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trade stock, stock trader
[Weekend Summary]
Dear Member:
Well, the markets this week looked like I suggested they might last week. I was speaking to one of my brokers this afternoon and he said now he knows how it must have felt in 1929. While that is probably an overstatement, the bear has attacked with a roar. Fortunately, I was able to play the downside successfully in both Trend Trader and Option Trader and had enough sense not to enter any new plays in $10 Trader. If one only enters bullish plays, it is critically important to know when not to play and this has been the time. At this point, the Nasdaq Composite and S&P 500 have come to rest around the 200 week exponential moving average and the Dow is in the vicinity though slightly above that level. If the Dow doesn't hold at that level, the next serious support I see is in the 11,320 range. So far there has not been a classic capitulation so my guess and it can only be that is we have more downside to play before the markets turn back up.
The good news for me is that I closed the put side of my iron condor on Baidu.com and did not have to do anything with the call side which has now expired worthless (that's a good thing in this case) so overall, the trade realized a 16.7% gain in 3 weeks and is now closed. Since the call side needed no adjustment, I had no commissions to pay to close those legs though I did pay a small commission to close the puts. Anyway, the trade made a good return.
After a number of adjustments over the months, I finally closed my puts on the Q's which I had held as a hedge and used to generate fairly regular income. Overall, the trade with adjustments enjoyed a modest profit. As they say: "you can't go broke making a profit."
I entered a put play on Rambus (RMBS) this week and so far it is doing well and, on paper, is up 6% since my entry on Wednesday.
My Citigroup (C) calls expired with a small loss overall after many sales of calls over time against that position. Selling those calls as covered positions turned what could have been a fairly large loss into a relatively small one. Good earnings news would have saved the day, but that was not to be.
I have written before about my Genitope (GTOP) puts where I entered by selling a naked position, the Jan 2.50 puts for $1.35. The stock will be put to me at $2.50, but the market initially paid me $1.35 to get in so the risk at entry was only $1.15 a share and it looks like I should be able to sell the stock next week for 70 or 75 cents and suffer a loss of maybe 40 cents overall.
The Sirius Satellite Radio (SIRI) and SPY spreads still have a great deal of time so are not a concern to me. When the S&P turns, I will take profit on the short leg of that spread thereby reducing overall risk and giving me the chance to sell other calls against the long position.
Though the stock price dropped this week on Mbia (MBI) it essentially held its own today even in the face of some selling pressure so I made no adjustment so far and may not need to next week.
Monday is a market holiday so maybe things will simmer down after the long weekend, but whatever, I think I should be able to find some more attractive plays.
Bill
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