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$25,000 Portfolio – Month 8 – Madness Continues

We’re over the $80,000 mark in our aggressive, virtual portfolio  with more than 3 months to go.

That puts us right on track for our $100,000 goal for the year so let’s not blow it.  It’s all fun and games trying to turn $10,000 into $25,000 (last year’s goal) and then $25,000 into $100,000 because you know it’s a long-shot and it’s all fun and games but trying to turn $80,000 into $100,000 is RISKING $80,000 and that is NOT what we signed up for when we originally decided to risk $10,000.  This is a classic trading mistake and not just with portfolios (virtual or otherwise) but with each individual trade – as the trade goes up in value, your risk increases and, very often, your potential additional reward decreases.  

You need to understand this well enough to internalize it in order to make better  trading decisions.  We had the same issue last year when we were up to $35,000 in November off our $10,000 Portfolio and we decided to take the virtual money and run rather than risk going for $50,000 into the holidays.  We’re not at that point yet as we’re still finding lots of fun things to trade but this week was substantially thinner in trading than the week before and we took our small profits quickly and were glad about it…  

It is a very natural tendency to feel that, since you are up $70,000, you can afford to make bigger bets or take bigger chances – THAT IS EXACTLY THE URGE YOU MUST LEARN TO FIGHT!  It’s the same urge that makes you want to make a big bet to "catch up" after taking a big loss – also a bad idea.  If you can usually make 10% a month with a system and one month you lose 50% (as happened to spread traders last month), the best thing to do is just go right on making 10% a month.  Over the course of a year, you can still make 70% – but only if you stick with your plan!  

Our last update was sent out on the 3rd, at which point we had $78,910 of realized gains, offset by $5,115 of unrealized losses.  As I said at the time: "I’m not too psyched about overly committing into this mess, which is why we have a constant mix of bullish and bearish bets with a lot of quick profit taking but you can see how nicely it adds up if you just keep at it."  Since then, we’ve closed the following positions:  

  • 20 UUP Dec $21 calls at .55, out at $1.10 – up $1,100
  • 10 BNO Sept $75 puts at net $3.50, out at $2.15 – down $1,350
  • 20 USO Sept $34 puts at .75 out at $1.75 – up $2,000
  • 10 DIA 9/30 $112 puts at $1.54, out at $4.90 – up $3,360
  • 10 DIA Sept $115 puts sold for $1.80, out at $3 – down $1,200 
  • 5 TZA 9/9 $42/43 bull call spreads at net .05, closed at $1 – up $475
  • 20 QQQ 9/9 $56 calls at .35, expired worthless – down $700
  • 20 TLT Sept $110 puts at net $1.78, out at $1.20 – down $1,160
  • 10 USO $34 puts at net .57, out at .65 – up $80
  • 10 USO $34 puts at net .57, out at .70 -  up $130
  • 10 HPQ Sept $25 calls at .35, out at .30 – down $50
  • 10 USO Oct $3 puts at $1.22, out at $1.45 – up $230
  • 10 FAS Sept $13 calls at .80, out at .65 – down $150
  • 10 QQQ 9/16 $54 calls at .55, out at .77 – up $220
  • 10 QQQ 9/16 $54 calls at .55, out at .80 – up $250

Notice how, as the two-week period moved on, we ended up just grabbing quick little profits off the table as the markets got very unstable and we got more nervous!  Still, it was a nice net $3,235 of additional realized gains for a grand total of $82,145 so far.  Unfortunately, we do still have open positions and, last week, we were left with $5,115 of unrealized losses.  Our goal is, as usual, to take each opportunity (as we did above) to minimize the damages, take the profits off the table and realize as little of those losses as we are able

As of yesterday’s close, we are left with the following open positions:  

  • 40 GLL Oct $17 calls at net $1.76 ($7,040), now .70 – down $4,240
  • 20 RIMM Sept $26 puts sold for net $1.14 (-$2,280), now .46 – up $1,360
  • 5 HPQ Sept $23 puts sold for $1.57 (-$785), now .40 – up $585
  • 5 TLT Sept $115/112 bear put spreads at $2 ($1,000), now $1.73 – down $135
  • 3 TLT Sept $112 calls sold for $2.05 (-$615), now $1.60 – up $135
  • 50 XLF Oct $12/13 bull call spreads at net .52 ($2,600), now .55 – up $150
  • 10 JPM Oct $28 puts sold for .75 (-$750), still .75 – even 
  • 30 XLF Oct $9 puts sold for .15 (-$450), now .05 – up $300
  • 5 FAS Oct $8 puts sold for $1 (-$500), now .45 – up $275 
  • 10 BCS Sept $10 puts sold for .85 (-$850), now .35 – up $500
  • 10 TZA Sept $48/51 bull call spreads at $1 ($1,000), now .20 – down $800
  • 20 BCS Sept $8 puts sold for .45 (-$900), now .05 – up $800
  • 10 USO Oct $34 puts at net $1.55 ($1,550), now $1.60 – up $50
  • 20 FXI Sept $36 calls at .52 ($1,040), now .42 – down $200

Down net $1,220 – that’s a huge improvement.  We made more money paring back our unrealized losses (through rolling, stopping out and doubling down) than we did actually closing positons!  Notice we took a big bet on the Financials bouncing and hedged it with TZA and that’s working out so far with a lot of those Sept short puts looking to expire worthless.  If not, we’ll roll them along as we still have faith but maybe we’ll add some new protection – just in case.  In fact, the TZA $48 calls are still .50 and they can be rolled to the Oct $41/44 bull call spread for another .50 and that’s the real cost of the insurance – .50 a month for $3 of disaster protection.  

So, net of unrealized losses we have $80,925 and we have only net $7,100 of our virtual cash (less than 10%) deployed in our open positions (but using quite a bit of margin) so PLENTY of room to make adjustments.  Our biggest loser, so far, is our GLL position – the short play on gold – and time is ticking on that one with 36 days to October expirations.  That’s another good thing about laying out your portfolio this way – it helps you identify and focus on your problem spots and we could, for example, decide to offset the trade with short puts or a bullish play on a miner here or in our main portfolio.  

It’s all about balance and, when we have bets on both sides of the table – whichever way the market tips we are bound to find some profits to take off the table.  Even when they are small ones, like the ones above – you can see how they add up over time because profits turn to cash and cash turns to more trades and half of those trades (if balanced) make a small profit and then more cash and more trades as you balance out the open side.   

We’re ending this option period pretty bullish overall with expectations that gold and TLT will calm down as we head into the Fed meeting next week.  Europe remains a wild-card but, as I said, we have 90% of our cash on the sidelines as we wait PATIENTLY for clarity because the last thing we want to do with a 200% gain for the year is gamble it – JUST to make another 25%!  

