Expiration Friday

Hey guys, it's been a while since I had anything to say. I had put on a total of 5 naked option positions at various times this month. I had naked puts on GG, LEAP, VLO, and UA. I had naked calls on SPY. GG and UA expired worthless, I closed out VLO early for a gain, closed out the SPY calls today for a -$100 loss, they expired worthless three hours later, frustrating. I have a -$2000 paper loss on the LEAP puts. I will be taking possession this weekend at a strike of $17.50 with a cost average of $16.50, and will sell Nov calls on Monday. So the realized gain this month for the four positions was $1240, however, including the paper loss it currently stands at -$760 for the sum total of the five positions.

For me this was a good month because I'm back to being in the game and speculating. Between the financial crisis and the uncertainty of future employment I had been running scared for a while and just hoarding cash. Just a few weeks ago I closed out my JPM call spread and left a lot of profit on the table because I wanted to get in cash for a possible move to Chicago. I would not be closing out that position today and currently regret doing so. It's a signal to me that I wasn't in my right mind a few months back. I feel like I've got my confidence back now after having lost it a few years ago. So I'm happy, today, we'll see what tomorrow brings.

Are we going to 1200 Dow?

I've really made my money this year learning from Dan Fritzpatrick at StockMarketMentor.com. In 1 year I've gone from basically only having a few thousand dollars to over $100k. My swing portfolio is up over 50% year to date (my 401k which I opened in January is up over 30%) but I missed a lot of money having not taken his trades and market commentary.

Here is his current thesis:

He has called and stayed with the trend all the way up from March and advocated being a "vigilant bull". He feels that investors are emboldened in to buy in this easy money "temporary bull" market where Americans aren't consuming their income but investing and their flowing into stocks because a) it's been easy money for almost 6 months now and they are chasing ROI b) lack of competitive options (real estate is too risky and credit is difficult, bonds are boring and savings are basically 0% return) c) no one wants to be in dollars. He also believes that the market will be heading to 1200 Dow but will encounter heavy resistance as we approach this level because this is a natural level for sellers to take profits. There are 3 things he feels could derail this rally:

1) Unexpected consistently negative earnings
2) Disorderly fall in the dollar or a reversal in the dollar's demise
3) Fed changing it's tone and raising interest rates

So I will continue to buy on pullbacks, short the dollar on rallies and buy oil when the S&P looks strong.

Options on stocktwits tv, oil & earnings this week

Hey Jason,

Sorry we've been talking stocks so much lately but I'd check out Steven Place's segments on Stocktwits TV. He specializes in options and seems to be quite a guru. He does like a 1 or 2 hour market breakdown to stock picking over the weekend. His segment is called something like "Brunch" if you're looking for ideas.

Personally I'm looking at oil to breakout this week if this market continues its strong uptrend and the dollar continues its orderly decline.



Also here's some important earnings for this upcoming week:

Yuan ETF?

Hey Guys,

Does anyone know if there's an ETF or basket of ETF's that track the Chinese Yuan? The only one I can find is the CYB but not exactly sure how this works. Looking to get super-long...

Tomorrow will be interesting key resistance will be tested

The past few days have been incredibly rewarding for those who have stuck with the trend and traded alongside the falling dollar. The SPY is at a key technical resistance level (see chart for details). Although we were able to sustain most of the gains today we still were not able to break above resistance. If we make a lower high this time in the trend my thesis will begin to focus on really being hawkish into earnings and keeping an eye on the falling dollar relationship for any signs of decoupling.

Exploring the tools to build my toolbox

My free trial to flyonthewall just ended. I really like the news feeds but wanna see how this service compares with Madscan and briefing. So I just signed up for Madscan Elite 1-month trial. The trial costs $3 which is made up of Exchange fees. If this filtering software can consolidate the features you would get with flyonthewall or briefing for the same or less monthly price and on top of that eSignal then when i do go live I may look at this as my 1 stop shop.

My rules

Trading System Rules (Sep-Feb): Re-evaluate after first 6 months
Max Tier Size, Max Stop Loss, Max Daily Shares
100, $120, 10,000
200, $150, 15,000
300, $175, 20,000
400, $200, 25,000
500, $225, 30,000
600, $250, 40,000
700, $275, 50,000
800, $300, 60,000
900, $325, 70,000
1000, $350, 80,000

Ways to increase Share Size

1) Gross $200 over 5 day period
2) Net 3x max stop loss in one day and over 50% of max shares allowed
2A) Up 7/10 trading days
2B) Up 5 days in a row >=$500

Ways to decrease share size

3) Violating the max number of shares rule
4) Violate max stop loss by 20%
5) Trading more than 5 stocks a day not profitably
6) Getting stopped out once
7) If gross loss is greater than 2 x your max stop loss during a 3 day period
8) Violating Max position size
Ways to get tiers size downgraded to 100 from any size

9) Violating the max number of shares by 30% and TA <-4
10) Violating max stop loss by 50%
11) Losing more than $1 on a stock valued at $10-$80
12) Getting stopped out two days consecutively ( Unless max is already 100 then stop loss is reduced by $25 each time this happens.)

General Rules:

13) A trader must trade on the demo on take a day off for 1 day if he/she gets stopped out two days consecutively.

14) If the trader is stopped out 3 times in a row his/her max stop loss and max number of shares will be reduced by 50%. Things will go back to normal tier size schedule once the trader nets 2 times his/her reduced max stop loss.

15) The trader should trade only one stock at a time. Ther is one exception to this rule: if the trader is making a support/resistance play around an important intraday level and the stock is not moving and a stop is entered to manage the position.

16) A trader may exceed his max number of shares traded daily if their ticket aerage is 8 or better. If at anytime their ticket average drops below 8, after they have exceeded their max numbr of shares then they must cease trading for that day.

17) Stop loss for the month is 10% of Equity

18) Can only trade maximum of 3 different stocks unless up at least 3x max stop loss.

19) No pre-market or afterhours trading is allowed for 6 months and then not allowed unless net positive MTD as of the trade.


20) For first 6 months or until I am positive, I will not take more than .15 risk per 100 shares.