it might work out for me. I still like the fundamentals and figured I could risk a few down months because it’ll be back up before long. With AXA’s delisting planned for as early as the end of this quarter it can no longer be a long term hold. It’s been getting beaten up bad the last couple of days and instead of waiting for a bounce off its lows, I chose to cut and run. While AXA was trading at 19.35 I bought to close four AXA February 22.50 naked puts at $3.30 each and paid $1,322.86 with commissions.
A couple days ago I posted my trade details about selling CSCO naked puts at the money. I was psyched when I saw CSCO beat earnings last night. I checked this morning to see if I should consider closing my position for a quick profit or not, but noticed I was actually losing money on it. It took me a second to realize my error. Instead of selling puts, I sold calls. I don’t know if I’ve ever made that mistake, but I have now and the timing wasn’t so great.
My first thought was to just buy back the calls and take the loss. Then I thought of turning the naked calls into covered calls by buying 300 shares of CSCO. I’d still be able to turn a profit by doing this. With the idea of leaving the short calls in place I decided I could sell in the money puts to accomplish basically a similar result. By the time I figured out this was an option for me CSCO came off its highs of the morning. I watched it drop for more than a few minutes while I still debated if I should take the loss or just add to the position. I was …
