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us stock market, trade stock
[Weekend Summary]
Dear Member,
This week was relatively quiet for me insofar as I didn't find many trades. I did enter a LEAPS call position by buying the Jan '06 $15 LEAPS (WOAC) on Sprint (FON)for $4.20. I am looking for a little pop on this one where my initial target is $19. At the moment, it has hit a little resistance at $18.40. If it gets to $19, I'll begin moving my stop up behind the position to capture as much profit as I can.
This week, I closed my calendar spread on CREE by buying the Aug 20 calls to close and selling the Dec 20's to close both legs. Before commissions, I got a 12.5% RETURN IN 3 WEEKS. Not bad. I like calendar spreads because the stock can often move a fair amount and the position still remains profitable. I always play calendar spreads based on the relative implied volatilities between the farther out and nearer months.
I also closed the Aug 22.50 Puts (QFTTX) on Open Text (OTEX). I only made a nickel on that deal.
My HDI straddle is just hanging around at the moment. Frequently that is what straddles do for some time. That's why I never (yup,never) buy short term straddles. I am happy with the position since the stock price is jumping around and that could mean increasing implied volatility.
It's a tough market right now. Still appears bearish but the COMPQX is right at a minor support dating back to June of '03. The SP-500 is approaching a support level in the vicinity of 1058. The DOW 30 is running right along a support level. While some more bearishness appears likely to me, I'll only play directionally if the market gives me an idea where it is going. A break below support will send me looking for bearish plays and a bounce will start the search for bullish play. It just hasn't told us yet. Remember the old saying: "Bulls make money, bears make money, hogs get slaughtered."
I visited a "mountain man" rendezvous yesterday. It was something to see. All the participants had to be in authentic pre-1840 garb and live in period accomodations (i.e. teepees). Some great classes were available like tomahawk throwing, making Cherokee baskets, and fur trade trivia. Fascinating.
Next weekend I'll be teaching a volatility trading seminar for CutLoss in Denver. If you ever want to know about the seminars, our toll free number is 1-866-LOSSCUT (567-7288). In the meantime, I'm looking for delta neutral type plays until the market gives me some idea of upcoming direction.
Have a great weekend and good trading.
Sincerely,
Bill
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