8/13 – Pumping up a leaky tire

The Fed injected some liquidity, and up the market goes.


The Fed injected some liquidity, and up the market goes. I actually think that is a response to the “oversold” conditions. The bears just needed a break. The market breadth is not very powerful to the upside.
I started off the morning with a barrage of fills and newly opened trades. Inside I get a little concerned when I start getting filled on large quantities of orders on a number of different stocks. 34 in total by 11:30am MST. 67 working orders.
So far the trades are:
TOL – Dec/Jan 22.5 Calendar for ave of .02, Low fill @ .02. And the Dec/Jan 25p for ave fill @ .02, low fill @ .01 I have 7 units of 22.5, and 5 units of 25p. 26:1 reward to risk on the position. I am just about full on this position. I will take even if they give it to me. This has been the most aggressive I have been in purchasing a position. However, with the amount of premium in the positions I feel good about the position.
ALD – 2 unit Jan/Feb 30p @ ave of .03 with low fill of .01. 1 unit 35c as a upward hedge @ Even. As of noon the 30p spread has widened significantly, mid-mark at .50, although not filling at .25.
CY – 10 units Dec/Jan 25p ave .02, low fill .01. Very Nice. Underlying 26.40. Reward to risk is 75:1. Risk $155 for a potential profit of $10K. pretty cool.
UNM – 3 units of Dec/Jan 22.5p ave of .03, low fill .01. 3 units of Dec/Jan 25p @ ave .02 low fill .01. EXCELLENT initiation. Underlying 24.27.
PGR – Jan/Feb 20p – I haven’t been filled in a few days on these, so I put a test sell @ .15 and was eventually filled. I still have 7 units on from .01.
SPF – I exercised my 17.5 Aug options to put my stock to the person I bought my options from. Overall, I bought this stock for $22, and sold them today for $11. Fortunately I traded around this position with married puts, and aggressive calendars flips. I ended up making money on this trade. It sure is better than losing thousands.
Currently the entire Calendar portfolio has a reward to risk of 28:1. There is not one position that has total risk (position risk & opening and closing commissions) in excess of 5% of the portfolio value. The ave position risk is about 2% of portfolio value. And I am now 72% in cash. On all of these trades I am willing to take a full loss, and I have very conservative profit exit points i.e. of the 28:1 reward to risk, I am looking to earn between 200-500% of my initial total risk. I will let someone else earn the remainder. Over the past year, this strategy has a little over 90% winners going. That certainly may change. But even at 50%, losing 100% on the losing trades and gaining 200% on the winners… there is lots of opportunity here. Currently it has been about 90% winners, about 250% ave return per trade.
When the market gains is direction back, I will look toward momentum and direction. For now, I will take advantage of Volatility.
Disclaimer:
This is certainly not to be construed as trading advice, as there is a lot more analysis to it. I am not a financial planner, broker, etc. If you decide to take trading advice from a ski instructor, that’s your problem 😉 I’m a much better ski pro, than a trader.
Here are some pros from which to learn. I was just listening to the weekly Profit Strategies Radio show (very good) which I subscribe for free and download it on iTunes.
Right now they are offering their full 3-day “Advanced Investor Methods” seminar for FREE. It is normally $2995. I originally bought into the $3500 Optionetics seminar. It obviously has been worth every dollar.
When you call them tell them that I sent you, they give me 50% of the seminar amount (50% of free). Ok so they don’t pay me anything, but just give them my # 201 7320. I don’t earn anything from it, but maybe down the road they will take referrals into account and offer me one of the their advanced seminars. I promise I will post the results
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