CME getting killed! This is great for me as I only got as far as the puts yesterday as it plunged straight down from my play but now I am going to sell the $540 puts for no less than $12, hopefully $14 against the $520s I have ($4) and leave the trade at that as there’s no sense adding risk now.
That’s it for IBM for me ($4.10) – what a nice save! I’m offering .75 for a few $100s, just so I don’t feel like I’m missing anything, stopping at .35. I THINK they’ll test $100 now that they’re up here but I’m not risking my $95s on it! – NEVER GOT THE $100S.
Out of TXN $32.50s at $2.80 but not selling against the leaps just yet – we are in such good shape now we can afford to wait a bit and see what happens around $35. The $35s are .72, which is kind of pricey but I’m not jumping in front of an 8% one-day gain. All they did so far was bounce 15% off the 10% rule, still generally bullish but I’d rather flip to the $35s and take my profits off the table.
SOX up 9 (2%) but not much action from MU and MRVL or AMAT, who I would think would have been excited about this. Even AMD is finding a few buyers below $14…
TM – I don’t get that one but yes, we still need to have stops in and the best way to play TM is to take your buck back and pick up the $125s on the turn (now $2.78). Part of what management did at their conference yesterday was give the “law of large numbers” speech that Google once gave as they really can’t sell 10% more cars quarter after quarter. The best dip this month on the $125s was $2 so that’s a good entry but it’s a DD at $1.40, DD at $1 and roll if it keeps going down.
The DIA $130s are too rich for my blood at $1.75 but the $129 puts are still reasonable at $1.25. DON’T look at the Dow! – watch the other indexes and Europe for a reality check. If we lose 12,900 we’ve got real problems because IBM is not going to gain another 4% tomorrow and TXN isn’t going to rally the SOX and Nasdaq (which is hardly rallying anyway).
COH is a buy down at $50! I’m not buying anything now but that is one silly sell-off!
IBM – I wouldn’t short them just because they’re up. They should have been up last week and were artificially held down although some of this may be short covering it’s not the same kind of thing as when RIMM hits $140 and screams to be shorted.
DIA $130 puts, best buy-in there is probably $1.50 if you can get it, otherwise you’re better off taking the $129 puts when/if the Dow breaks below 12,900 .
EBAY – not yet but since we have a losing $35 call (mine was a buck) we can use it as upside protection against an agressive call sale like selling the $32.50 for $1.33 against the June $32.50s at $1.85. The logic is we think it will come back so we like the Junes but we want to recoup our current losses so we sell 10/13ths the number of May positions to get our money back there (being greedy is bad) against the Junes that are in the money.
Our goal here is to get even, not win so any combination of these positions that gets you a .70 gain at this point is a good time to get mostly out.
I’ll be checking in but I’ll be doing a lot of virtual portfolio moves if we don’t recover soon but the general rule of thumb is to take the next level DIA puts if we go below 12,900 but more important that the S&P holds 1,475. Nas 2,500 would be a catastrophe, Russell 820, NYSE 9,600.
The XAL is still down, steel is getting killed (bad sign) and the brokers are dropping off – GS below $220 is another bad sign! If oil doesn’t pull back I don’t see the industrial turning and those guys are off in their own little world and CNBC is featuring a report on $4 gas and repeating the same Nigeria story every 15 mins. VLO and BP both just announced production cuts but its a lot of hype into the reports making me think we won’t get much out of them tomorrow.
Remember though – this is a test today. Terrible data against pretty good earnings. If the market can shrug this off we may get to 13,000 yet so I’m not rushing into (or out of) anything until there’s a real trend.
TIE – you’re risking a worst than expected GDP number but BA has to build a lot of planes so I’m holding my June $35s at $2.30, even though they are down from $2.70 last week (but I’m out at $2).
Just to clarify something re buying on days like today:
In a down market I take my mattress plays (or in this case I still had my $129s) in order not to sell my existing calls. As the drop slows or I start to lose faith in my puts – rather than dump out of my mattress play I start picking up some new calls (but keeping my stops on the older calls). That way I roll over into fresh positions and I don’t overplay one way or the other.
