A short review for last week.
1. Intraday trade on LVS, 6/5
Enter LVS 10.77, exit 10.41. - 3.3%.
Positive: Mental stop was slightly below 10.5, so the loss was taken quite quickly.
To improve: Tried to pick a bottom, but probably did it a bit too early. Stop could have been tighter if bottom fishing.
2. Intraday trade on BAC MAY 14 Put (BYOQN), 7/5
On this day, BAC opened with a huge gap up at $15 (prev day close $12.25), and the trade was intended to fade the gap. Trade was taken when a lower high was formed on BAC after watching the first 45 mins. Trade closed when BAC came back above $14.
Entry 0.84, exit 1.05. + 25%.
Positive: Controlled trade, good entry (lower high on a huge gap up day), good exit.
To improve: To recognize it was a down-trending day for the indices and financials. Pullback on downtrend day would mean an opportunity for another short entry.
3. Straddle on FAZ, 7/5
Entered FAZ MAY 6 Call (FAYEF) at 0.6 and FAZ MAY 6 Put (FAYQF) at 0.9, when underlying FAZ was around 5.7-5.8. This was on the day of the bank stress test results, announced after mkt close at 5pm EST. The option chain will profit only if FAZ goes above 7.25 or below 4.75, and the intent was to close the position on Fri 8/5.
Unfortunately, i did not stick to the strategy, and instead sold off the put leg when it seemed the market was turning, and closed the other at the end of the day, when the FAZ indeed hit the profit zone, hitting a low of 4.43 at 3.50pm EST.
Exited FAYQF at 1.1, exited FAYEF at 0.2. + 22% & - 66%.
Lesson: Plan the trade, and trade the plan! I followed the first half, but not the second half. Thought to self: Remember, sticking to a written strategy is far more important than the trading outcome.
Sunday, May 10, 2009
Friday, May 8, 2009
Links
A few good reads:
1. 10x Equals X - The Importance of Hard Work.
2. “V” Right on the Open - Where I Want to Be - Excellent example of market opening trade.
3. Bullish on VIX
4. Full Q&A With Investors and Traders on Twitter - stockguy22
5. Volume Weighted Moving Average Price (VWAP)
1. 10x Equals X - The Importance of Hard Work.
These new traders believe that if their work output is X then their reward must be X. If only that were the case. When you begin as a trader, your work output must be 10x to make x.
2. “V” Right on the Open - Where I Want to Be - Excellent example of market opening trade.
3. Bullish on VIX
4. Full Q&A With Investors and Traders on Twitter - stockguy22
5. Volume Weighted Moving Average Price (VWAP)
Tuesday, May 5, 2009
Review - 27/4 to 4/5
An eventful week, closed all positions and entered/exited Visa calls, and a brief stock trade in MasterCard.
Old positions (all closed):
1. CCJ JAN 2010 30 Call (LTAAF) - entered 0.45 on 14/4 when underlying CCJ was 18.19. Exited remainder 2/3 position at 1.925 average on 30/4, near the end of a strong surge (when CCJ was 24.52 & 24.56). + 327.8%
Talk about the power of options: the stock gained 34.9%, while the options gained 327.8%.
2. SPY MAY 90 Put (SWGQL) - entered 4.65 on 24/4 (when SPY was 86.81). Was waiting for a break in support of the SPY, however breakdown did not happen. Exited 5.3 on 27/4 (when SPY was 85.75). + 13.9%
3. HL SEP 2.5 Call (HLIZ) - entry was 0.45, exited 0.6 on 28/4 (when HL was 2.59), at the end of a strong day surge. + 33%
4. SLV JUL 16 Call (SLVGP) - entry was 0.65, cutloss at 0.25 on 27/4 (when SLV was 12.85). - 61%
New positions (all closed):
1. V JUN 70 Call (VFN) - was quietly confident on Visa's earnings results on 29/4 after mkt close, but waited for the right moment.
On 24/4, Visa climbed to a high of 60.75, and the calls hit about 0.85.
Waited for a dip, and on 27/4 morning, entered the calls at 0.70 (when V was 59.13). Since the calls doubled and hit 1.4 on 29/4 morning, i decided to sell off two-thirds of the calls at 1.45 and 1.35. + 101%
The stock went on to reach a high of 63.74 on 29/4 late afternoon, before the earnings after market close, which were slightly favourable. But on the next day 30/4, the market shot up, and Visa went on to hit a high of $68, taking the calls to bid price high of 2.9. Exited remainder at 2.75. + 292.8%
Now, most people might say, they could have kept the calls since they were already 100% up. But like the recent Goldman case of buy-on-rumour and sell-on-news whereby the calls collapsed due to time decay and stock sell off on results, there was a possibility of losing a large amount of the gains or more, hence i decided to close two-thirds of the position before the results.
That the calls went on to double again after i sold most of the position, giving almost 300% gains is immaterial. The key is to recognize when not to be too greedy, and take what the market gives you. Before the trade, i would have been happy with a 100% gain from the calls, hence the decision to lock in most of the gains was a right one.
2. MasterCard (MA)
This was another earnings play i was eagerly anticipating, results were due on 1/5 before mkt open. I was looking to enter on 29/4, but partly due to the Visa's earnings, there was a hesitancy to be place too many eggs into one basket, since both are electronic payment companies. The option i was looking at: the MA JUN 220 CALL (MALFD).
Here's what happened. On 29/4, the stock hit a low of 168.17, before really taking off to the races, hitting 177.83 near the close. During the day, the calls went from 1.35 to 1.7. On the next day, the stock gapped up above 180, and went on to hit 188.77 before closing below 184. The calls opened at 2.46, and hit a high of 3.4.
Hence the calls had more than doubled before earnings results.
