I have positions it two dry bulk shippers: DRYS & EGLE. Both of which are breaking out of all the moving averages on my charts (15, 50, and 200 day MA). Would love to see a close above the 200 day on these guys for a confirmation that this is a real move. Will be watching these guys closely over the next few days. If we can get past some significant resistance levels in DRYS of $7.5-$8, I may look to buy strait calls. But we will see.
To see my positions use the links below:
DRYS: http://shareandcritique.blogspot.com/2009/12/drys.html
EGLE: http://shareandcritique.blogspot.com/2009/12/notes-on-egle.html
Tuesday, January 5, 2010
New Trade in STLD (Update)
This is a name that I played recently and booked profits early. It has had time since to consolidate and prepare for a break higher. Today IWO recommended its subscribers to initiate a 200 share position. I like the play but I do not have the capital or desire to buy the shares outright. So instead I created a synthetic stock position buying the Feb '10 $19 Calls for $.90 and selling the $19 puts for $1.45. All in all I had a net Credit of $0.55 per synthetic. I bought 5 such positions.
They have earning on 1/25/10. I will look to offload the position going into earnings. I do not want to hold the risk into earnings.
More to come to the post later, have to head to work. As promised below is a little more analysis on the STLD position.
Above you can see an in depth analysis of the risk profile on this position. As you will see directly below the graph is a section called price slices. Here I have entered in 4 prices: Stop loss, current stock price, first price target, and second target. In this table you will be able to see the the estimated P&L will be at these prices and what the effect will be on the Greeks as well. Keep in mind that the Greeks are in terms of the entire position.
Below I added a two year 1 week chart. This is how far I had to go back to find the next level or resistance and try to determine my price target. As you can see on the chart I am targeting in the range of $20-$22. Could have more upside from here, but in my short holding period I think this would be the most this thing will move.
Reminder: I am managing this position with a trailing stop loss at the 15 MA which as of yesterday was at $17.86 and now has moved up on this move to $17.91.
They have earning on 1/25/10. I will look to offload the position going into earnings. I do not want to hold the risk into earnings.
More to come to the post later, have to head to work. As promised below is a little more analysis on the STLD position.
Above you can see an in depth analysis of the risk profile on this position. As you will see directly below the graph is a section called price slices. Here I have entered in 4 prices: Stop loss, current stock price, first price target, and second target. In this table you will be able to see the the estimated P&L will be at these prices and what the effect will be on the Greeks as well. Keep in mind that the Greeks are in terms of the entire position.
Below I added a two year 1 week chart. This is how far I had to go back to find the next level or resistance and try to determine my price target. As you can see on the chart I am targeting in the range of $20-$22. Could have more upside from here, but in my short holding period I think this would be the most this thing will move.
Reminder: I am managing this position with a trailing stop loss at the 15 MA which as of yesterday was at $17.86 and now has moved up on this move to $17.91.
YGE trade
I ran out of time yesterday, but here is the YGE position that I put on from IWO. I liked the trade idea so I put it on.
New Solar Trade
* stevenplace
* January 4th, 2010
This new trade is in YGE. First, the technical picture:
This has been a potential breakout for a while now, and it’s been mentioned by my friend Brian (alphatrends) since about November.
The overall trend is up, and there is resistance at these levels. If it can clear it, 18 and change should be in short order.
Here are the volatility bands:
With volatility contracted, it can easily start riding the Bollinger Band to the upside. I’m expecting a move to the upside in both direction and momentum.
I also saw this come across the options board:
As these trades were put on at the same time, I think it’s safe to assume that we are seeing a large block trade in YGE options. Notice that both calls and puts are being bought. Looking at the current volume, it seems that we’re seeing an unbalanced straddle buy. The trader is essentially buying 2x 16 calls and 1x 16 puts.
This is the trade I want to take. Here’s the thinkorswim copy:
BUY +6 YGE 100 JAN 10 16 CALL @.80 LMT
BUY +3 YGE 100 JAN 10 16 PUT @.50 LMT
Here’s the situations I’m looking at:
1. YGE Rips higher and runs to 18.
2. YGE pulls back and finds support at 14.50
3. YGE stays in its range between 17 and 14.50
Clearly scenario 3 is the worst situation here. If it doesn’t do anything, the premium in our position will continue to erode and we will be at a significant loss. If we get our optimal situation (run to 18) we’re looking at a double and our calls gain intrinsic value.
