8/15 – Sub-prime madness continues

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Information from around the word is coming out relating to the Sub-prime. I don’t think this is over, and the UNCERTAINTY seems to have people heading for the doors. The Market can absorb bad news, but uncertainty is what the mkts don’t like.


Information from around the word is coming out relating to the Sub-prime. I don’t think this is over, and the UNCERTAINTY seems to have people heading for the doors. The Market can absorb bad news, but uncertainty is what the mkts don’t like. i.e. take the money out of positions. And 1 instance of a money market fund stopping withdrawls isn’t good either.
I was reading an article by Johnny Chan in the latest Trader Monthly. His article was well summarized when he wrote,

“I played to minimize my losses when behind while maximizing my gains when ahead.”

I do this with the calendars. If I am in a substantial reward to risk position within my Risk Graph, I am willing to add to the position. If it starts to move near or outside of my Breakevens, I am more reluctant to add under that strike price. However, I will look to create a new calendar position at the current ATM strike price. Look @ my ONXX trade.. I built and adjusted it over the course of two weeks.
You don’t think the Federal Reserve is the Government do you? Part 1 of 5

I am looking at a few entries.
ICE is intersting below 140.50. Entered 2 units Dec 140p/120p for 8.50. sold 1 at 9.80. Hold the rest, and tightened my trailing stop.
BZH- I exited 2 units of this trade for .15 Dec/Jan 10p. I bought these for even a few days back when the underlying was 15+, at the time of the sale it was 11. 200% gainer. I wanted to buy it back to open up some mental capital. And I now have TOL in the housing sector. One issue in this troubled industry is enough, eh.
My Acct is taking 3-5K swings about every hour. The good news is that I am well aware of my max risk, and the underlying prices of the option positions are not changing very much. It is very interesting.
COST- is getting ripped apart. I am looking for a bounce on it’s 50 dayMA support ($59.50), however we may see a taking out of stops at the level. I am looking to put a trade (perhaps just stock) below that level, and then I will set a tight stop. I do not intent on loosing more than 1% on this trade. I bottom fished off the trendline and picked it up for 59.04. There were a few stops hit and then it rebounded. My loss stops have been set, and I have a profit stop too.
I chose to enter for 3 reasons. 1) at the market lows, the breadth in the S&P was even. 2) COST was beaten down by a doom and gloom report from Walmart. I just don’t see it as that bad. 3) my stop was set where the loss couldn’t hurt me. I chickened out. I got out of COST @ 59.43. The underlying did not respond well on the back side of the 50MA, and the S&P was repelled at the primary downtrend line. It is a tough market to pick direction, YIKES.
JBLU – getting beaten with the poor oil inventory report this morning. I may step in with a second bullet today (as originally planned). And have a tight stop. 2nd bullet filled @ 8.98. It looks like stops were hit. I was stopped out @ 8.80 on 200 shares. I lost $60. It is really just commission on my calendar trades. But I feel like a pig for not accepting a10.10 (9%) gain just 3 short days ago. My profit target was 10.77. Dang. It was just a speculative play. I guest the bright side is that my acct up 5% on the day.
CY – Sold 1 of 10 units 15p Dec/Jan @ .15
TOL – sold 1 unit of 22.5p calendar for .17. Sold 1 units of 25p for .15. sold 1 unit of 20p for .15
FRX – Huge volatility in this issue. I am look at a few calendars. Received nothing.
IWM – I am still a long way from my skewed butterfly trade. but I am watching.
I am looking for a huge purchasing of puts, this may be a que to reversal. It will be violent to the upside. I am looking for it.
I was asked why not hold on to these longer than just a .15 move, before selling a unit off. 2 things.. 1, I just hate giving back profits. 2) I believe later today or tomorrow, the market opportunity for my style of hedging the risk of a high price option with an equally price option will present itself to me, several times a day. So, in the spirit of belief, I don’t mind selling a few “early”. If I was afraid I may never find this trade again, then I may hold on to them all the way until December expiration. I must have trust, execute my plan, and believe tomorrow will bring more opportunity.

Just a tune I was listening to on internet radio. I don’t think she wrote this song, because well… I doubt she ever went through what she is singing about.

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