However on 1/5, earnings results were out before mkt open, and due to the company's warning about continued weakness in revenues, the stock gapped down and briefly hit below 164. What happened to the calls? They collapsed with the drop in volatility, and ranged between 0.55 to 0.8 that day, since there was little chance of the stock hitting the strike price.
Instead, i took the opportunity to take an entry on the underlying stock at 170 at the end of the trading day, and exited it on the next trading day morning.
MA stock - entered 169.96 on 1/5, exited 177.08 on 4/5. + 4.2%
Old positions (all closed):
1. CCJ JAN 2010 30 Call (LTAAF) - entered 0.45 on 14/4 when underlying CCJ was 18.19. Exited remainder 2/3 position at 1.925 average on 30/4, near the end of a strong surge (when CCJ was 24.52 & 24.56). + 327.8%
Talk about the power of options: the stock gained 34.9%, while the options gained 327.8%.
2. SPY MAY 90 Put (SWGQL) - entered 4.65 on 24/4 (when SPY was 86.81). Was waiting for a break in support of the SPY, however breakdown did not happen. Exited 5.3 on 27/4 (when SPY was 85.75). + 13.9%
3. HL SEP 2.5 Call (HLIZ) - entry was 0.45, exited 0.6 on 28/4 (when HL was 2.59), at the end of a strong day surge. + 33%
4. SLV JUL 16 Call (SLVGP) - entry was 0.65, cutloss at 0.25 on 27/4 (when SLV was 12.85). - 61%
New positions (all closed):
1. V JUN 70 Call (VFN) - was quietly confident on Visa's earnings results on 29/4 after mkt close, but waited for the right moment.
On 24/4, Visa climbed to a high of 60.75, and the calls hit about 0.85.
Waited for a dip, and on 27/4 morning, entered the calls at 0.70 (when V was 59.13). Since the calls doubled and hit 1.4 on 29/4 morning, i decided to sell off two-thirds of the calls at 1.45 and 1.35. + 101%
The stock went on to reach a high of 63.74 on 29/4 late afternoon, before the earnings after market close, which were slightly favourable. But on the next day 30/4, the market shot up, and Visa went on to hit a high of $68, taking the calls to bid price high of 2.9. Exited remainder at 2.75. + 292.8%
Now, most people might say, they could have kept the calls since they were already 100% up. But like the recent Goldman case of buy-on-rumour and sell-on-news whereby the calls collapsed due to time decay and stock sell off on results, there was a possibility of losing a large amount of the gains or more, hence i decided to close two-thirds of the position before the results.
That the calls went on to double again after i sold most of the position, giving almost 300% gains is immaterial. The key is to recognize when not to be too greedy, and take what the market gives you. Before the trade, i would have been happy with a 100% gain from the calls, hence the decision to lock in most of the gains was a right one.
2. MasterCard (MA)
This was another earnings play i was eagerly anticipating, results were due on 1/5 before mkt open. I was looking to enter on 29/4, but partly due to the Visa's earnings, there was a hesitancy to be place too many eggs into one basket, since both are electronic payment companies. The option i was looking at: the MA JUN 220 CALL (MALFD).
Here's what happened. On 29/4, the stock hit a low of 168.17, before really taking off to the races, hitting 177.83 near the close. During the day, the calls went from 1.35 to 1.7. On the next day, the stock gapped up above 180, and went on to hit 188.77 before closing below 184. The calls opened at 2.46, and hit a high of 3.4.
Hence the calls had more than doubled before earnings results.
However on 1/5, earnings results were out before mkt open, and due to the company's warning about continued weakness in revenues, the stock gapped down and briefly hit below 164. What happened to the calls? They collapsed with the drop in volatility, and ranged between 0.55 to 0.8 that day, since there was little chance of the stock hitting the strike price.
Instead, i took the opportunity to take an entry on the underlying stock at 170 at the end of the trading day, and exited it on the next trading day morning.
MA stock - entered 169.96 on 1/5, exited 177.08 on 4/5. + 4.2%
Sunday, May 3, 2009
Lessons from Brett Steenbarger, Part 1
Lessons from Brett Steenbarger, author of several psychology trading books, including the recent release - The Daily Trading Coach: 101 Lessons for Becoming Your Own Trading Psychologist.
This blog post will focus on: How to avoid overtrading, and why you should not overtrade.
1. How Do I Avoid Overtrading?
Essentially, overtrading consists of: "trading size that is too large for one's portfolio (i.e., taking too much risk per trade) and trading too often (i.e., when an objective edge for the trade is not present)".
The solution is to formulate one's trading rules explicitly, and to stick to it always. As Ed Ponsi mentioned in a seminar i attended last November:
2. In a related post - Position Sizing and Risk Management in Trading, Brett shows why position sizing is so important.
The example used shows a peak-to-trough drawdown of 12% for a portfolio whereby returns per trade is only 1%, on the assumption the trader has entered a period of flat performance (average zero return per trade).
Brett goes on to say:
3. Finally, a few nuggets of wisdom.
From a medical doctor, from Risk Management and the Biology of Trading Psychology.
From Brett:
(a) Take What the Market Gives You: When your idea pays you out quickly, take some profits; (the winners that turn to losers are especially painful)
(b) Focus on profitability for the week: Don't get caught up in individual trades; focus on profitability over a series of trades and days.
This blog post will focus on: How to avoid overtrading, and why you should not overtrade.
1. How Do I Avoid Overtrading?
Essentially, overtrading consists of: "trading size that is too large for one's portfolio (i.e., taking too much risk per trade) and trading too often (i.e., when an objective edge for the trade is not present)".
The solution is to formulate one's trading rules explicitly, and to stick to it always. As Ed Ponsi mentioned in a seminar i attended last November:
Always stay with your strategy. Never change your strategy even if the outcome is positive from a case of not following your strategy.