 


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  1. Phil

     FAS Oct $11 puts can be sold for .92 and that money pays for the Oct $12/14 bull call spread at $1.15 for net .23 on the $2 spread that’s $1.66 in the money so 10 of those in the $25KP and 20 in the Income Portfolio. 

    Submitted on 2011/09/15 at 10:25 am

    Europe up huge with an hour to go:  FTSE up 2.5%, DAX and CAC up 3.6%.  Not much reaction from our markets so far and FXI $36 calls down to .40, which makes no sense to me (other than that they are expiring tomorrow, of course) but, in the $25KP, I’m more inclined to roll out to next week’s $36 calls for .40 than to roll or DD tomorrow’s so let’s make that adjustment as I’m not willing to give up on the trade.  

    You’re welcome Wappler!  I wish I had not been greedy in the $25KP, where we were short 20 RIMM $26 puts.  Silly me, at $30, I did not think a 20% drop was in the cards and they went from .35 this morning (up $1,500) to $3 this evening (down $4,000) – that really sucks!  Had I been watching more closely, they were an obvious stop-out as they zoomed up to .75 at the end of the day and that’s why we have rules for these things.  

    Important note to $25KP players – I cannot watch everything, it is VERY important to follow general trading rules unless we are specifically going for something.  This afternoon I was out and those RIMM puts shot up and I missed it when I came back from my lunch meeting.  Still, I certainly should not have to tell people that a short put that goes from .35 to .75 on earnings day should, at some point, be stopped out – especially when it was sold for $1.14.

    Meanwhile, RIMM is in a product rollover cycle and have spent a ton of money on R&D so I don’t hate them but they may get further downgraded and revisit $21 so we’ll have to handle with care going forward but I still think $25-$27.50 is about right for them. 

    Submitted on 2011/09/16 at 9:52 am

    In the $25KP, if you didn’t stop out yesterday there were 20 RIMM $26 puts at $1.14, now $2.80.  We ALWAYS SELL into the initial excitement so the move would be to sell 20 Oct $23 puts for $1.75, which is the LOSS on the puts and then put a stop on the $26 puts, at $3 and hopefully they get cheaper before we take them off the table today. 

    FXI/$25KP, DC – Good call taking profits on FXI – Oct $36 calls, now $2 – no sense in risking a quick double.  

    Submitted on 2011/09/16 at 11:01 am

    Oil hit $87.50 on the button, USO Oct $34 puts topped out at $1.70, very disappointing with the VIX down 25% and we’re out in the $25KP.  

    Submitted on 2011/09/16 at 11:06 am

    TBT $23 calls at .09 are a fun craps roll.  20 in the $25KP ($180).  

    FAS $13 calls have very little premium at .65, 10 in the $25KP with a stop at .50.

    $25KP – TBT at .06 for ($60 loss) otherwise no point in the FAS profits!  Stop on FAS at .75 (now .90) means we net a bit better than even after commissions – which beats losing!  

    FAS $14 calls are a really fun gamble at .13 now.  FAS could easily hit $14.50 for a triple.  10 of those in the $25KP and let’s raise the stop to .85 on the others to pay for it.  

    $25KP – Done at .85 on FAS $13 calls and may as well kill the $14s at .10 and be done with it.  I thought we could go higher but it’s too annoying at the moment – maybe if we get another sell-off that holds…

    TNA Oct $41/45 bull call spread at $2, selling $29 puts for $1.70 is net .30 on the $4 spread with TNA at $42.50 so $13.50 would be a 32% drop or a 10% drop in the RUT to about 620 before these get put to you and then you can roll them and don’t you want to be long 2x TNA, ultimately, if the RUT falls 20%?  10 in the $25KP.

    DIA 9/30 $115.75 calls at $1.05 – 10 in $25KP, stop under 11,250 – which is probably .90.  

    FAS weekly $13/14 bull call spread at .40, selling JPM Oct $28 puts for  .63 is a .23 credit on the $1 spread.  FAS Oct $9 puts can also be sold for .50 (better for people who have 100% margin).  In the $25KP, let’s buy 20 of the bull spreads for $800 and sell 10 of the JPM short Oct $28 puts for $630, risking $170 (plus owning JPM for 15% off) to make $2,000.  

    Wow, Greece is "fixed" again – who’d have thought?  

    BCS Oct $10 calls are .85, 10 in the $25KP.

    Submitted on 2011/09/20 at 10:07 am


    Up in smoke is where yesterday’s gains are going if you didn’t stop out at the open – which I hope you did in the $25KP as I am usually writing my post in the morning and can’t always say "ALWAYS sell into the initial excitement."  That’s why it’s Rule #1 (of 2) and that’s why the word ALWAYS is there in big letters – so I don’t have to say "yes, I do believe it’s a good idea to take profits off the table" every time we have a big open.

    Of course, Rule #2 (of 2) is "When in doubt, sell half" which means (in case it is not obvious) that EVEN if you think you should ignore #1 because you are smarter than the markets – at least take half the profits off the table so you don’t look like a total fool when it turns out you are not smarter than the markets.  

    QQQ FRIDAY $57 calls at .47 – 20 in $25KP.  They were .80 this morning!  

    Submitted on 2011/09/21 at 10:17 am

    QQQ is at $56.62 and we have the Friday $57 calls at .45 in the $25KP (20 of them) but, if you want to play the volatility, you can buy those AND the $56 puts (now .40) and take off whichever one gets to .80 first for a free ride on one side although, obviously, we’re willing to risk the bull only side based on my expectations of the Fed’s move this afternoon being bullish for the markets.  

    Submitted on 2011/09/21 at 10:32 am

    Oil is being silly at $87 into inventories (/CL) is a good short off that line.  USO Oct $32 puts at $1 are a good entry – 10 in the $25KP

    Submitted on 2011/09/21 at 10:48 am

    Damn, oil flew the other way.  Out of the futures of course and let’s take the dime loss and move on in the $25KP rather than mess around.  

     TLT weekly $116 puts are .70 – 20 in $25KP with stop at .49.  

    BAC Oct $7 calls at .43, selling Oct $6 puts for .30 for net .13 – 10 in the $25KP.  

  2. Phil

    Submitted on 2011/09/21 at 2:51 pm

    20 FAS Oct $10 puts sold for .82 in the Income Portfolio and 10 in the $25KP.  

     

    Submitted on 2011/09/21 at 3:14 pm

    FXI FRIDAY $34 calls at .75 are a fun overnight gamble (worked last week).  10 in the $25KP.  

    Submitted on 2011/09/21 at 3:19 pm

    NOW TLT is done in $25KP at .40 – that sucked.  

