Hi Joe,
Glad you are doing well. Sorry I haven't had a new post lately. I have been too busy. But let me update you about my views and trades:
I think market is in an undecided point. Shorts are selectively and aggressively shorting specific stocks and are gaining some confidence. But I think they will be squeezed soon. Here are the things I consider for trading:
1) First Coverage Sentiment report: They have a real time sentiment which has proved to show the mood of the market short term. Now they are calling to be long, so I am back to business. Their stock picks aren't really reliable as it reflect the past weeks activity. If they are bullish on a stock and I see the stock has been beaten, I consider selling out of the money puts. I am also considering neutral trading or writing closer to the money put spreads on bullish stocks. This way, I have a higher risk portfolio but risk less money too. Unfortunately, whenever I tried bearish or neutral spreads, I got caught. In case of DELL, I managed to get out with minimal loss. I also had a neutral spread on POT (sold 110 calls and 75 puts, bought 115 calls and 70 puts). That trade was good, but I got panic when POT rallied 10% in one day and close it the bearish side. Now that I am trying to be bullish, things seem to be turning bearish for me :) Seems I am out of phase a bit these days. Despite all that, so far my portfolio had been steady with small gains, so no major complain yet.
2) Here are the open positions I have:
- GMCR 55-50 bullish put spread (it is down after hours but I am going to hold on to it probably)
- MOS (45-40 bullish put spread)
- POT (80-70) bullish put spread
- SNDA (45-40) bullish put spread
- I own THLD (wish I added more when it was 1.10, insider bought it long time ago at 1.50)
My plan is to take profits when possible and keep the capital 1-2 weeks before expiration to sell neutral box spreads. Time decay should be killing both calls and puts.
It is a good idea to buy some insurance in case of market crash. I have a feeling that US dollar will go higher. The best deal for that I found are UDN puts since it has both time decay and UDN goes down if dollar goes up. I was looking at December 26 puts. As soon as I watched it, it got some volume the day after :) But I want to get it for less that $0.2/contract. We will see. I was thinking of some neutral ideas: for example something that takes advantage of dollar + gold trade...
The real time sentiment from first coverage is good although stocks are tanking. So that is a good short term sign to me. I am still concerned about the whole economy testing its past lows again and possibly tanking further. So, it is good to prepare for that (just as a small possibility)
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Smart,
ReplyDeleteI agree the market has been difficult to call. We seem to be in a bull rally in a bear market, but the bear market might be turning if we look at the longer term trend such as the 200dma. We still have people (such as Gary Schilling, SnP to 600) calling for another cliff dive yet to come.
I think we can only trade the market as we see it and let our winners or losers tell us what is going on. I like your First Coverage Sentiment report, several other sources I look to for big picture status are Wishing Wealth and StrategicGrowthModel blogspot, both are in a market buy mode.
I am leaning more towards options on ETFs for my trading. I like QQQQ, FXI, XLF, SLV. I also am watching the currency ETFs, UUP, UDN, FXC, FXA. As for options on stocks I like BAC.
Regards, Joe
Hey Joe,
ReplyDeleteHow have you been doing? I was caught with gmcr but now it bounced back. Glad I held it. What a volatile week. strangles would have worked so nicely for example on: gmcr, qcom, rimm, x, c, bac. Anyways, I didn't do that, but nice to learn. I keep thinking on doing neutral trades. The POT one would have worked if I hadn't closed the 110 call spread. Some stocks don't move much in a month although volatile. then you only need to have half the capital, and also down the road in the middle of the expiry, you can make strangles of the same stock. Still thinking and thinking. Any opinion on a neutral trade idea Joe? By the way, are you bullish on natural gas? It is at its 7 year low.