Judge the success of your trades based on whether you followed the strategy, not based on the outcome.
2. In a related post - Position Sizing and Risk Management in Trading, Brett shows why position sizing is so important.
The example used shows a peak-to-trough drawdown of 12% for a portfolio whereby returns per trade is only 1%, on the assumption the trader has entered a period of flat performance (average zero return per trade).
Brett goes on to say:
When we trade size that is too large for our account size, we subject ourselves to drastic swings in P/L, and that subjects us to drastic swings in mood. In turn, we then make trading mistakes that bring a negative expectancy to each trade, and the size eventually blows us up.
3. Finally, a few nuggets of wisdom.
From a medical doctor, from Risk Management and the Biology of Trading Psychology.
... risk management is perhaps the preeminent tool of trading psychology. When we trade with excessive leverage, exposing our accounts to potential drastic drawdowns, we create the kind of stress-based learning that overwhelms the executive abilities of the prefrontal cortex.
There are many guides for risk management, but perhaps this psychological definition is simplest of all. You should always ensure that any loss you are likely to take in a position will not be large enough to generate an emergency response of mind and body. The size of your positions relative to the size of your portfolio will serve as a kind of magnifying glass for the stress responses of mind and body.
Risk management is a biological--as well as psychological--trading imperative.
From Brett:
(a) Take What the Market Gives You: When your idea pays you out quickly, take some profits; (the winners that turn to losers are especially painful)
(b) Focus on profitability for the week: Don't get caught up in individual trades; focus on profitability over a series of trades and days.
Solar
Firstly, my watchlist of Solar companies: http://finviz.com/portfolio.ashx?v=1&pid=3392922. More analysis to follow in the next few weeks.
News and articles:
Solar Stocks Up Nearly 7% for Week
First Solar rallies after profit triples, First Solar Rockets Higher; An Exception To The Rule, FSLR - Jan 09 Review by Green Market blog
Solar Industry's Long Term Outlook
Solar Stock: Recovery and Comparative Market performance - article from The Green Market
News and articles:
Solar Stocks Up Nearly 7% for Week
First Solar rallies after profit triples, First Solar Rockets Higher; An Exception To The Rule, FSLR - Jan 09 Review by Green Market blog
Solar Industry's Long Term Outlook
Solar Stock: Recovery and Comparative Market performance - article from The Green Market
Sunday, April 26, 2009
Links
Useful links:
http://chart.ly/user/terchua - to share stock charts for twitter and stocktwits
How to buy a stock for a 15-20% discount - excellent option writing strategy.
The key is to pick stocks that are:
Trading near lows
Fairly volatile
NOT likely to go bankrupt/Undervalued
Either pay dividends or have good growth
Have a clear path of continuing contracts to write
You don’t mind owning long-term
http://chart.ly/user/terchua - to share stock charts for twitter and stocktwits
How to buy a stock for a 15-20% discount - excellent option writing strategy.
The key is to pick stocks that are:
Trading near lows
Fairly volatile
NOT likely to go bankrupt/Undervalued
Either pay dividends or have good growth
Have a clear path of continuing contracts to write
You don’t mind owning long-term
Saturday, April 25, 2009
Review - 13/4 to 24/4
It's been a busy two weeks with ups and downs.
A. The positive trades:
1. DNDN MAY 7.5 Call (UKOEU) - entry was 1.55, exited 12.4 and 10 on 14/4. +622% average
2. C MAY 5 Call (CEP) - entered 0.21 on 13/4, exited 0.42 on 14/4 (2/5 position) and 0.48 on 15/4 (3/5 position). +100% and +128%
The calls went up to 0.72 on 14/4, but did not adopt a limit stop to protect profits, and kept the remainder position overnight.
3. FAZ MAY 7.5 Call (FAYEU) - intraday, entered 2.4 on 22/4, exited 2.7 and 2.6. +12.5% and +8%
B. The negative trades:
1. GS APR 140 Call (GSDH) - entered 2.23 on 13/4, exited 0.2 on 14/4. -91%
Lesson: Chased the calls too late in trading session after a strong surge, the day before results.
2. TCK MAY 10 Call (TCKEB) - entered 1.05 on 13/4, exited 0.75 on 15/4. -28.6%
Lesson: No rationale for short-term position, except for results on 21/4. This one is a longer-term hold.
3. C stock - entered 4.07 on 16/4 day before earnings, exited 3.16 on 21/4. -22%
Lesson: Always use stop to protect profits, never be complacent and think the unexpected will not happen.
Did not sell in pre-market hours at 4.3 on 17/4, and stock dropped quickly when market opened, missed opportunity to cutloss at 3.9-3.99. Held onto the loser till i was tired of watching it.
4. SPY MAY 90 Put (SWGQL) - entered 7.05 on 20/4 (when SPY was 83.88), exited 6.75 on 23/4 (when SPY was 83.93). -4%
Lesson: This was a bit of a boo-boo, as i just realized the entry was 7.05. Had mistaken it to be 6.05, hence the early exit was taken. This stresses the importance of record keeping and reviewing them!!
5. FAZ - intraday, entered 10.82 on 21/4, exited 10.06. -7%
Lesson: Swing low was 10.46 on 21/4, hence stoploss would have been tighter (around 10.42) to cut losses fast.
C. Holding:
1. CCJ JAN 2010 30 Call (LTAAF) - entered 0.45 on 14/4 when underlying CCJ was 18.19, exited 1/3 position 0.85 on 24/4, +88%. Holding remainder 2/3 position.
Rationale: Uranium miner (Cameco) for long term. Strong 3 day move made the underyling CCJ overbought, with $21 resistance. Intend to scale in further if it breaks $21 and establishes $20-21 as support.