    Submitted on 2011/09/21 at 3:31 pm

     

    So we dropped $600 on TLT out of a $1,400 allocation but the point is we still have $800 to go back at the same play.  Day trading is like Futures trading in that the key is to keep your loss manageable and just get out and look for a better entry.  As I said above, we’ll take a crack at the next weeklies tomorrow so now we root for them to go higher to give us a better entry.  We’ll allocate another $1,500 most likely and we’ll need to get $2,100 to get even (40%) which is certainly not unrealistic.  

    Good time to look at $25KP adjustments:  

    • We gave up quickly on the QQQ calls and that let us get out even.  
    • Sadly, we let ourselves get spooked out of the USO puts. 
    • TLT went badly – down $600
    • We went bullish on BAC (seems crazy enough to work) and FAS (same craziness) and FXI

    That leaves us needing a bearish play so how about 10 AMZN weekly $235/230 bear put spreads at $1.45 – that’s $1,450 and we’ll probably lose half on a move up but a very nice $3,550 worth of protection if the markets collapse.  

     

    Submitted on 2011/09/22 at 10:02 am

    Oops, almost forgot TLT (thanks StJ!) – 10 Next week $121/118 bear put spread can be bought for .95 and paid for with the sale of 5 next week $122 calls at $1.75 in the $25KP.  

     

     VXX back where we like to short them.  Next weekly $52 calls can be sold for $1.60 and that pays for most of the $51/48 bear put spread at $1.90 for net .30 on the $3 spread.  5 of those in the $25KP.  

     

    Submitted on 2011/09/22 at 2:02 pm

    TLT/Ajay – The $25KP is not meant as a portfolio that is $25,000.  As VERY CLEARLY stated from day one, it is the aggressive RISK portion of a $250,000+ portfolio.  Taking those kinds of risks when that’s all the money someone has to play with would be nuts!

    Submitted on 2011/09/22 at 3:45 pm

    HPQ Oct $22/23 bull call spread for .53, 20 in $25KP.

    Submitted on 2011/09/23 at 11:11 am

    Speaking of the DAX – they tested 5,000 again and are back to flat for the day at 5,152 so we can have fun with EWG again in the $25KP.  The Oct $16/18 bull call spread is $1.30 and we can sell the $17 puts for .90 for net .40 on the $2 spread so let’s try 10 of those.  

     

    $25KP – Sorry, that was the EWG $16/18 bull call spread, not $16/17.   It’s still $1.30.  

     

    Submitted on 2011/09/26 at 10:02 am

    Short trade of the morning is DIA FRIDAY $105.75 puts at $1.15, 10 in the $25KP with a stop at $.95 so risking $200 to make quite a lot if things turn ugly.  

    Submitted on 2011/09/26 at 11:24 am

    Dow came flying back and we can watch for a rejection at 10,900 for a possible reload on DIA puts.  This time we’re looking for the Dollar to bounce off 78.75 and hopefully we can pick up 10 DIA $106.75 puts for $1.15 (now $1.25) with a stop at .95 (sound familiar) for the $25KP.  By taking small gains we now have less risk on another trade in an even better position and, of course, we’re hoping to either get a nice run with a big profit or have the Dow keep going up and give us a small loss which proves we’re not nuts to hold onto our bullish positions.  

     

    DIA/$25KP, Jerconn – Of course, the stop was at .95 and I said I expected a rally into the close.  Also the Dollar failed to hold 79 – all on our list of reasons to stop out.  

     

    Submitted on 2011/09/27 at 2:29 am

    Cash is king Rev, we just need to keep an eye on the Big Chart to see if we’re in a series of weakening bounces (which becomes consolidation on the break-down line) or forming a better bottom.   Obviously, today’s little move was nice but not impressive unless we string together a few of them.  A good rule of thumb is putting 20% of those paper gains into downside protection on the way up – just little things like what we did with DIA puts today in the $25KP – we won $100 and then lost $200 so our cost of insurance to protect a 277-point gain on the Dow was $100.  The value of that was we were not inclined to cash out our bullish positions as we jerked around during the day because we had some nice downside protection.  Spending $100 to help hold onto $8,000 worth of upside plays is a good idea…

    Submitted on 2011/09/27 at 10:13 am

     

    The RUT is still behind and the IWM FRIDAY $68/69 bull call spread is .50 so I like 20 of those in the $25KP or, for the non-margin challenged, you can sell 10 RUT FRIDAY $645 put for $2.55 and buy 40 of the bull call spreads for a net .55 credit bet that the RUT won’t reverse and drop 37 points (over 5%) by Friday (rollable, of course).  

    Other bullish offsets include short VLO Oct $19 puts for .79, GS FRIDAY $100 puts can be sold for $1, GS Oct $85 puts can be sold for $1.05.  JPM Oct $31 puts can be sold for $1.05 too.  GE Jan $15 puts can be sold for $1.05, VNO Oct $75 puts can be sold for $2. 

    A bear spread, using the same offsets, would be a DXD $18/20 bull call spread at .70.  With DXD currently at $19.16, this is well worth using as a cover if the Dow fails to take out 11,300 or if it fails it thereafter.  30 of these for $2,100 has a $3,900 upside and, if you stop out at .35 with a 50% loss ($1,050) all you need is to sell 10 $1.05 bullish offsets to make this free insurance!  

     

    Submitted on 2011/09/27 at 10:46 am

     

    Past 10:30 without breaking 10,300 and the Dollar over 78.20 so over 78.25 is a good reason to tap the DXD hedge or grab the DIA FRIDAY $111 puts, now .98 so let’s watch that VERY CAREFULLY although it could just be a bit of profit taking into the EU close with the DAX up 12% since Friday morning.  A pullback to 10% is very much expected here and EWG naked calls can come off the table for now until they prove they can break $20.  

    In the $25KP, our EWG $16/18 bull call spread is $1.60 out of $2 but the short $17 puts are still .40 for net $1.20 out of $2 possible so, although we’re up 200%, there’s another 200% we can capture and we’re feeling pretty good about holding $18 for the month at the moment.  We’re not risking 300% to make 200%, we’re risking 100% (stopping at net .80) to make 200%.  

     

    Submitted on 2011/09/27 at 12:54 pm

     

    CMG/Mr. M – It’s all about their new Chop House idea.  If that puts up good numbers and they announce a roll-out plan, they can get a nice kick (which would be a good short) but if they have any kind of disappointment in their pilot (DC), they could drop 10% very fast.  Also, last Q was not a good one for food or labor costs for them (immigration issues) so they do make a fun short with the caveat that you have to be prepared for good spin from Chop House.  

    Earnings are on the 20th, the day before expirations so I like the volatility crush of selling 5 $340 calls for $9 ($4,500) and buying 3 Dec $350s for $15 ($4,500) for a free spread.  No matter what CMG does, $4,500 of premium will be gone from the callers on Oct 21st, then the Nov whatevers can be sold, hopefully for another $4,500 in premium or perhaps we can just pull the trade so let’s do one set in the $25KP and see how it goes. 

