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Thursday Virtual Portfolio Moves

Posted April 26, 2007 at 9:31 am | Permalink (Edit)


Rule number 1: ALLWAYS sell into the initial excitement
Rule number 2: When in doubt sell half.

Breaking one commandment is forgivable but breking two often brings down the wrath of the markets!

Posted April 26, 2007 at 9:47 am | Permalink (Edit)

AAPL – May $100s opened at $4.40 and you really should have taken $4 as any profit on a spread needs to be taken off the table ahead of earnings unless you have huge mo. If you’re still holding at $3.40 (puts are .25) then you may as well watch the $100 line and get out even if we lose it or you could DD on the puts and ride the month out but with a spread you need to be thrilled to make 25% – you are lowering your risk by immediately sacrificing what would be a double so a 25% gain on the spread is a 125% gain on one side – expecting better is going to lead to disappointment.

For those of you looking to get out of AAPL on either side, try playing the spikes, we’re probably going to have them in both directions today and I will be looking into working my way into a strangle, starting with an offer of $1.50 on the $100 puts and either getting the $100 calls for the same or grabbing the $105s as a mo play.

Posted April 26, 2007 at 9:51 am | Permalink (Edit)

TM (5/9) – We took the loss on the $130s on Monday at $1 but now is the time to go for the $125s at $1.50 XXX.

MU – Very greedy to not take at least half at the critical $12 mark – that’s a huge move since our pick. Oops, I stopped out now anyway.

Posted April 26, 2007 at 10:04 am | Permalink (Edit)

MCD/all other stop questions – Don’t think, set 20% of the profit stops. That means that you take the highest price paid for your contract and, if the price paid goes 20% below that you should sell at least half. 20% below that you should sell antother half or, if you still love it, then buy back some more as you just saved yourself a fortune by not holding that first half too long.

If it turns around on you after you sell your first half and gains another 100%, you will have still given up less than 50% of the maximum possible gain while every 20% down that you take no action costs you a full 20% of your gains while time eats away at your premium.

If you want to be in something for the long haul and ride out the dips – DON’T PLAY OPTIONS WITH LESS THAN A 90-DAY WINDOW!

LOL – EWJ got crushed! Stopped out there too. If we hold up today I will buy them back.

FXI too – if you guys don’t have mattress plays I strongly suggest them.

TSO – I sold the May $115 calls for $5.50 yesterday to some sucker (at least I hope he’s the sucker..)

Will sell the $120 puts for $6.70 if oil turns up (gas inventory out soon). Depends wheich side of $65 we’re on, still $65.36

Posted April 26, 2007 at 10:25 am | Permalink (Edit)

SNDK may be grossly underestimated so the $45s are a pretty good gamble. I’m no longer happy with my Jan $40 leaps as they are too in the money at $9 so I’m rolling those to the Jan $45s for $6, taking $3 off the table and leaving the puts I sold in place – hopefully I won’t get gapped out…

Posted April 26, 2007 at 10:39 am | Permalink (Edit)

SU – I don’t know what’s keeping them up! Average production was BTE but they lowered forecasts for the year by 5Kbd ($118M). I’m not complaining, the $80s are a double from yesterday now and the June puts are still $2 so I’m tight stop on the calls and then tight stop on the puts on the turn.

Build in gas 18Bcf – good for SU.

VLO now catching TSO fever!

CME heading back down. NYX $90s for $1.45 as mo play – was $2 yesterday and $4 on Monday XXX

Posted April 26, 2007 at 11:14 am | Permalink (Edit)

TSO – Even if they hit their number, it only puts them in-line with last year’s earnings and can’t possibly justify this premium to VLO. I still have the June $110 puts from yesterday, holding $3.30 so I’m out of the current $110s if I should be lucky enough to hit $3 but I won’t DD there now.

Plan is still to roll losses to Aug $105 puts (up from $100s) at $3.90, hopefully $3.50 and then sell puts against those for a while.

I also like the spread of the Aug $120 puts for $9.70 and selling the Aug $130 puts for $15.85 – you make money as long as TSO doesn’t finish between $124.15 and $130 and if it looks bad going into July the loss should only be couple of bucks vs. a $6.15 potential gain. XXX

67% of the S&P has beat so far – keep that in mind when you short! Anybody who exports anything is in good shape but domestic companies remain very questionable.

JWN – tough one because earnings are 5/17 but I suppose taking the .70 profit off the table an moving to the Jun $60s for .90 is the best way to hedge this one. To do this you can get out here (since this looks double toppy for the week but always trying to get a little more and buy for a little less) and wait for a dip or buy in at $1 if you have to on a breakout over today’s high. That way you are only risking .30 or less on earnings. XXX

Posted April 26, 2007 at 12:07 pm | Permalink (Edit)

BIDU Flying! We have 3 June $105 calls and sold 2 June $105 calls against them in the $10KP and those $105s have an insane $5 premium. I think they should do as well or better than Google since they get help for a lot less money and aren’t acquisition happy but they may also get the ho-hum Google reception on great earnings.

TSO – LOL you’re right – I was thinking as an upside cover and forgot my downside! I’m watching way too many things if I’m going to start missing things like that! I was thinking about protecting my heavy Aug put position against catastrophe but that does not work as a new play for people other than the uber bullish. Sorry!