2. SPY MAY 90 Put (SWGQL) - entered 4.65 on 24/4 (when SPY was 86.81). Rationale is that SPY 87.5 has strong resistance, and there might be a pullback in the next 2 weeks.
3. HL SEP 2.5 Call (HLIZ) - old position
4. SLV JUL 16 Call (SLVGP) - old position, may evaluate to consider cutting loss and enter Oct 09 or Jan 10 calls instead.
A. The positive trades:
1. DNDN MAY 7.5 Call (UKOEU) - entry was 1.55, exited 12.4 and 10 on 14/4. +622% average
2. C MAY 5 Call (CEP) - entered 0.21 on 13/4, exited 0.42 on 14/4 (2/5 position) and 0.48 on 15/4 (3/5 position). +100% and +128%
The calls went up to 0.72 on 14/4, but did not adopt a limit stop to protect profits, and kept the remainder position overnight.
3. FAZ MAY 7.5 Call (FAYEU) - intraday, entered 2.4 on 22/4, exited 2.7 and 2.6. +12.5% and +8%
B. The negative trades:
1. GS APR 140 Call (GSDH) - entered 2.23 on 13/4, exited 0.2 on 14/4. -91%
Lesson: Chased the calls too late in trading session after a strong surge, the day before results.
2. TCK MAY 10 Call (TCKEB) - entered 1.05 on 13/4, exited 0.75 on 15/4. -28.6%
Lesson: No rationale for short-term position, except for results on 21/4. This one is a longer-term hold.
3. C stock - entered 4.07 on 16/4 day before earnings, exited 3.16 on 21/4. -22%
Lesson: Always use stop to protect profits, never be complacent and think the unexpected will not happen.
Did not sell in pre-market hours at 4.3 on 17/4, and stock dropped quickly when market opened, missed opportunity to cutloss at 3.9-3.99. Held onto the loser till i was tired of watching it.
4. SPY MAY 90 Put (SWGQL) - entered 7.05 on 20/4 (when SPY was 83.88), exited 6.75 on 23/4 (when SPY was 83.93). -4%
Lesson: This was a bit of a boo-boo, as i just realized the entry was 7.05. Had mistaken it to be 6.05, hence the early exit was taken. This stresses the importance of record keeping and reviewing them!!
5. FAZ - intraday, entered 10.82 on 21/4, exited 10.06. -7%
Lesson: Swing low was 10.46 on 21/4, hence stoploss would have been tighter (around 10.42) to cut losses fast.
C. Holding:
1. CCJ JAN 2010 30 Call (LTAAF) - entered 0.45 on 14/4 when underlying CCJ was 18.19, exited 1/3 position 0.85 on 24/4, +88%. Holding remainder 2/3 position.
Rationale: Uranium miner (Cameco) for long term. Strong 3 day move made the underyling CCJ overbought, with $21 resistance. Intend to scale in further if it breaks $21 and establishes $20-21 as support.
2. SPY MAY 90 Put (SWGQL) - entered 4.65 on 24/4 (when SPY was 86.81). Rationale is that SPY 87.5 has strong resistance, and there might be a pullback in the next 2 weeks.
3. HL SEP 2.5 Call (HLIZ) - old position
4. SLV JUL 16 Call (SLVGP) - old position, may evaluate to consider cutting loss and enter Oct 09 or Jan 10 calls instead.
Sunday, April 12, 2009
Earnings watchlist
No changes to positions in the past week.
For the week of 13-April, more earnings are in the pipeline, including:
Goldman Sachs (GS), Tuesday, before market open
Johnson & Johnson (JNJ), Tuesday, no time given
Google (GOOG), Thursday, after the close
JP Morgan Chase (JPM), Thursday, 6:30 a.m. ET
Citigroup (C), Friday, before market open
General Electric (GE), Friday, before market open
For the week of 13-April, more earnings are in the pipeline, including:
Goldman Sachs (GS), Tuesday, before market open
Johnson & Johnson (JNJ), Tuesday, no time given
Google (GOOG), Thursday, after the close
JP Morgan Chase (JPM), Thursday, 6:30 a.m. ET
Citigroup (C), Friday, before market open
General Electric (GE), Friday, before market open
Saturday, April 4, 2009
Trade Review 30/3 - 3/4
Firstly, no changes to positions in the past week.
1. Current Holdings:
(a) HL SEP 2.5 Call (HLIZ)
Entry was $0.45, closed 3/4 $0.4. The underlying took a hit on 27/3 and 30/3 with Silver dipping, but recovered slightly and closed 3/4 at 2.06.
(b) DNDN MAY 7.5 Call (UKOEU)
Dendreon soared on Friday 3/4, as investors looked ahead to long-awaited data on the company's experimental Provenge vaccine to treat advanced prostate cancer.
Entry was $1.55 (when DNDN was at 4.14), closed 3/4 $2.04 (as DNDN closed 5.99, up 38% on Fri with vol of 22.78M compared to avg vol of 2.56M).
(c) SLV JUL 16 Call (SLVGP)
Entry was $0.65, closed 3/4 $0.45. The underlying SLV ETF dropped off it's 20/3 high of 13.6 and closed 3/4 at 12.6. Watch this closely, as SLV's support of 12 to 12.5 must hold.
2. Next, the one i was watching the past few months, but did not trade, Research In Motion (RIMM) which reported earnings on Thur after market close.
The April 60 calls (RFYDL) closed Wed 1/4 at $0.22 (up $0.1 that day), closed Thur 2/4 at $0.58 before the results. RIMM reported better-than-expected earnings, hit $60 in the Thur after hrs trading and a high of $60.95 in early Fri trading.
The April 60 calls hit a high of $3.9 on Fri, and closed at $2.82.