     

     

    VXX/$25KP, Etrad – I think the VIX should continue trending lower.  While a bit disappointing so far, we are on track with an hour to the close and we would be thrilled with our progress if Europe hadn’t done so well today.  The $52 short calls are still .20 with VXX at $45 and the $51/48 bear spread is $2.40 so net $2.20 out of $3 from a net .30 entry means we’re up 633% with 900% max so we have 270% more to gain in 3 days – it’s not something we need to throw away unless we get nervous and an up 2.5% day is not a reason to be nervous.   This is a very cool trade for the $25KP that can net $1,500 off a $30 cash investment from last Thursday!  Keep in mind we’re playing aggressive with a very small pecentage of the portfolio at risk on this trade – if you have serious money on it – of course take the money and run with 2/3 of max gained already or, when in doubt – sell half!  

     

     

    Game on for the DIA puts but now we can pick up the $112 puts for $1.10 – 10 in the $25KP with a stop at .90 in case we dive into the close.  

     

     

    EDZ got nicely crushed on the China move today and those are always fun to play, let’s plan on weekend protection with 10 of the Oct $28/34 bull call spread at $1.10, selling FCX Oct $31 puts for .91 in the $25KP.  

     

     

    DIA $112 puts in $25KP out at $1.65, of course (I hope I don’t have to say those things with a 50% gain in an hour!).  

     

     

    Good morning! 

    Dollar back down to 78 and all is well in the futures, heading back to yesterday’s highs.  

    They can yank the market around like that every afternoon if they want to, as long as we can make a quick 50% into the close, right?  What did we do?  We put the brakes on the slide by adding 10 DIA puts at $1.15 so $1,150 in our $25KP was a 5% allocation (of the original amount, as we’re up around $80K now) and we made a quick .50, which is $500 but that’s not chicken feed – it’s 2% of the ENTIRE original balance of the portfolio in one hour!  If we do that on 100 drops, we make 200% ($50,000) so who cares if we take a few dings.

    What’s key is that we DIDN’T panic out of our bullish positions.  What we were mostly doing was allocating about 10% of our open position exposure to a very bearish position and that very quickly flipped us from being $7,000/3,000 bullish to $7,000/4,150 (examples, not exact) bullish.  Also, that last bullish play was unhedged and, if we consider it a double weighting, it’s more like flipping from 7/3 to 7/5 and that’s how easy it is to put the brakes on a drop.  

    Now what would have happened if the market went the other way?  We were 7K/3K bullish and we spent $1,150 and perhaps we would have stopped out back over 11,300 with a $150 loss.  Would that have hurt us?  Not at all!  We might have lost a percentage of our gains but they key is, again, that rather than stop out of our positions on a dip we did not believe in (and incur spread costs and commissions) we rode out the dip with our longer-term investing premise intact.  

    The $25KP is very aggressive and, at the moment, it’s aggressively bullish but even an aggressively bullish portfolio can be steered very quickly to a more neutral stance if you follow the rules and maintain a balance of bullish and bearish positions at all times – that’s what makes what seems to be a quick, little adjustment so effective.  I’ll be updating that portfolio this evening and we’re almost at our $100,000 goal so we’ll be getting back to all cash and making a fresh start again with a $10/100KP, where our goal for next year will be to turn our virtual $100,000 into $500,000 or, for those looking for smaller trades, to turn $10,000 to $50,000.  

    It’s been a wild 2 years since we started the $10,000 Portfolio last year and we hit our goals with room to spare and, of course, we will continue to maintain our much more conservative (and very boring) Income Portfolio, which was so dull and balanced that we didn’t even have anything to update this month as there was nothing to change – despite the 20% drop (we did make some adjustments during Member Chat, as usual).  

    So that’s my plan for next year, even though it’s not even Q4 yet so plenty of time for suggestions if you have any.  

     

     

    Thanks L4!   Keep in mind that my system is all about taking a balanced group of trades and cashing out the winners and working out the losers while JRW’s system is VERY directional and short-term.  The two can be used together the same way I favor having the bulk of our assets in well-hedged positions like our Income Portfolio and using a small portion for short-term gambling like our $25KP.  Over the course of a year, we expect the $500K Income Portfolio to make 10-20% so even getting wiped out of the $25KP only dings us slightly but making $75K on the $25KP still adds 15% more to the overall portfolio so we risk losing 5% to make 15% and 15% is A LOT when you add it to a long-term strategy and reinvest it SENSIBLY over time.

  3. Phil

    Thanks L4!   Keep in mind that my system is all about taking a balanced group of trades and cashing out the winners and working out the losers while JRW’s system is VERY directional and short-term.  The two can be used together the same way I favor having the bulk of our assets in well-hedged positions like our Income Portfolio and using a small portion for short-term gambling like our $25KP.  Over the course of a year, we expect the $500K Income Portfolio to make 10-20% so even getting wiped out of the $25KP only dings us slightly but making $75K on the $25KP still adds 15% more to the overall portfolio so we risk losing 5% to make 15% and 15% is A LOT when you add it to a long-term strategy and reinvest it SENSIBLY over time.

    It’s a rough market and we still could move violently in either direction – everyone needs to keep that in mind as we’re back to Cashy and Cautious for the moment (20/15 or 15/10 bullish until we fail our goals).  

     

     

    S&P looks like it’s losing it and we don’t have much support under here but I’d rather pick up where we left off with the DIA FRIDAY $111 puts at $1 with a stop at .85, 20 in the $25KP.  

     

    Submitted on 2011/09/28 at 10:30 am

    Dollar getting rejected again at 78.25 – that’s good if it sticks.  We’ll see what oil says in a few mintutes but maybe we pull the DIA play even in the $25KP if the Dollar doesn’t go over 78.25 – still at $1.02. 

     

    Oil UP 1.9Mb, gasoline up 800K, distillates up 100K so decent demand but build in oil not expected – that won’t give them a pop so it’s all up to the Dollar now, which is over 78.25 and that will now be our stop line for the DIA puts in the $25KP (at about the $1 mark) and we’ll just see how far it goes now.  

    I have no interest in shorting oil without them going higher first but good time to take bullish oil profits off the table if not well-hedged spreads.  

     

    Submitted on 2011/09/28 at 10:44 am

    DIA $111 puts at $1.20, let’s take a $200 gain on 1/2 (10) in the $25KP and set a stop even at $1 on the rest.  

     

    In the $25KP, those DIA $110 puts are .95 so 20 of those with a stop at .80 – playing the same way as we did before.

     

    Submitted on 2011/09/28 at 2:19 pm

    So speaking of ridiculous panic.  DIA $110 puts just topped out at $1.20 and now $1.05 but I’m not feeling it so let’s cash out in the $25KP and at least get our commissions back.  

