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[Weekend Summary]
Dear Member:
Well, my suggestion in last weekend's summary that the markets looked like they might tend to stay bearish for a while hit the mark with the action on Thursday. I must have shot myself in the foot with some of the $10 Trader subscribers who bailed after my comments. I do think it is important to play the market I am dealt and to be honest with myself, but that does not mean that one cannot make money in a bearish market with bullish plays. The trick there is to be more cautious with picks and be very selective with entries and keep a close eye on the stock. The Option Trader has the ability to trade the downside a bit more easily by doing things like buying puts and creating bearish call or bearish put spreads. Those who only utilize bullish plays must just apply stricter standards when the markets are turning down. I am not convinced that the markets are ready to turn back up just yet in spite of the little breather on Friday. Volatility is still high and rising though it backed down a bit from Friday's highs. Increasing volatility often accompanies a falling market.
I was able to grab a small profit by selling naked puts on Taser (TASR) on Wednesday and buying them back on Friday. I also closed the short Aug leg of my put spread on the Q's this morning in order to avoid holding over the weekend in light of the high volatility. I have held my long put positions for Jan and Sept in QQQQ.
The Apple (AAPL) spread came awfully close to requiring attention over the last couple of days when the stock price fell to almost $120. However, it bounced back to the magic $125 by Friday close so I am still there.
The other spreads on Citigroup (C), SPY, and Sirius Satellite (SIRI) have a lot of time left and I found no need to adjust.
Have a wonderful weekend.
Bill
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