3. Watching:
(a) STP (Suntech Power Holdings Co. Ltd.)
STP JUN 20 C (STPFD): 3/4 close 0.7-0.85 (bid/ask)
STP SEP 22.5 C (STPIX): 3/4 close 1-1.2 (bid/ask)
(b) TCK (Teck Cominco Limited), Industrial Metals & Minerals - Results 20/4 after mkt close.
TCK MAY 10 C (TCKEB): 3/4 close 0.3-0.4 (bid/ask)
TCK AUG 10 C (TCKHBTCK): 3/4 close 0.8-0.9 (bid/ask)
(c) IVN (Ivanhoe Mines Ltd.), Industrial Metals & Minerals
IVN JUN 7.5 C (IVNFU): 3/4 close 0.85-0.95 (bid/ask)
IVN SEP 10 C (IVNIB): 3/4 close 0.7-0.85 (bid/ask)
(d) V (Visa Inc.), Results 29/4 after mkt close.
V MAY 70 C (VEN): 3/4 close 0.9-0.95 (bid/ask)
(e) HBC (HSBC Hldgs), provided support of $31-32 holds, after gap up on 2/4.
HBC JUN 40 C (HBCFH): 6/4 0.9-1.05 (at 12.30pm when underlying HBC was 32.75)
HBC JUN 45 C (HGKFI): 6/4 1.05-1.15
HBC SEP 45 C (HGKII): 6/4 0.4-0.45
1. Current Holdings:
(a) HL SEP 2.5 Call (HLIZ)
Entry was $0.45, closed 3/4 $0.4. The underlying took a hit on 27/3 and 30/3 with Silver dipping, but recovered slightly and closed 3/4 at 2.06.
(b) DNDN MAY 7.5 Call (UKOEU)
Dendreon soared on Friday 3/4, as investors looked ahead to long-awaited data on the company's experimental Provenge vaccine to treat advanced prostate cancer.
Entry was $1.55 (when DNDN was at 4.14), closed 3/4 $2.04 (as DNDN closed 5.99, up 38% on Fri with vol of 22.78M compared to avg vol of 2.56M).
(c) SLV JUL 16 Call (SLVGP)
Entry was $0.65, closed 3/4 $0.45. The underlying SLV ETF dropped off it's 20/3 high of 13.6 and closed 3/4 at 12.6. Watch this closely, as SLV's support of 12 to 12.5 must hold.
2. Next, the one i was watching the past few months, but did not trade, Research In Motion (RIMM) which reported earnings on Thur after market close.
The April 60 calls (RFYDL) closed Wed 1/4 at $0.22 (up $0.1 that day), closed Thur 2/4 at $0.58 before the results. RIMM reported better-than-expected earnings, hit $60 in the Thur after hrs trading and a high of $60.95 in early Fri trading.
The April 60 calls hit a high of $3.9 on Fri, and closed at $2.82.
3. Watching:
(a) STP (Suntech Power Holdings Co. Ltd.)
STP JUN 20 C (STPFD): 3/4 close 0.7-0.85 (bid/ask)
STP SEP 22.5 C (STPIX): 3/4 close 1-1.2 (bid/ask)
(b) TCK (Teck Cominco Limited), Industrial Metals & Minerals - Results 20/4 after mkt close.
TCK MAY 10 C (TCKEB): 3/4 close 0.3-0.4 (bid/ask)
TCK AUG 10 C (TCKHBTCK): 3/4 close 0.8-0.9 (bid/ask)
(c) IVN (Ivanhoe Mines Ltd.), Industrial Metals & Minerals
IVN JUN 7.5 C (IVNFU): 3/4 close 0.85-0.95 (bid/ask)
IVN SEP 10 C (IVNIB): 3/4 close 0.7-0.85 (bid/ask)
(d) V (Visa Inc.), Results 29/4 after mkt close.
V MAY 70 C (VEN): 3/4 close 0.9-0.95 (bid/ask)
(e) HBC (HSBC Hldgs), provided support of $31-32 holds, after gap up on 2/4.
HBC JUN 40 C (HBCFH): 6/4 0.9-1.05 (at 12.30pm when underlying HBC was 32.75)
HBC JUN 45 C (HGKFI): 6/4 1.05-1.15
HBC SEP 45 C (HGKII): 6/4 0.4-0.45
Saturday, March 28, 2009
News and Links from the past week
General News:
- The Amazing Surprising Trend Day of March 23
- Monday Options Update: XLF, JPM, C, AGN, RHT, SU, SWY
- China calls for creation of new currency to replace the dollar
- Bear Market Comparisons
- Friday Outlook: Commodities, Global Markets
- Elliott Wave Update - Possible Count for March 26
- Geithner's Financial Reform Is Doomed to Fail
- China Chastises West in Leadership Bid Before G-20
Investment Ideas:
- Exclusive Interview With the 'King of Copper' - Juan Villarzu
- Fast Food Rising Quickly: MCD, YUM, CMG
- Speculating on Chinese Solar: Throw a Dart and Smile - STP, TSL, LDK, YGE, JASO
- 2009 Country Performance: BRIC Countries All in the Black
- ETF encyclopedia - list of ETFs by category
Gold and Silver:
- Silver Market update (news)
- Bob Moriarty: Act on Contrarian Thinking (interview)
- Richard Russell articles, on Gold-eagle.com
- Roger Wiegand: Senior and junior gold, silver mining stock picks: Part 1 and Part 2.
- Jim Sinclair's Mineset - excellent blog!