     

    USO FRIDAY $31 calls are .85 with just .30 of premium.  10 in the $25KP overnight as pure speculation.  

     

     

    F Hoenig!  IWM FRIDAY $65/66 bull call spread is .65 20 in the $25KP for $1,300, selling 10 VLO Oct $18 puts for .86 ($860) for net $440 on the $2,000 spread.  

     

    Submitted on 2011/09/28 at 3:38 pm

    Things have been getting worse as I’ve been writing.  I’ve changed my mind on the USO calls and we can kill them at .71 in the $25KP – too much premium now with too little time left to risk it.  


  4. Phil

    $25,000 Portfolio Update  

    Just a quick update of positions closed over the past 2 weeks and list of open positions in our virtual portfolio.  As of the 15th, we had $82,145 of realized gains against $1,220 of unrealized losses for a net of $80,925 as month 8 draws to close – just $19,075 to go for our $100,000 goal for the year.  We had just $7,100 of our cash committed to open positions, which allowed us to make a few aggressive moves but it’s been an insane couple of weeks.  

    We closed the following positions, many on the 20th, when I made my general call to take the money and run ahead of the Fed in our morning Alert to Members:

     

    • 5 HPQ Sept $23 puts sold for $1.57, expired worthless – up $785
    • 5 TLT Sept $115/112 bear put spreads at $2, out at $2.75 – up $375
    • 3 TLT Sept $112 calls sold for $2.05, out at .35 – up $480
    • 10 BCS Sept $10 puts sold for .85, expired worthless – up $850
    • 10 TZA Sept $48/51 bull call spreads at $1 ($1,000), expired worthless – down $1,000
    • 20 BCS Sept $8 puts sold for .45, expired worthless – up $900
    • 20 FXI Oct $36 calls at .92, out at $2 – up $2,160
    • 20 RIMM Sept $26 puts sold for net $1.14, out at $1.80 – down $1,320
    • 10 USO Oct $34 puts at net $1.55, out at $1.70 – up $150
    • 20 TBT Sept $23 calls at .09, out at .06 – down $60
    • 10 FAS Sept $13 calls at .65, out at .85 – up $200
    • 10 FAS Sept $14 calls at .13, out at .10 – down $30 
    • 10 DIA 9/30 $115.75 calls at $1.05, out at $1.65 – up $600 
    • 10 FAS 9/23 $13/14 bull call spread at .40, out at .60 – up $200
    • 50 XLF Oct $12/13 bull call spreads at net .52, out at .55 – up $150
    • 10 JPM Oct $28 puts sold for .75, out at .65 – up $100
    • 30 XLF Oct $9 puts sold for .15, out at .04 – up $330
    • 5 FAS Oct $8 puts sold for $1, out at .25 – up $375
    • 10 FAS Oct $12/14 bull call spread at $1.15, out at $1.35 – up $200
    • 10 FAS Oct $11 puts sold for .92, out at .75 – up $180
    • 20 RIMM Oct $23 puts sold for $1.75, out at $1.30 – up $900
    • 10 TNA Oct $41/45 bull call spread at $2, out at $2.40 – up $400
    • 10 TNA Oct $29 puts sold for $1.70, out at $1.20 – up $500
    • 10 JPM Oct $28 puts sold for .63, out at .48 – up $150
    • 20 QQQ 9/23 $57 calls at .47, out at .47 – even
    • 20 QQQ 9/23 $56 puts at .40, out at $3 – up $5,200
    • 10 USO Oct $32 puts at $1, out at .90 – down $100
    • 20 TLT 9/23 $116 puts at .70, out at .40 – down $600
    • 10 AMZN 9/23 $235/230 bear put spreads at $1.45, expired at $5 – up $3,550
    • 10 DIA 9/30 $105.75 puts at $1.15, out at $1.15 – up $100 
    • 10 DIA 9/30 $106.75 puts at $1.15, out at .95 – down $200
    • 10 DIA 9/30 $112 puts at $1.10, out at $1.65 – up $550 
    • 10 DIA 9/30 $111 puts at $1, out at $1.20 – up $200
    • 20 DIA $110 puts at .95, out at $1.05 – up $200 
    • 10 USO 9/30 $31 calls at .85, out at .71 – down $140 

    We were incredibly fortunate to have turned bearish on the Fed, even though we were bullish going into it, our early morning attitude to take the money and run on the spike and our very fortunate QQQ and AMZN short plays made for one of our best weeks of the year – actually THE best if you consider that last time we did the review, our GLL calls were DOWN $4,240!  What a difference 2 weeks can make.  That trade is a great example of rolling, doubling down and generally sticking with a trade based on conviction.  

    Overall, we netted a very nice profit of $16,335 on our closed positions and that pushes our realized gains up to $98,480!  Now all we have to do is find $1,520 more gains to close and try to get rid of the rest even and we’re at our $100,000 goal – just in time to hit Vegas….  

    Our open (unrealized) positions were down $1,220 on the 15th and GLL was killing us with the $4,240 loss.  While we closed many positions since then, we opened many more as the market danced up and down (but still within our range):  

     

    As of yesterday’s close, we are left with the following open positions:  

    • 40 GLL Oct $17 calls at net $1.76 ($7,040), now $3.02 – up $5,040
    • 10 BCS Oct $10 calls at .85 ($850), now $1.01 – up $160 
    • 10 BAC Oct $7 calls at .43 ($430), now .20 – down $230
    • 10 BAC Oct $6 puts sold for .30 (-$300), now .44 – down $140 
    • 10 FAS Oct $10 puts sold for .82 (-$820), now $1.15 – down $330
    • 10 TLT 9/30 $121/118 bear put spreads at .95 ($950), now $2.40 – up $1,450
    • 5 TLT 9/30 $122 calls sold for $1.75 (-$875), now .05 – up $850
    • 5 VXX 9/30 51/48 bear put spreads at $1.90 ($950), now $1.15 – down $375    
    • 5 VXX 9/30 $52 calls sold for $1.60 (-$800), now .95 – up $325
    • 20 HPQ Oct $22/23 bull call spreads at .53 ($1,060), now .60 – up $140
    • 10 EWG Oct $16/18 bull call spreads at $1.30 ($1,300), now $1.73 – up $430
    • 10 EWG Oct $17 puts sold for .90 (-$900), now .55 – up $350
    • 40 IWM 9/30 68/69 bull call spreads at .50 ($2,000), now .13 – down $1,480
    • 10 RUT 9/30 $645 puts sold for $2.55 (-$2,550), now $6.80 – down $4,250
    • 30 DXD Oct $18/20 bull call spreads at .70 ($2,100), still .70 – even
    • 10 JPM Oct $31 puts sold for $1.05 (-$1,050), now $2.15 – down $1,100
    • 3 CMG Dec $350 calls at $15 ($4,500), still $15 – even 
    • 5 CMG Oct $340 calls sold for $9 (-4,500), now $7.60 – up $700
    • 10 EDZ Oct $28/34 bull call spreads at $1.10 ($1,100), now $2 – up $900
    • 10 FCX Oct $31 puts sold for .91 (-$910), now $1.90 – down $990
    • 20 IWM 9/30 $65/66 bull call spreas at .65 ($1,300), now .52 – down $260
  5. Phil
    • 10 VLO Oct $18 puts sold for .86 (-$860), now .97 – down $110 

