Opening up the week June 4, 2007

China falls 8%, and the US markets burp. US markets have been built up to the resistance of Chinese Stock Shock. It seems like a consolidation to me. I would actually like to see a bit of market fall.


China falls 8%, and the US markets burp. US markets have built a resistance to Chinese Stock Shock. It seems like a consolidation to me. I would actually like to see a bit of market fall.
EK – I sold some more of my EK position. As the EK stays at it’s up downward trendline and point of decreasing profit. I will pair back my position. I have 2 units on, and am pleased with the result of the trade so far. UPDATE – It has moved passed resistance. I took off another level, .48 and .42. I now only have 16 spreads on. I will use these as “lottery tix”. These are now just freebies.
PALM took a nice move up due to Private Equity money. However, I am looking at exiting the trade early. There will be a special $9 dividend. Who really knows where this stock is going. I will look for easier places to make money. UPDATE – I sold 1 unit for a small .10 profit. This position still makes money between 14.5 and 18.5. I am looking to exit the entire position for a very small profit.
COGN – dropped on the open. sitting at 40 right now. The option spread has nearly doubled. I couldn’t get a second level on @ .14. I like this 40 level for at least a few more days. Theta decay is 4% on my initial purchase price/day. That is pretty good.
AIG – Down please. It is doing nothing today.
SPF – I am looking to put a collar on it. I just created a Dynamic Hedging program to show me the proper hedges
JADE – Down slightly today. I was listening to the Optionetics section on “Dollars per Delta” selection of options. I created a spreadsheet to best figure which option offers the best bang for the buck in this Straddle. I am looking for a retest of a high, I will then put on the postion. I am looking at putting on 7 – Oct 10p when the price creates the right conditions.
FITB – I just put on a tester trade on this. a 45p Calendar July/Aug for .10. I only put on 1 unit. I will put 1 more on @ .05 if the price gets into a profit zone. This trade requires a lift in the underlying’s price. If it doesn’t lift, then I will probably be assigned when vol drops.
AMTD – The stock is taking a break at 20. I have 2 units on, and I am looking to put a 3rd on if I can get the right spread price.
BWLD – I am looking at this trade very carefully. I am putting on what I will now call, the “WildWing” trade. I am uncertain in the near term, but a bull in the intermediate/long term. Volatility is very high on the options. September especially.
I am trying to SELL a bullish Iron Condor in September (B90p-S95p / S100c-B105c), I will next buy a bearish Butterfly July (70p-75p-80p). As the underlying moves, I will look to buy a july 70p and a july 105c for “blowout” protection. These are very inexpensive. But it would stink to be right on direction and wrong on magnitude. The Risk on the IC is .70, the risk on the Butterfly is .40, and the combined risk on the protective options is .4. The Max gain is quite nice, at 7:1. Higher if the underlying moves down mid-summer, then back up in September. the main risk is that the underlying does not move, and all the positions expire worthless. UPDATE – nothing entered, besides a papertrade.

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