- The Amazing Surprising Trend Day of March 23
- Monday Options Update: XLF, JPM, C, AGN, RHT, SU, SWY
- China calls for creation of new currency to replace the dollar
- Bear Market Comparisons
- Friday Outlook: Commodities, Global Markets
- Elliott Wave Update - Possible Count for March 26
- Geithner's Financial Reform Is Doomed to Fail
- China Chastises West in Leadership Bid Before G-20
Investment Ideas:
- Exclusive Interview With the 'King of Copper' - Juan Villarzu
- Fast Food Rising Quickly: MCD, YUM, CMG
- Speculating on Chinese Solar: Throw a Dart and Smile - STP, TSL, LDK, YGE, JASO
- 2009 Country Performance: BRIC Countries All in the Black
- ETF encyclopedia - list of ETFs by category
Gold and Silver:
- Silver Market update (news)
- Bob Moriarty: Act on Contrarian Thinking (interview)
- Richard Russell articles, on Gold-eagle.com
- Roger Wiegand: Senior and junior gold, silver mining stock picks: Part 1 and Part 2.
- Jim Sinclair's Mineset - excellent blog!
Trade Review (23/3 - 27/3)
1. Trades Closed:
(a) MS APR 30 Call (MSDF) - entered 16/3 $1.1 (when MS was $24.42), cutloss 24/3 $0.85 (when MS was $25), - 23%.
The calls went to as low as 25 cents on 20.3, before the market rebound brought MS back up. However after comparing the underlying chart with the option chart, the time decay was apparent. The calls hit $1.55 when the stock hit a high of $26 last week, while today (24/3), the calls hit $1 with the stock at $25.5. Decided to cutloss, since i have the longer-term XLF call. (MS subsequently hit a high of $27.2 on 24/3, but closed the week at 24.35).
(b) XLF SEP 11 Call (XJZIK) - entered 23/3 $0.94 (when underlying XLF was $8.88), closed 25/3 $1.22 (when underlying XLF was $9.28), + 29%
The XLF had a strong first half trading session on 24/3 (hitting 9.66 twice), but faded along with the market selldown and closed below opening. However on 25/3, after a small gap opening (see *Note), there was slight divergence with the SPY, as the XLF failed to hit the previous day high, only touching 9.55 while the SPY took out the previous 2 days high of 823 and touched 826. In view of this divergence, i took a small early profit. As of 1.50pm on 25/3 (US time), the SPY indeed covered today's gap up, and was sold down to 806 (with XLF at 9).
2. Trades Entered:
- SLV JUL 16 Call (SLVGP) - entered 27/3 $0.65 (when underlying SLV was $13.16).
Have been watching this call, which ranged between 0.6-0.7 on 25/3. The bid-ask was 0.55 and 0.65 on 27/3, but decided to enter an initial position first.
3. Current Holdings:
- HL SEP 2.5 Call (HLIZ)
- DNDN MAY 7.5 Call (UKOEU)
- SLV JUL 16 Call (SLVGP) (added this week)
*Note: SPY gap up (or gap down) of $1 or more are a strong indication of the market strength (or weakness), and the gaps are usually not filled. Gaps of < $1 are usually filled. Stats from Traderfeed and Quantifiable Edges.
(a) MS APR 30 Call (MSDF) - entered 16/3 $1.1 (when MS was $24.42), cutloss 24/3 $0.85 (when MS was $25), - 23%.
The calls went to as low as 25 cents on 20.3, before the market rebound brought MS back up. However after comparing the underlying chart with the option chart, the time decay was apparent. The calls hit $1.55 when the stock hit a high of $26 last week, while today (24/3), the calls hit $1 with the stock at $25.5. Decided to cutloss, since i have the longer-term XLF call. (MS subsequently hit a high of $27.2 on 24/3, but closed the week at 24.35).
(b) XLF SEP 11 Call (XJZIK) - entered 23/3 $0.94 (when underlying XLF was $8.88), closed 25/3 $1.22 (when underlying XLF was $9.28), + 29%
The XLF had a strong first half trading session on 24/3 (hitting 9.66 twice), but faded along with the market selldown and closed below opening. However on 25/3, after a small gap opening (see *Note), there was slight divergence with the SPY, as the XLF failed to hit the previous day high, only touching 9.55 while the SPY took out the previous 2 days high of 823 and touched 826. In view of this divergence, i took a small early profit. As of 1.50pm on 25/3 (US time), the SPY indeed covered today's gap up, and was sold down to 806 (with XLF at 9).
2. Trades Entered:
- SLV JUL 16 Call (SLVGP) - entered 27/3 $0.65 (when underlying SLV was $13.16).
Have been watching this call, which ranged between 0.6-0.7 on 25/3. The bid-ask was 0.55 and 0.65 on 27/3, but decided to enter an initial position first.
3. Current Holdings:
- HL SEP 2.5 Call (HLIZ)
- DNDN MAY 7.5 Call (UKOEU)
- SLV JUL 16 Call (SLVGP) (added this week)
*Note: SPY gap up (or gap down) of $1 or more are a strong indication of the market strength (or weakness), and the gaps are usually not filled. Gaps of < $1 are usually filled. Stats from Traderfeed and Quantifiable Edges.
Monday, March 23, 2009
Links - Silver and Gold
- Short Squeeze in Silver - How to Profit
- Silver's discount to gold sticks out like sore thumb
- Apples of Gold, Settings of Silver, and Barrick Gold
- Dow/Gold Ratio and the Dollar: What Does It Mean for Value Investors
- Gold report - interview on gold and precious metals
An opposing view - Gold Bulls Should Stay Away from Gold Stocks
RunToGold.com
Silver Blog Spot and Silver Investor - good list of articles
The Gold and Oil Guy
Silver Brothers
Wikipedia - Silver
- Silver's discount to gold sticks out like sore thumb
- Apples of Gold, Settings of Silver, and Barrick Gold
- Dow/Gold Ratio and the Dollar: What Does It Mean for Value Investors
- Gold report - interview on gold and precious metals
An opposing view - Gold Bulls Should Stay Away from Gold Stocks
RunToGold.com
Silver Blog Spot and Silver Investor - good list of articles
The Gold and Oil Guy
Silver Brothers
Wikipedia - Silver
Friday, March 20, 2009
Trade Review (16/3 - 20/3)
1. Trades Closed:
(a) XLF Sep 10 Call (XJZIJ) - entered 26/2 $1.04, sold 16/3 $1.1, + 5.8%.