Posted April 26, 2007 at 12:14 pm | Permalink (Edit)

Knot waking up. Oct $20s are still $3.90 (same as 4/4 entry + .2)

Posted April 26, 2007 at 12:19 pm | Permalink (Edit)

GRMN (5/2) – $55 puts are $1.30 and TomTom just gave good close of europe results so there should be some panic about price competition and market share for garmin – just a mo trade (.30T)

Posted April 26, 2007 at 12:39 pm | Permalink (Edit)

UNH getting killed here. Taking out May $55 caller for .35 – have to consider selling $50s for $2.90 as a mo play (selling at $2.75 with a .25 stop). Nonetheless, doing a DD on Jan $55s at $4.35 as I just made .65 on my first batch so it’s good cushion and earnings were pretty good with all the weaknesses fixable.

Posted April 26, 2007 at 1:03 pm | Permalink (Edit)
MSFT July $30s is an earnings gamble but if I lose I go long and large on Jan $27.50s or whatever it ends up at so I’ll be distributing let’s say a .25 loss to each of my leaps if it’s a disaster.
Picking up YHOO June $30s for .45 XXX
Posted April 26, 2007 at 1:51 pm | Permalink (Edit)

BIDU – in a $10KP I would not hold those profits into earnings. You need $116 (+7%) just to keep your money. In a STP I now like the Jan $120s for $10.95 and selling the $115s for $3.40 as there is plenty of time to roll.

MDT – that is kind of an embarrassing amount of money to make (and much worse if you lose it). I set my last stop there at $3.25 when it was $3.50 but at $4.30 I think a .50 trailing stop will preserve more than a triple. If you have a lot (ie if losing half would ruin your week) riding on it, then by all means take half here and don’t risk an overnight but this is the 4th day in a row I’m glad I held through a dip… If I had made less money I might want to sell the $52.50s for $2.05 to pick up another .50 but that’s just being greedy at this point and I’d rather have the cash.

XOM spreads – I have both still. The July $80s are still $5 and the June $85/May $75 is down .40 but we didn’t expect those to work. I will probably sell the $80 puts against my $85 puts OR sell the $80 calls against my June $85s as I have the Julys for protection but I can give it until next week so see what happens as the $80s should hold $2.50 as a pair through next week.

That does it, I’m tired of DNDN going up and down like this! Buying $15s for $4.50, looking to sell $17.50s for same (currently $3.70). Will stop out of $15s at $4.25 rather than stay in trade, maybe try again at $4. XXX (for crazy people only!).

Posted April 26, 2007 at 2:49 pm | Permalink (Edit)

DNDN – I’m not worried but if I can scam a free ride I sure will! It’s just fun to have zero cost positions you could care less about and then suddenly you get paid… I didn’t like the action so I’m out at $4.60 with a dime profit and I will try again tomorrow. I decided to do this because I am amazed at how well these options hold thier value. XXX

SIRI – selling $3 ls for .20 when I can on half my positions (I am DD and DD on my originals so looking to exit half). My basis is $.95 and this makes it .85 so I would get 1/2 out at $1 which would drop the basis to a comfortable .70 as I want this for a long-term hold. XXX

Posted April 26, 2007 at 2:58 pm | Permalink (Edit)

TSO – my $115 caller is lauging at me! I have to take out my $120 putter, no way can I afford to risk this overnigt but the $115s are covered by my $105s so I’ll just leave him.

Posted April 26, 2007 at 3:12 pm | Permalink (Edit)

Note to all: When I post a price I post the current price which, in a non mo trade, is the MOST I am willing to pay. I will usually put in a bid for a dime (if over $1.50) or a nickel less and wait. I’d rather not get the trade than pay 10% more than my target for something.

DNDN is back to $15 and you can sell the $15s for $4.40/$4.50 – once again a great play for any virtual portfolio!

Posted April 26, 2007 at 3:26 pm | Permalink (Edit)

EBAY – rolling to June $35 at $1 (+.50) rather than DD here – will likely DD there at .50 but I really hope not!

Posted April 26, 2007 at 3:36 pm | Permalink (Edit)

AVP – If you’re bullish sure. They have tough numbers to hit but they are quite the China story. This is a double tap at $40 for them and last time they were going through (after Feb earnings) but 2/27 hit so I’m going to XXX the June $40s for $1.55 but hold off on selling the May $40s until we see tomorrow’s market (assuming you have some general covers) as another good move could pop them over.

Posted April 26, 2007 at 3:45 pm | Permalink (Edit)

BRCM should be good but they have tangential issues with lawsuits and stuff so risky.

Based on what I see though I say they blow it out and I wish I had done this before but I’m going to take the June $37.50s for .85 and the $32.50 puts for .40 XXX

Posted April 26, 2007 at 4:00 pm | Permalink (Edit)

EBAY – the current $35s at .45 (all I could get) rolled into the June $35s at $1

Negative whisper on MSFT spooking the markets. If they beat there’ll be a whole new squeeze tomorrow!

OK, now AMZN is just messing with people! PE up to 137, 66 for next year assuming all goes well.  Selling May $47.50s for… LOL (really lauging now)… $14.25 – I just can’t take it anymore, they were .85 on Tuesday!

Posted April 26, 2007 at 4:27 pm | Permalink (Edit)

AMZN – sorry I ran out of time (I know too late). The correct move on those is to trade the May whatever calls sold for the $60s at $4.60, which carry a $2 premium but I realize this is prohibitive for most people, which is why it took me so long to make the last post as I was racking my brains for a solution.

One is to move yourself to the Oct $65s for $5.50 (you can go to July $65s for $3.35 but it’s much riskier) and roll your caller to the May $60s for $4.60 – this will cost you about $1.10 per spread but pushes you 5 months out just out of the money with 80% coverage this month so that’s the XXX move. Going for the Julys nets you cash but the danger is a continued run puts you back to scratch (but then we just do this again until it works).


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