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July 30th, 2012 at 11:48 am
Europe closing up very nicely, up over 1% mostly with PIIGS up about 2% so they are still believing.
MCD/Crussell – If you want to stay with them, I'd go out to the March $90 calls at $3.85 ($3.20 for the roll) and begin to pay for that by rolling your caller (.10) down to the Sept $90 calls at $1.45 for + $1.35 so for net $1.85, you drop 2.50 in strike and buy 6 months of time but, on the whole, MCD would have been on my long put list if they hadn't already taken a dive – I'm not terribly enthusiastic about them with food prices climbing on the drought – the one everyone seems to have forgotten already.
Decay/Mr M – Well we know holding those things long-term is madness. Good idea for AMZN, we should start a rumor..
VIX/Ging – I have found VXX to be more liquid than VIX so I end up using that one lately. I would only trade it short-term enough that the other considerations don't matter. While it's tempting, I think it's foolish to ignore the possibility that there WILL be QE and the VIX will drop significantly. I'm playing it skeptical in that I would rather cash longs and buy some speculative puts as I think the upside is mainly baked in but looking for a rising VIX is a bit more specific of a trade and you only have 18 days to be right.
Ideas/Bird – Yes, the "idea" is to pick a few you believe in (and balance out your portfolio) well enough that you'd want to roll it up and double down if the position moves against you (or take a 20% loss and get the hell out). The only one in our $25KP is the AMZN, as we have shorter-term bear bets than those. The point on these are, we generally do OK with them, with many chances to gain a quick 20% and get out and, once in a while, we hit a grand slam like CHK or ISRG but, in a real market collapse, they should all be good for huge gains.