Decided to cash out as there is a possible short-term resistance on the XLF at 8.6, on a day when Citi was +40% and BAC +14% within the first 2 hrs. Will consider re-entry on a pullback.
2. Current Positions:
(a) MS APR 30 Call (MSDF) - entered 16/3 $1.1, still open.
MS has been on an uptrend since the $1 opening gap up to 17.5 on 10/3 Tue, before hitting a high of $25.5 today. Took this trade when MS dropped to around $24.4, on the basis of 23.6 support holding. It has hit a YTD high, hence this is a play on the least path of resistance.
Note: Admittedly, this trade was not my idea. Checked the chart and saw a possible opportunity, especially with a possible rally in the current options expiration week.
(b) HL SEP 2.5 Call (HLIZ) - entered 19/3 $0.45 (when underlying HL was 2.02), still open.
Hecla Mining - proxy to Silver and metal's strength.
(c) DNDN MAY 7.5 Call (UKOEU) - entered 19/3 $1.55 (when underlying DNDN was 4.14), still open.
Dendreon - biotech play.
(a) XLF Sep 10 Call (XJZIJ) - entered 26/2 $1.04, sold 16/3 $1.1, + 5.8%.
Decided to cash out as there is a possible short-term resistance on the XLF at 8.6, on a day when Citi was +40% and BAC +14% within the first 2 hrs. Will consider re-entry on a pullback.
2. Current Positions:
(a) MS APR 30 Call (MSDF) - entered 16/3 $1.1, still open.
MS has been on an uptrend since the $1 opening gap up to 17.5 on 10/3 Tue, before hitting a high of $25.5 today. Took this trade when MS dropped to around $24.4, on the basis of 23.6 support holding. It has hit a YTD high, hence this is a play on the least path of resistance.
Note: Admittedly, this trade was not my idea. Checked the chart and saw a possible opportunity, especially with a possible rally in the current options expiration week.
(b) HL SEP 2.5 Call (HLIZ) - entered 19/3 $0.45 (when underlying HL was 2.02), still open.
Hecla Mining - proxy to Silver and metal's strength.
(c) DNDN MAY 7.5 Call (UKOEU) - entered 19/3 $1.55 (when underlying DNDN was 4.14), still open.
Dendreon - biotech play.
Sunday, March 15, 2009
Trade Review (9/3 - 13/3)
Managed to stick to the discipline of only taking trades that were planned out in advance. It was tempting to stray, particularly since it was a huge upmove in the markets, with the S&P500 moving up about 9-10% for the week, and clearing the 700 level convincingly. The next resistance level to watch is 800.
For the upcoming week, will be watching XLF, BAC, JPM and DXO.
1. Trades Done:
(a) IBM APR 95 Call (IBMDS) - entered 9/3 $1.3, exited 11/3 $2.0. + 54% (before comms)
(b) POWERSHARES DB CRUDE OIL DOUBLE LONG (DXO) - entered 11/3, exited 12/3 $2.4 (when Apr Crude was around $44.4 and $45.4 respectively), + 2.2%.
Thoughts: Due to the uncertainty of the US indices on Thur 11/3, i took an early exit for the IBM calls, when the underlying stock took a temporal high for the day, which turned out to be the case. Subsequently, the calls retreated and went to a low of $1.45 on 12/3, before the market rally brought it to a high of $2.4, when IBM hit 90.53.
For DXO, it was a maiden Oil ETF trade. Observed that crude oil increase of $1 equates to about $0.1 increase in DXO. The entry was done after release of crude inventories figure of 0.7M, against 0.1M expected. April Crude rallied to $45.8, before coming back down all the way to $42.08. The lesson learnt is to avoid such entries immediately after a news release, and instead wait for the news to filter through to the markets.
2. Current Positions:
(a) XLF Sep 10 call option (XJZIJ) - entered 26/2 $1.04, still open.
With financial stocks leading the past few days' rally, the XLF will remain a hold, with a view to add to this position.
Articles:
Wednesday Outlook: Commodities, Emerging Markets
For the upcoming week, will be watching XLF, BAC, JPM and DXO.
1. Trades Done:
(a) IBM APR 95 Call (IBMDS) - entered 9/3 $1.3, exited 11/3 $2.0. + 54% (before comms)
(b) POWERSHARES DB CRUDE OIL DOUBLE LONG (DXO) - entered 11/3, exited 12/3 $2.4 (when Apr Crude was around $44.4 and $45.4 respectively), + 2.2%.
Thoughts: Due to the uncertainty of the US indices on Thur 11/3, i took an early exit for the IBM calls, when the underlying stock took a temporal high for the day, which turned out to be the case. Subsequently, the calls retreated and went to a low of $1.45 on 12/3, before the market rally brought it to a high of $2.4, when IBM hit 90.53.
For DXO, it was a maiden Oil ETF trade. Observed that crude oil increase of $1 equates to about $0.1 increase in DXO. The entry was done after release of crude inventories figure of 0.7M, against 0.1M expected. April Crude rallied to $45.8, before coming back down all the way to $42.08. The lesson learnt is to avoid such entries immediately after a news release, and instead wait for the news to filter through to the markets.