The put buys give us some extra versatility; if YGE pulls back to previous support around 1480, then we can pull off those puts for a profit and roll our calls out to the February 15 calls and our drawdown will be around 150. From there we can set a tight stop and look for further upside. If we get a sharp move to the downside, we should see an increase in implied volatility so that will help our position.
Our theta is the biggest problem here; we’ve only 2 weeks left before they expire. So this is a situation in which we need a “time stop.” For this situation, I am using the bollinger band envelope as my guide. The best odds for continued momentum is for price to stay within the 1st and 2nd standard deviation (blue and green). As long as price closes above there, I will hold onto the position. If the position is not profitable by Friday, we will cut it.
New Solar Trade
* stevenplace
* January 4th, 2010
This new trade is in YGE. First, the technical picture:
This has been a potential breakout for a while now, and it’s been mentioned by my friend Brian (alphatrends) since about November.
The overall trend is up, and there is resistance at these levels. If it can clear it, 18 and change should be in short order.
Here are the volatility bands:
With volatility contracted, it can easily start riding the Bollinger Band to the upside. I’m expecting a move to the upside in both direction and momentum.
I also saw this come across the options board:
As these trades were put on at the same time, I think it’s safe to assume that we are seeing a large block trade in YGE options. Notice that both calls and puts are being bought. Looking at the current volume, it seems that we’re seeing an unbalanced straddle buy. The trader is essentially buying 2x 16 calls and 1x 16 puts.
This is the trade I want to take. Here’s the thinkorswim copy:
BUY +6 YGE 100 JAN 10 16 CALL @.80 LMT
BUY +3 YGE 100 JAN 10 16 PUT @.50 LMT
Here’s the situations I’m looking at:
1. YGE Rips higher and runs to 18.
2. YGE pulls back and finds support at 14.50
3. YGE stays in its range between 17 and 14.50
Clearly scenario 3 is the worst situation here. If it doesn’t do anything, the premium in our position will continue to erode and we will be at a significant loss. If we get our optimal situation (run to 18) we’re looking at a double and our calls gain intrinsic value.
The put buys give us some extra versatility; if YGE pulls back to previous support around 1480, then we can pull off those puts for a profit and roll our calls out to the February 15 calls and our drawdown will be around 150. From there we can set a tight stop and look for further upside. If we get a sharp move to the downside, we should see an increase in implied volatility so that will help our position.
Our theta is the biggest problem here; we’ve only 2 weeks left before they expire. So this is a situation in which we need a “time stop.” For this situation, I am using the bollinger band envelope as my guide. The best odds for continued momentum is for price to stay within the 1st and 2nd standard deviation (blue and green). As long as price closes above there, I will hold onto the position. If the position is not profitable by Friday, we will cut it.
Monday, January 4, 2010
Complementary Newsletters
I put two files in the dropbox. I don't know if I know how to use that thing correctly so let me know if you are able to find them. If not I'll email them. They are two temporary complementary newsletters from some of the CBOE webinar presenters. Just thought I would share. One is "Option Advisor" from Bernie Schaeffer. I have heard this guy referenced in Barron's for many years and seen him on CNBC. The other is "The Option Strategist" by Larry McMillan. This guy was a particularly good speaker and I liked his presentation topics. I'm going to take a look at his free newsletter for a while and read his book before I make any further decisions on him. Jon Najarian and some others consider this guy to be one of the living Holy Grails of option traders. I'll take a look and make my own decision.
Possible meet up...
Hey Guys,
I was wondering if you guys wanted to meet up sometime next week on either Tuesday or Wednesday night? Let me know how this might work for you guys...
Maybe we can meet near the Honda center off the 57 where I work? There are a good amount of restraunts here.
Let me know...
