Looking at the Apple Inc (AAPL) 3 month chart, I noticed that the 3 month timeline low is $78.20 (52 week low- January 20, 2009). At that point when AAPL reached the low of $78.20 NASDAQ was trading at 1440.86 since now NASDAQ is trading at 1377.86 and AAPL is trading at $89.31 I think AAPL will hold above $70.00 within the current month.
With that in mind, I am selling AAPL Mar 09 70 Puts. Again when selling options it is not where the underlying stock is going, it is where the underlying stock is not going.
News of the Day
Friday, February 27, 2009
Wednesday, February 25, 2009
Trading the VIX
In looking at the VIX (CBOE Volatility Index), I decided to sell VIX Mar 09 60 calls @.85 in order to capture income from the decaying time value of the options (if the option expires out of the money). Looking at the 3 month VIX chart I see a consolidation pattern with support at 37.34 and resistance at 57.36 (intraday highs and lows within the 3 month chart).
Since I'm looking for where the VIX is not going verses where it is going, I feel the VIX will not be reaching 60 in the near term (less than a month). Given that, selling the VIX at 60 seems like the most reasonable trade.
Since I'm looking for where the VIX is not going verses where it is going, I feel the VIX will not be reaching 60 in the near term (less than a month). Given that, selling the VIX at 60 seems like the most reasonable trade.
Friday, February 20, 2009
New Lows on the Dow
In another down session in stocks on Friday where the Dow ended down -100.28 (1.34%) to 7,365.67; The NASDAQ down 1.59 (0.11%) 1,441.23 and the S&P down 8.89 (1.14%)to
770.05
Read the full story here: Yahoo Finance Story
Bank stocks led the way down for the indexes for the most part today on fears of nationalization when Sen. Chris Dodd suggested that nationalization of the banking system may be inevitable. Later in the day the stocks rallied to market open levels when "word surfaced that the White House believes the correct way to run the bank system is through private ownership, which likely helped calm fears of bank nationalization." (yahoo finance story)
What do we take from this? The simple notion of bank nationalization is driving fear into the market. It's like what one analyst said on CNBC, is the cure more toxic than the disease. My suggestion is to let these banks go into bankruptcy and from the ashes, stronger and new banks will arise. Further downward pressure on stocks will continue until we have further clarity on what the fate of such banks driving the markets down such as Bank of America (BAC) and Citigroup (C).
770.05
Read the full story here: Yahoo Finance Story
Bank stocks led the way down for the indexes for the most part today on fears of nationalization when Sen. Chris Dodd suggested that nationalization of the banking system may be inevitable. Later in the day the stocks rallied to market open levels when "word surfaced that the White House believes the correct way to run the bank system is through private ownership, which likely helped calm fears of bank nationalization." (yahoo finance story)
What do we take from this? The simple notion of bank nationalization is driving fear into the market. It's like what one analyst said on CNBC, is the cure more toxic than the disease. My suggestion is to let these banks go into bankruptcy and from the ashes, stronger and new banks will arise. Further downward pressure on stocks will continue until we have further clarity on what the fate of such banks driving the markets down such as Bank of America (BAC) and Citigroup (C).
Thursday, February 19, 2009
Lowest Close Since 2002
Financial stocks led the Dow lower today closing down 89.68 or 1.2% to 7465.95; NASDAQ down 25.15 or 1.71% to 1442.82; S&P500 closed down 9.48 or 1.2% to 778.94
Read the full story here: Yahoo Finance story
Contrary to my previous post, there wasn't a catalyst such as GM going into bankruptcy that sent stocks into that downward spiral but we did however see a breakout on the downside of the Dow and the other major indexes due to the uncertainity in the market about the U.S Government plan to get out of recession. I feel that until we get a better picture of what that plan is, I think we will see more downside of U.S equities.
Read the full story here: Yahoo Finance story
Contrary to my previous post, there wasn't a catalyst such as GM going into bankruptcy that sent stocks into that downward spiral but we did however see a breakout on the downside of the Dow and the other major indexes due to the uncertainity in the market about the U.S Government plan to get out of recession. I feel that until we get a better picture of what that plan is, I think we will see more downside of U.S equities.
Tuesday, February 17, 2009
Dow is testing it's November lows where it's near 7552. If we break 7552 I think we'll see significant downside on the Dow because on the Dow yearly chart, I see a bear flag forming.
At this point, if we have a major catalyst like GM applying for Chapter 11, I think we'll see a significant downside breakout.
At this point, if we have a major catalyst like GM applying for Chapter 11, I think we'll see a significant downside breakout.
Wednesday, February 4, 2009
Selling 10 USO 37 Calls- Update
My positions 10 USO 37 Call contracts in which I sold is pared well as oil has been fairly steady. I added to my position by selling 5 USO Feb 09'35 Calls again looking for time decay in order to profit.
Sunday, February 1, 2009
Selling 10 USO 37 Calls
Today I'm selling options on the USO-US Oil Fund ETF by selling calls which is a bearish strategy.
When selling options, the question is not where the stock is going, but where it is not going. With that being said, I sold 10 USO 37 Calls at 0.25 looking for income from the time decay.
Why bearish? Looking at the one month chart, I see a bearish flag forming making me believe that the price of the USO will go lower in the short term. But keep in mind, the news of the day can dramatically increase the price of oil which in turn will increase the share price of the USO- US Oil Fund ETF. So careful watch of your shorted options positions is a critical due to the unlimited risk involved with selling options. Nevertheless, I have time on my side.
When selling options, the question is not where the stock is going, but where it is not going. With that being said, I sold 10 USO 37 Calls at 0.25 looking for income from the time decay.
Why bearish? Looking at the one month chart, I see a bearish flag forming making me believe that the price of the USO will go lower in the short term. But keep in mind, the news of the day can dramatically increase the price of oil which in turn will increase the share price of the USO- US Oil Fund ETF. So careful watch of your shorted options positions is a critical due to the unlimited risk involved with selling options. Nevertheless, I have time on my side.
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