     

    Curse you RUT!  If not for that whopping $4,250 paper loss, we’d have hit our goal!  Oh well, the net of this mess is a loss of $1,080, leaving us at net $97,400 overall.  Our $4,250 paper loss on the RUT becomes a $2,550 realized gain on Friday if the Russell can manage to hold 645 for 2 days.  If not, the Oct $550s are $6 so another 20% down before we even have to think about capitulating (and those are a great current sale!).  

    That means, for all intents and purposes, we can expect to close out our 8th month with over $100,000 if we don’t screw it up so I’m going to be into taking profits off the table, starting with my now-once-again-beloved GLL.  

    We do have heavy EDZ and DXD downside protection and CMG is a bearish play too but, on the whole, I’d rather see the EU pass their bailout package and have the VIX calm down and make our money on the bull side because, on the whole – it’s more fun to spend your money when the rest of the World isn’t bursting into flames!  

    I don’t want to jinx it but congrats to all the $10KP players who became $25KP players and are now going to be $100KP players.  As I mentioned on Thursday, my plan is to start again next year with a 10/100 portfolio and we’ll keep the Income Portfolio going because that’s what you should be doing with $100,000 – not gambling it on aggressive plays!  Ideally, if you have $100K, you can carve out $10K for an aggressive portfolio and if, like this one, it goes to $100K in two years – even if you made "just" 15% a year on your conservative $90K, that’s going to wind you up with about $220,000 – that’s not a bad outcome – and you don’t have to risk your whole $100K to get it.  

    We’ll talk more about that when we close this portfolio out and start the next one properly.  Hopefully I was right to ignore the BS sell-off yesterday and the markets shake off the Euro worries for a nice couple of window-dressing sessions as we close out the Quarter! 

     

  6. Phil

    Futures looking better, which is good as our $25KP is VERY close to goal at $100K (see update) with that goal riding on whether we hold over 645 on the RUT through Friday!   

    Good morning!  

    Shouldn’t have chickened out on those USO calls yesterday but I didn’t realize the $25KP was doing well enough to take that chance.  Oh well, as long as the RUT works out, we’re happy campers.  GLL $17 calls are down from $3 and we have 40 of them in the $25KP at net $1.76 so we do want to get $3 for 20 and set a stop at $2.50 (.50 trailing) on the rest.  We should have hit it yesterday when they were over $3 as gold pulled back but, as I keep saying – I can’t call every exit – when the markets are moving I’m generally more concerned with finding balance trades as well as helping people who are worried about positions so PLEASE – follow our general rules (see Strategy Section, especially post and comments on Scaling).  

    11,250 on the Dow is up 2.1% for the day but a 2.5% off the Futures lows so a pullback to 1.5% would be normal at around 11,175 but below that will be bearish.  Since it’s very likely we get rejected on our first attempt, I like the DIA tomorrow $112 puts at $1.05 with a stop at .85 to protect the morning pop – 20 in the $25KP.  

     


    DIA $112 puts are $1.60 so done with those in the $25KP and we can flip to 20 of the $110 puts (now .70) if they hit .80 and set that stop at .65.

    Submitted on 2011/09/29 at 11:16 am

    QQQ TOMORROW $53s at $1.45 have just .20 in premium – 10 in the $25KP and a stop at $1.30

    I was looking to see if we should stop out of the VXX in the $25KP (it actually should have stopped out at 100% per earlier discussions but I never officially called it) and I just noticed the VIX is DOWN today.  That is VERY strange.  

    QQQ $53s topped out at $1.75, now $1.55 but no point in getting out now in the $25KP if you didn’t take $1.65 and run.  I think we’re going to do better into the close so we can give them a chance.  If we had 20, or were not way ahead for the day off the DIA puts earlier, then of course we would take 1/2 off with a .20 gain!

    Now that we KNOW $1.75 was a top, we should be more inclined to take 1/2 off the table if they don’t pop through it on the next run and then raise the stop on the remaining 1/2 to even ($1.45).  As I said before – in and out and in and out with $100 here and $200 there and, before you know it – you’re making money! 

    Submitted on 2011/09/29 at 1:40 pm

    Woops, broke the lows so game on for the DIA puts in $25KP, of course and the Qs died already.  

      


    Don’t forget to get 1/2 out of those GLL Oct $17s at $3 in the $25KP!  We only have 22 days so crazy to risk it when this takes more than our original entry off the table.  Stop on the rest is .50 trail from here.  

    DIA $110 puts now $1.10 so another $600 off the table in the $25KP and we’re good for the day.  

    Oh, it’s only 2:30, I thought it was later.  

    FAS $10 calls are $1.28 with .10 in premium so 10 in the $25KP should be fun with a stop at $1.13. 

    Submitted on 2011/09/29 at 3:19 pm

    Let’s see if we can top JRW’s 11% with the IWM tomorrow $64/65 bull call spread at .60 and we’re going to get there in the $25KP by rolling the 20 $65/66 bull call spreads, now .42 (down .23) to 30 of the $64/65 spreads for an average entry of .68 and a 50% upside if TNA gets over $65 at tomorrow’s close.  That puts us in for $2,040.  

     


    VXX/$25KP – Let’s buy back the $48 puts for .15 and hope for a nice sell-off to give us a pop on the $51 puts (now .95 but out of the money. 

    Submitted on 2011/09/30 at 9:57 am

    Our technicals are turning very ugly, of course but we only care about the 10% lines on the Dow, S&P and Nas – if they hold, then we’re still not in worse shape than we were in August.  The Nas has the farthest to fall still and we’ll watch that -5% line very closely to see if they can take it back (2,473) while the RUT has the most to gain and we took an aggressive IWM spread into yesterday’s close in addition to the short RUT puts in the $25KP so it will very much suck to be wrong about 645 holding up (now 655).  

    So, for a hedge, I like SQQQ Oct $28/33 bull call spread at $1, selling RIMM Oct $20 puts for $1 – hopefully a free hedge!  WFR 2013 $5 puts can be sold for $1.60 as a longer-term offset.  

