Barrons’ August 13, 2007 issue had a follow-up piece on Aetna (AET). They called its bullish run months ago and now that it has run and slowed again they are calling for another surge. Their theory, based on a fundamentally strong foundation, is backed by the chart. AET hit its rising trend line of higher lows which happened to coincide with the high from February and the previous low from the end of April. If this point holds, I could see AET moving back towards the mid-50s.
The option premiums aren’t too fat for my taste which pushes me towards the idea of buying some calls. I made it to AET’s chart around 3:30-3:45 yesterday and by the time I decided to make a trade on it the price had jumped more than 50 cents. I re-charted and then the market was closed. I’m putting a limit in to buy four September calls which will hopefully take off after I buy of course. Why September instead of a later month? I believe AET is hitting its trend line and will bounce soon, just as I said AT&T (T) would last month when I made a similar trade. If AET doesn’t find support and sinks over the next seven trading days I will have lost less money by selling so close to expiration. If it does find support I will make a greater percentage return and possibly a greater dollar return too, although I will likely plan my exit strategy to get out sooner than later.
Click the thumbnail for a larger chart.
—-EDIT: I raised my limit on my AET calls and they hit about 20 minutes later at .30. Within a few minutes after that the same calls traded at .20. I shouldn’t have chased this one, but I did and now I have a limit to sell all four at .60.—-
Liberty Global (LBTYA) is also worth a closer look as it was identified in Barron’s as a growth story although with loftier fundamentals than its competitors. When I have more time, I’ll have to delve deeper and might consider buying calls on LBTYA. Buying calls is probably the best move on it if you are bullish considering the potential for a large drop in its price.
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Thanks for mentioning Ameritrade. They are out of my hometown in Omaha, NE I believe. There was a good article in Reader’s Choice tab of Msn Money a couple days ago detailing services and ratings of top brokers. What’s interesting is some have web-trading, some have software programs, some have both.
Thursday begins with apparently futures down over 20 on S&P and NASDAQ. I haven’t seen that very often. That is a good question for you. Do you watch futures, and what is your take on them? Lots of times I have seen the day end opposite of negative or positive futures, with tons of trading up and down of course. Sometimes it’s right on for open AND close, but not always; so for me it’s just an interesting guide how the day should start at least. It’s those mid-day reversals that get people! I have bearish positions on CROX, which can be highly volatile; anticipating move down to 44 from current 55 area. Will follow AET upcoming.
Thanks again for this very valuable blog, and I hope 2007 continues well for everyone. (get a bit better in my case, haha)
I watch futures about like you do. These past few weeks have been so crazy that the futures can’t tell you much about how the day will go. I check on the futures every morning just as a quick glance to how the markets SHOULD open, but even the futures can have wide swings from when I leave for work (6:30ish) to market open. I used to trade on Intrade (and might again) and would sell contracts for what price the Dow would be at 10:00am. It was fun and I doubled my money in a year (only a couple of thousand), but my stomach literally hurt all day after a tough morning. I have no plans to trade futures. I’ll leave that for the guys who have more time. I’m taking a beating this morning, down almost $1500 by 9:45. FWLT is killing me and I have to decide if I should take my losses. I think it will come back up on the next up day, but I’m not sure if the wait is worth it as the slide continues.
Look, losses are very shocking, but see what your balance would be if you just closed the losers out now. You’ve made alot, sometimes, you have to give some back, but REALIZE you are way ahead. Besides, this time is difficult. You know how good I felt when I got rid of my headache positions, felt as if I had made money, not lost it. This volatile time has everyone learning and wondering the immediate future. That’s the dance we play, immediate moves versus long term predictions and how to have our dollars available and working under each sort of time frame. But you should know your down side. I didn’t know my down side, and definitely “accepted” too much down.
Good points. I just emailed a friend of mine yesterday and mentioned that I was happy to be down $500 after being down $1500 earlier in the day. At the end of the day I was down $1500 again which shows I should have dumped the losers while I had a chance. I’m still way up for the year, so I can’t complain too much.