Also: I mentioned back when we first started up this blog that I was going to try and crash a options class at Cal-State Fullerton. I have friends who have taken the class and the instructer is an options trader, who trades a $2 million personal account which he uses real examples from his own account during lectures. I am not sure if you guys are interested or not.
The Spring class starts on 1/25/09 and is on Tuesday nights from 7pm to 9:45pm. Here is the class desciption:put and call options, option pricing theory and models. Financial futures pricing, hedging strategies and models. Institutional characteristics of futures trading. Options and futures on stock indices. Options on futures, theoretical relationship between options and futures.
They are using the following book:INTRO TO DERIVATIVES AND RISK MGMT.
I was wondering if you guys wanted to meet up sometime next week on either Tuesday or Wednesday night? Let me know how this might work for you guys...
Maybe we can meet near the Honda center off the 57 where I work? There are a good amount of restraunts here.
Let me know...
Also: I mentioned back when we first started up this blog that I was going to try and crash a options class at Cal-State Fullerton. I have friends who have taken the class and the instructer is an options trader, who trades a $2 million personal account which he uses real examples from his own account during lectures. I am not sure if you guys are interested or not.
The Spring class starts on 1/25/09 and is on Tuesday nights from 7pm to 9:45pm. Here is the class desciption:put and call options, option pricing theory and models. Financial futures pricing, hedging strategies and models. Institutional characteristics of futures trading. Options and futures on stock indices. Options on futures, theoretical relationship between options and futures.
They are using the following book:INTRO TO DERIVATIVES AND RISK MGMT.
New Positions
Today I sold 10 naked puts each on three different tickers.
AAPL $190 Jan 10' .22
VLO $17.50 Jan 10' .33
MO $20.00 Feb 10' .60
The AAPL is just a pure gamble. I can't afford to take possession of that position so I would be closing those out at a loss should it fall to that level or below. The VLO and MO I'm OK getting long at those prices and would hold them long-term and sell covered calls. MO has a nice dividend and VLO historically has higher than average beta and volatility so it makes for attractive monthly premiums. These are just some small trades to try and bring in some money this month as I continue to decide on a longer term portfolio strategy and weightings.
Jason,
Below I have run the probabilities for your plays in case you were interested. I know that you say that the APPL play is a pure gamble, but it does not look to bad. I mean you have like $24 of cushion, time decay is on your side, and I don't think there are any major announcements planned between now and expiration. Oh I used the strike minus the premium you recieved to get the lower target price and used the current price as the high target.
RIMM Trade
So I just could not wait any longer. I am compelled to enter into a position for RIMM. I have been contemplating all morning how I could and/or wanted to put this position on and how I could limit my downside risk in the short term.
So today near the close RIMM was trading near $65.7 when I sold a $60/$50 "Vertical put calendar spread", not really sure if that is even an official position name. But anyway I sold 2 of the Jan '12 $60 puts for $12.55 per contract and bought the 2 Feb '10 $50 puts for $0.25 per contract.
As I did not want to miss my entry on this name. In the short term I still think that there is some downside in RIMM. And if there is I plan to sell the puts for a profit when I feel the bottom might be in. If not then I bought some cheap insurance. Again I am not looking to collect all the premium.
Currently my maximum gain is $2,460 with a maximum downside of $2,000. This is about a 25% on capital at risk.
Also to see additional analysis from previous play you can follow this link:
http://shareandcritique.blogspot.com/2009/12/rimm-earnings-play.html
So today near the close RIMM was trading near $65.7 when I sold a $60/$50 "Vertical put calendar spread", not really sure if that is even an official position name. But anyway I sold 2 of the Jan '12 $60 puts for $12.55 per contract and bought the 2 Feb '10 $50 puts for $0.25 per contract.
As I did not want to miss my entry on this name. In the short term I still think that there is some downside in RIMM. And if there is I plan to sell the puts for a profit when I feel the bottom might be in. If not then I bought some cheap insurance. Again I am not looking to collect all the premium.
Currently my maximum gain is $2,460 with a maximum downside of $2,000. This is about a 25% on capital at risk.
Also to see additional analysis from previous play you can follow this link:
http://shareandcritique.blogspot.com/2009/12/rimm-earnings-play.html
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