    On the long side, I like TNA Oct $34/38 bull call spread is $2 and you can sell the $26 puts for $1.70 for net .30 on the $4 spread.  

    Also, of course – FAS Oct $10/11 bull call spread is .60 and you can sell the $8 puts for .50 for net .10 on the $1 spread.  

    Also, for FAS Money – let’s buy back the short next week $12s at .50 – we can re-cover later but I still think we’re heading up.  

    USO today $30 calls 10 in $25KP at .67.

    All I can say is thank goodness those RUT puts expired this morning!   We finished at 644 on the RUT but the short puts expired worthless.  That should put the $25KP over the top.  

    Submitted on 2011/10/03 at 10:05 am

    Oil (/CL) is a good bullish play off the $77.50 line with VERY tight stops.  USO Oct $28 puts can be sold for .75 and that pays for most of the Oct $29/31 bull call spread ($1.08) for net .33 on the $2 spread as a bet oil gets back over $80 by expiration day (19th).  Let’s do 10 in the $25KP.  

    Submitted on 2011/10/03 at 11:41 am

    TLT/Mampcs – Yes, thanks for pointing that out! Weekly $122 calls can be sold for $1.65 and that pays for the $124/121 bear put spread at $1.70 for net .05 on the $3 spread.  5 in the $25KP!  

    USO weekly $30 calls at .90 – 10 in the $25KP.  

    Submitted on 2011/10/04 at 11:21 am

    USO/$25KP, Champ – The $30s are down to .51 and I wish we had caught the DD at .41 but c’est la vie.  10 more at .51 averages just over .70 and we look to take 1/2 off the table at .70 or better to leave us with 10 at a lower basis.  

    USO Friday $30s back to .35 and that’s a DD for a .53 avg on 20 in the $25KP. 

    Submitted on 2011/10/05 at 12:23 pm

    USO/Jerconn – I thought we’d cross $79.25 oil with a $79.25 Dollar and we’re on track but if the Dollar doesn’t fall below $79.50 then oil probably won’t go over $79 so watch this area carefully.  

    That goes for all bullish plays – including naked ones in the Income Portfolio or $25KP.  I’m leaving this afternoon and will be in Vegas tomorrow through Monday so I won’t have all my screens and will certainly not be able to watch everything so PLEASE – BE SENSIBLE (and not too greedy)!  

    Submitted on 2011/10/06 at 10:07 am

    The same hedges we liked yesterday are good today, of course. I do like going long on Dow futures (/YM) off the 10,800 line with tight stops and that should also be 650 on the RUT (/TF) and for the non-fut

  7. Phil

    Submitted on 2011/10/06 at 10:07 am

    The same hedges we liked yesterday are good today, of course. I do like going long on Dow futures (/YM) off the 10,800 line with tight stops and that should also be 650 on the RUT (/TF) and for the non-futures crowd, the IWM tomorrow $65/66 bull call spread at .55 has very little premium so 20 in the $25KP with a stop at .50 (say below RUT 650) has a chance of doubling $1,000 tomorrow on a small move up against a $100 risk.  

     

     TZA/Itrade – If we get rejected from 666 it’s not bad but I think we’re heading over.   Nas is still my top choice for protection but what we’re getting right now is a simple 5% rule pullback off significant lines of resistance on the futures at Dow 11,000, S&P 1,150, Nas 2,200 and RUT 666 so don’t get too excited by a pullback.

    • DIA $104 puts at $1.05 are nice downside momentum plays off rejection at 11,011 (regular Dow, not the futures).  IF AND ONLY IF we fail that line, then I like them (maybe $1.10) for protection so 20 in the $25KP with very tight stops back over that line. 
    • As a longer spread, the TZA tomorrow $46/47 bull call spread is fun if you can get it for .35 or less and you can offset that with a next weekly $40 put at $1.20 for a net .85 credit and, if you don’t want to be long TZA on a 12% drop (up 4% on the RUT) then why the hell would you be looking for any kind of bearish RUT play?
    • QID Oct $51/56 bull call spread at $1.50 is the way to play a Nas failure here (right at the top of the downtrend) and I like that one enough to add 10 to the $25KP with a stop at $1 for a $500 insurance policy. 

     

     

    Wow, the RUT got slammed!   Down 20 since 10:30.  That sends our TZA $25KP today $46/47 bull call spread into the money and the short puts are down to .70 so don’t let that huge winner get away as we’re lucky to get it at all after that open!  The DIA and QID hedges we took at the same time yesterday are longer-term protection but we don’t mess around when we get huge wins on dailies.  

     

     

    As we just turned a $1,700 credit into another $500 in cash in 24 hours (closing our potential obligations), let’s take a chance in flipping back in the $25KP and pick up 5 TNA $34/37 bull call spreads for $1.30 and sell the $26 puts for $1.15 for net .15 on the $3 spread.  Just 5 because we may have to roll and DD if things go the wrong way on us.  

     

     

    SPY weekly $121 calls at .75 – 10 in the $25KP with a stop at .60.

     

    Submitted on 2011/10/11 at 3:22 pm

    I don’t see Nas 2,600 going quietly so that puts a 0.5% cap on an upside move – still a very good time to hedge SDS and now TZA because RUT 700 has been a rock-hard barrier that’s easy to set stops on.  The TZA Oct $38/39 bull call spread is $2.60 in the money at net .45 so you know I love it and more so if we buy 20 in the $25KP ($900) and sell 10 of the Oct $35 puts, which are $7.50 (21%) out of the money at .80 ($800) for net $100 on the $2,000 spread that pays of if the RUT is not over 715 and doesn’t get in trouble until the RUT is up 7% (about 725).  This was wildly successful last month when we shorted the actual RUT puts but this way is much margin cheaper.

    Submitted on 2011/10/12 at 10:40 am

     

    We have our downside trades already mapped out from yesterday and Monday so now, most of us should be looking for a quick bull trade.  XLF is, of course, my favorite (now $12.63) if the ESFS passes but it’s the RUT that has a lot of ground to make up if we’re really coming back and the TNA Oct $40/43 bull call spread at $1.30 is a nice way to play bullish with a natural return of 130% and you can offset that with any of the following short puts:

    • MO Jan $26 puts at .80

    • FAS Jan $8 puts at $1.12

    • JPM Nov $30 puts at $1.16

    • AA 2013 $7.50 puts at $1.17

    • GS Oct $90 puts at $1.60

    • GS Nov $75 puts at $1.80 (shows you how worried people are about GS). 

    If we fail 666 on the RUT we can kill this trade (both ends if you don’t REALLY want the offset so let’s do 20 in the $25KP, selling 10 of the GS Oct $90 puts for $1.60 and we don’t REALLY want to own GS in the $25KP, nor do we want to roll it and be stuck for another month so it’s a stop at $2 ($400 loss) if things go the wrong way and we’ll simply find another way to fund the trade (if the RUT ends up holding 666 despite a GS pullback that blows our stops).  