2. Current Positions:
(a) XLF Sep 10 call option (XJZIJ) - entered 26/2 $1.04, still open.
With financial stocks leading the past few days' rally, the XLF will remain a hold, with a view to add to this position.
Articles:
Wednesday Outlook: Commodities, Emerging Markets
Sunday, March 8, 2009
Trade Ideas
Here are my ideas for the upcoming weeks till mid April. Prices quoted at 6/3 Fri close. At this point, am favouring positions in XOM, IBM and possible DXO. Will also consider a short-term trade on XLF, plus closely watch NG and IVN.
(a) SPX - Straddle on the SPX or SPY, using April options.
- Long SPY APR 2009 69 Call (SWVDQ) and Long SPY APR 2009 69 Put (SWVPQ). However breakeven is 60.65 and 77.35, which makes it too wide a range. Max loss is $835 per 1 contract, if SPY stays at 69. One possibility is to do the reverse, and Sell both the options, earning $815 premium, with $2,538 margin required. Premium-margin ratio is 32%. However given the possible volatility, the margin required may increase, hence will pass on this possible trade.
(b) XOM (Exxon Mobil) - Support at $60-$62, and as a proxy to oil's strength.
- Long Apr 70 calls (XOMDN - 1.55/1.59) or Apr 75 calls (XOMDO - 0.59/0.62). Cutloss if XOM closes below 60, target 70-75.
(c) IBM - Closed 85.81 on Fri, possible support at 80.
- Long Apr 90 calls (IBMDR - 3.1/3.2) or Apr 95 calls (IBMDS - 1.5/1.55). Cutloss if IBM closes below 80, target 90-95.
(d) Gold - Will stay out of GLD, am considering GDX or GLD/GDX options. The alternative is to own Gold explorers like NG (NovaGold Resources Inc.) or IVN (Ivanhoe Mines Ltd.).
- Short GLD MAR 2009 93 Call (GLDCO) and Short GLD MAR 2009 93 Put (GLDOO), earning $514 premium, with $2,821 margin required. Breakeven point is 87.86 and 98.14. Premium-margin ratio is 18.2%.
- Short GDX MAR 2009 33 Call (GBJCG) and Short GDX MAR 2009 33 Put (GBJOG), earning $330 premium, with $1,152 margin required. Breakeven point is 29.7 and 36.3. Premium-margin ratio is 28.6%.
- Will consider NG or IVN Apr options, depending on how the US indices and Gold move in the next 2 weeks. 6/3 close: IVN 4.17, NG 2.70.
(e) Crude - Long a small position in DXO. Watching DBE (energy ETF).
Other commodity ETFs include DBC (Commodity ETF) and DBA (Agriculture ETF).
(f) Aussie and Canadian Currency - Watching FXA and FXC, in particular FXC, especially if USDCAD resistance of 1.3 holds. 6/3 Fri close 64.07 (FXA) and 0.6402 (AUDUSD); 77.76 (FXC) and 1.288 (USDCAD). Checked the FXA and FXC options, however the spreads are quite wide, hence not viable.
(g) XLF - Possible short-term reversal trade, given it's large drop the past week. Stoploss has to be tight, around the 6-Mar low of 5.88.
(a) SPX - Straddle on the SPX or SPY, using April options.
- Long SPY APR 2009 69 Call (SWVDQ) and Long SPY APR 2009 69 Put (SWVPQ). However breakeven is 60.65 and 77.35, which makes it too wide a range. Max loss is $835 per 1 contract, if SPY stays at 69. One possibility is to do the reverse, and Sell both the options, earning $815 premium, with $2,538 margin required. Premium-margin ratio is 32%. However given the possible volatility, the margin required may increase, hence will pass on this possible trade.
(b) XOM (Exxon Mobil) - Support at $60-$62, and as a proxy to oil's strength.
- Long Apr 70 calls (XOMDN - 1.55/1.59) or Apr 75 calls (XOMDO - 0.59/0.62). Cutloss if XOM closes below 60, target 70-75.
(c) IBM - Closed 85.81 on Fri, possible support at 80.
- Long Apr 90 calls (IBMDR - 3.1/3.2) or Apr 95 calls (IBMDS - 1.5/1.55). Cutloss if IBM closes below 80, target 90-95.
(d) Gold - Will stay out of GLD, am considering GDX or GLD/GDX options. The alternative is to own Gold explorers like NG (NovaGold Resources Inc.) or IVN (Ivanhoe Mines Ltd.).
- Short GLD MAR 2009 93 Call (GLDCO) and Short GLD MAR 2009 93 Put (GLDOO), earning $514 premium, with $2,821 margin required. Breakeven point is 87.86 and 98.14. Premium-margin ratio is 18.2%.
- Short GDX MAR 2009 33 Call (GBJCG) and Short GDX MAR 2009 33 Put (GBJOG), earning $330 premium, with $1,152 margin required. Breakeven point is 29.7 and 36.3. Premium-margin ratio is 28.6%.
- Will consider NG or IVN Apr options, depending on how the US indices and Gold move in the next 2 weeks. 6/3 close: IVN 4.17, NG 2.70.
(e) Crude - Long a small position in DXO. Watching DBE (energy ETF).
Other commodity ETFs include DBC (Commodity ETF) and DBA (Agriculture ETF).
(f) Aussie and Canadian Currency - Watching FXA and FXC, in particular FXC, especially if USDCAD resistance of 1.3 holds. 6/3 Fri close 64.07 (FXA) and 0.6402 (AUDUSD); 77.76 (FXC) and 1.288 (USDCAD). Checked the FXA and FXC options, however the spreads are quite wide, hence not viable.
(g) XLF - Possible short-term reversal trade, given it's large drop the past week. Stoploss has to be tight, around the 6-Mar low of 5.88.
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