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stock trading, stock option trading
Dear Members,
I currently hold three positions. The first is the December 25 straddle on SWY (SWYLE and SWYXE). SWY has been drifting down making the put side of the straddle profitable. Implied volatility has been increasing which helps both legs and I continue to like the position.
This week I entered a small bullish credit spread on OTEX, selling the Aug 25 Put (QFTTE) and buying the Aug 22.50 Put (QFTTX) as downside protection. I received a credit of $0.55. Since I only entered a 5 contract position, before commissions I took in $275 and my risk is limited to $975. If no adjustments become necessary, there will be a 28% return for the month.
Though the market is certainly suspect (see below), I entered a bullish position on Micron (MU) yesterday. I bought the '06 $12.50 LEAPS calls and was filled at $3.60. MU is at a quadruple bottom support. The delta was .68. My initial exit is contingent on the stock hitting $13.10 so any loss would be quite small. If the stock moves up off this support level, I will move my stop up behind it.
Speaking of stops on options plays, I move and set my stops contingent on the price of the stock rather than on the option price itself.
As far as the markets are concerned, the short and intermediate term looks bearish to me. The NASDAQ closed below a support level at 1900. The SP-500 is still within its recent trading range, but continues down on fairly strong volume. The next support is in the 1084 range. The DOW, like the SP-500 is also heading down in the trading range with a support at about 9906. At the moment, these indices just don't look bullish. Combined with the summer doldrum effect, I will generally be looking for bearish plays until the market tells me otherwise.
Hope you are enjoying your weekend.
Bill
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