     

    Submitted on 2011/10/13 at 10:40 am

    Another long idea of the moment is USO ahead of inventories.  The Oct $33 calls (was our old put line) are .60 so 10 of those in the $25KP and we’ll see how it goes but if we’re up .20 or more ahead of inventory – we don’t risk it and take the money and run.  

    Submitted on 2011/10/13 at 11:12 am

    Speaking of USO – we topped out at .65 and now back to .60 in the $25KP but the markets are improving and the net draw was very large so I think stick with it until/unless we see more weakness ($84 line should hold).  

    Submitted on 2011/10/13 at 12:56 pm

     

    With a 20% loss on the USO calls, it’s time to make a decision.  We have 10 so not much at risk and we have the weekend so we might get a pop and oil bounced hard off the $83 line and below that, $82.50 should be support so I guess we’ll look to DD at .40 in the $25KP if it goes lower but, otherwise, we stick with the plan and look to get out at .80 pending review into the close.  

    AMZN/NF – Running into earnings you don’t even have 10% leeway.   Carrefour numbers should be a big concern on AMZN earnings so I would not play them bullish through that day.  

    AMZN can be played a bit bearish by selling 5 Oct $240 calls for $4.90 ($2,450) and buying 3 Nov $250 calls for $9 ($2,700) for net $250 on the spread.  $245 was their high and I don’t think they have earnings until late Oct so the callers will (hopefully) expire worthless and the Nov calls should hold good value behind the earnings firewall.  Let’s do a set in the $25KP.  

     

    Submitted on 2011/10/14 at 9:44 am

    Another fun GOOG play is the TODAY $590 puts for $1.10 – let’s get 10 of those in the $25KP just for fun as it’s the kind of fun that can make us $10,000 on a nice pullback (doubtful but fun).   

     

    USO Nov $32 puts are $1.10 so 10 of those in $25KP and we’ll be happy to roll and DD if it goes the wrong way on us.  

     

     

    GOOG – The $590 puts are $1.80 and we want to take 1/2 off the table at $2 and have a free ride on 5.  If you think you will be missing something, you can always buy 5 of the $585 puts for .60 but not officially in the $25KP, where we’d rather not lose $500 playing a long-shot.  

     

     


    Now on GOOG, in the $25KP, we want to lock in $1 so that’s our stop for a net $500 profit – not the kind of thing you want to throw away.  

     

    Submitted on 2011/10/17 at 3:01 pm

     

    Bearish/Rustle – I’m not bearish, I’m rangeish!  My bearish call was based simply on the fact that there wasn’t enough bullish data to break the range so down we go.  Now it’s up to the bears to prove their case and defeat S&P 1,200 going the other way along with Nas 2,600.  Testing those levels today on a Dollar 1% rally with low volumes of trading makes anything that happens today suspect.  While I certainly hope no one is bullish – bearish doesn’t feel right yet.  

    Keep in mind we’re diving on major downgrades of Construction and Builders and Publishing and Retail and GMCR scared people out of MoMos and the German guy said something scary and Financials are unsteady and white people are starting to riot now and Transports dropped 3% and SOX dropped 3% and Basic Materials are off 3% and OIH is down 4%….  And we’re ONLY down 2% on the Dow and S&P….

    I’m not trying to sugar-coat things and it’s good to be neutral to bearish but until we fail Thursday’s lows and Monday’s highs – this has no meaning.

     

    DIA $115 calls at .95 – 10 in the $25KP, stop if Dow fails to hold 11,400 (probably a dime loss).  

    Submitted on 2011/10/18 at 10:10 am

    I still like those DIA $115 calls,  now .50 so we didn’t miss anything by stopping out yesterday.  Let’s do 20 in the $25KP and see what happens.  

    We expected a sell-off to put in a bottom this morning and we’re looking for Thursday’s lows to hold on the majors, which is roughly 11,375 on the Dow (blown), 1,190 on the S&P, 2,585 on the Nas, 7,140 on the NYSE (blown) and 688 on the RUT (blown).  So 3 of 5 down already and if we lose the Nas and S&P, then a bit more bearish we shall get but then we’ll be looking for 1,175 to hold on the S&P.  

    Submitted on 2011/10/18 at 11:00 am

    By the way, I don’t know if I was clear enough above but we already discussed it earlier this morning – the plan was to cash out the bear bets into the morning dip and get bullish until we have reason not to be.  

    Speaking of patience – See how we watched and waited yesterday and took a little poke at the DIA calls in the $25KP yesterday and lost $100 and got out and now we get back in for 2x at a lower price and already we’re up $300 – that’s what I mean by patience – if you sit back and wait for things to resolve themselves – an opportunity usually comes along.  If you insist on trading all the time, whether there’s a clear direction or not – then you can’t see the forest through the trees…

     

    Hoping we get a pop when Europe closes (11:30) if not, time to take DIA profits (still .75) in $25KP (no less than .65 for a $300 gain so call it a .10 trail on 1/2 at .75 with a full stop at .65 on all) but I think we’re just hitting resistance around 1,200 and 11,400 and gearing up for a move higher.  

      


    DIA/$25KP – Topped out at .90 so stops are currently .80 on 1/2 and .70 on other half for .75 avg, currently at .85.  


    Oops, that’s $1 on DIA – time to cash 1/2 and set stop on rest at .85 (.15 trail) in $25KP.   Not taking 100% off the table is just silly.  

     

     

     

     

  8. Phil

    Submitted on 2011/10/19 at 10:00 am

    USO Nov $32 puts at .85 are a DD in the $25KP for 20 at an average of .925 ($1.10 originally).  We may get more of a run into inventories but then I expect a nice sell-off.  Obviously, I like them as a new play too. 

    Another fun play is the AAPL $395/400 bull call spread for $3, which pays $2 more if AAPL holds $405 through Friday.  10 in the $25KP with a stop at $2.50 risks $500 to make $2,000 – simple enough?  

    Obviously, 11,500 is a good line to short Dow Futures (/YM) with a tight stop there.   

    DIA $115 puts are just $1 so 20 of them in the $25KP with a stop at .85.  

    Oil touched $86 so of course half back out at $1.15 on the USO puts in the $25KP and a stop at $1 on the rest.  We might do better but why risk a nice gain after almost taking a loss?  

    Submitted on 2011/10/19 at 3:10 pm

    Damn – 77.45 on the Dollar – I thought it would stop by now.  Over 77.50 and it’s time to flip to DIA $114 puts at $1 (now .95) with the same .85 stop on 20 in the $25KP in case we have an anti-stick finish but volume is still light and this could just be a shake-off ahead of the real EU fix so I do not WANT to cover more.  

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