My Trader's Journal

Dow Jones Chart – January 14, 2011

Posted on by Alex Fotopoulos

I charted the Dow Jones Industrial Average ($DJIA, $INDU, $DJI) after it closed its second week of 2011 at 11,787.38.

9 thoughts on “Dow Jones Chart – January 14, 2011”

  1. Just to let you know, the DSX spin-off of Diana Containerships happened today and my short January Options changed from DSX to DSX1. They’re $0.30 in the money (taking the value of DSX alone) and are currently quoted at $0.12. Therefore, it looks like the Option will entitle me to 100 DSX as well as some DCIX if assigned.

  2. Thanks for the update Ronan. It’s interesting that Yahoo! Finance no longer lists prices for the DSX options and when I checked in IB it said no prices were available. I tried DSX1 and had to agree to their disclaimer that prices might not be accurate before it would let me see the contracts’ prices. I see nothing in either place for DCIX. It’ll be interesting to see how an assignment works out if that’s the case.
    Thanks again for sharing. I doubt many of us have been through one of these before you.

  4. Well, I’m now the proud owner of 300 DSX, 9 DCIX and a little bit of cash (about $10 – $15).

    The position is currently worth about $12.35 including the cash and I originally sold the Jan 12.50 strike at $0.25 so the position is slightly profitable at the moment.

    I think DCIX represents good value at current levels and may consider buying a couple of hundred as opposed to selling my current 9 shares. I’ll also be selling some covered calls on DSX.

  5. EGLE, GNK and a number of other shippers took a big hit today after Korea Line Corp announced it’s going into receivership.

    DSX was one of the least hit with no exposure to Korea Line Corp. Looking at it’s balance sheet, it has almost enough cash and cash equivelants to cover long term debt. I can see this being the start of bad times (well, not the start) for some of the smaller companies. At that point, DSX will likely lever up and buy some distressed assets.

    As I’d been saying before, I only currently have half a position in DSX so, today, I sold enough Naked Puts for March expiry at an $11 strike for $0.35 each.

    I also placed an order to sell March 12 Covered Calls at $0.40 each but, as of now, that order hasn’t hit. I’ll probably place the same order again tomorrow on a DSX rise.

  6. Those DSX puts look like they were a really good move so far (Jan 26). I’m assuming your covered calls hit by now, did you get a better price than expected?

  7. Yeah, the Covered Calls hit yesterday. I placed the order at $0.45 after seeing the rise in DSX yesterday. Part of the order hit after about 5 minutes and the rest about 15 minutes later.

    I’m very happy with the position. My basis on the DSX shares is $11.88. I’ve now taken in $0.78 in premiums (after comm) which gives me a basis of $11.05 if my Naked Puts are assigned or a profit of $0.90 if the covered calls are assigned. If DSX ends up between $11 and $12, I’ll have a basis of $11.10 – this is my desired outcome.

  9. On a side note, I sold a couple of AT-THE-MONEY February $47 Naked Puts on ABT yesterday. They’re currently losing a little trading at $0.93 (sold at $0.66).

    I prefer ABT over JNJ for a number of reasons and they’re due to announce the dividend next month – an increase is to about $0.48 is expected which would bring the yield to over 4% (about 4.2% if you sold Naked Puts at a $47 strike today). A dividend like that should provide some good support to the stock.

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