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I am not an expert in technical analysis, but here is some basic analysis that I think might play out. And I am putting together a game plan if this unfolds.
So today we had a nice bounce continuation right into the area where I wanted to try and find some short exposure. About 5 minutes before the close I looked up those $108 puts that I had already played a few times for a small profit. I sold them last time for about $2.30, today I was able to buy them at 0.97. So I bought a starter position with 5 SPY Feb '10 $108 puts @ 0.97.
As I pointed out on the chart, I am looking for a bounce into the 110.5 - 111.67. Today's high was $110.59. So if we do get a move higher I am willing to buy another 5, but not sure at what strike or expiration yet. I will evaluate that when/if we get there.
I am once again in a Delta Neutral position. Actually slightly negative at -11 Delta beta weighted to the SPY.
Just came accross the twitter feed.
ReplyDeletehttp://blog.t3live.com/2010/02/how-to-trade-bounce.html?utm_source=twitterfeed&utm_medium=twitter
From Scott Redler at T3Live.com
Just read this post on IWO -->http://www.investingwithoptions.com/2010/02/what-range-can-we-expect-with-this-volatility/
ReplyDeleteThis is a nice quick and dirty method, kind of back of the envolope type analysis.
So today we had a nice bounce continuation right into the area where I wanted to try and find some short exposure. About 5 minutes before the close I looked up those $108 puts that I had already played a few times for a small profit. I sold them last time for about $2.30, today I was able to buy them at 0.97. So I bought a starter position with 5 SPY Feb '10 $108 puts @ 0.97.
ReplyDeleteAs I pointed out on the chart, I am looking for a bounce into the 110.5 - 111.67. Today's high was $110.59. So if we do get a move higher I am willing to buy another 5, but not sure at what strike or expiration yet. I will evaluate that when/if we get there.
I am once again in a Delta Neutral position. Actually slightly negative at -11 Delta beta weighted to the SPY.