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Thursday Virtual Portfolio Moves

Posted June 28, 2007 at 9:46 am | Permalink (Edit)

TASR – too dangerous here. I’ll be doing something with my leaps soon though.

T had a nice jump today.

Posted June 28, 2007 at 10:14 am | Permalink (Edit)

Oil puts – I’m hoping for a nice run into inventory to start VERY SMALL positions which I will intend to DD, roll, DD, roll, DD, DD and roll. We could go a very long time without a pullback if they get oil over $70.

RIG – my basis is $1.24 right now so I’m certainly going to DD (just 15 contracts ATM). We still have 15 trading days to go and those puts were $1.80 yesterday so we don’t have to get that lucky with a .90 basis. XXX

DIA – if you’re in the June calls from yesterday you should be looking to get out – don’t forget they expire tomorrow!

Long oil – I just can’t do it. They are so massively overpriced I just can’t find any I want for a long…

Posted June 28, 2007 at 10:24 am | Permalink (Edit)

Index puts – I don’t buy them every day but I tinker with them a lot. I just play them as great big momentum trades and, as insurance, what I do with them generally depends on how much I think my other positions need protecting. Don’t be misled by how well I’m doing with these – it’s just an accident of the volatile market, not a plan.

What happens is I will establish a position that protects about 1/3 of my anticipated losses on a 200 point dip, in this case that’s 350 DIA July puts. As a rule of thumb I find whatever contract is around $2 is usually the best mover.

Once I establish it I follow mattress play rules but I’ll usually spend .30 per 100-point down gain to roll them up to the next level but then follow the usual half out rules on a pullback. If the Dow goes up 300 points from where I buy the $135s for $2 I end up owning the $138s for about $3, when the Dow corrects 150 points I get half of that off the table even and I would have layered the play by then so I have tight stops on the remainder so I end up even for all my trouble but that’s great as the idea was to insure my longs for 300 points up, which I’ve hopefully cashed out by then.

That’s the plan but what’s been happening lately is we’ve had a lot of rapid pullbacks that have paid me a bonus followed by rises that came faster than I scaled in so I end up buying low and selling high by accident.

Posted June 28, 2007 at 10:32 am | Permalink (Edit)

Gas build 99Bcf – much higher than expected. Now I’m loving my RIG puts (.94 basis) VLO $75 puts are a down momentum play and EOG $70 puts make a fun play XXX Tight stops, very risky!

Posted June 28, 2007 at 10:40 am | Permalink (Edit)

RIG – very important lesson in scaling. I bought 5 at $1.60, 5 at $1.20 and 5 at .80 yesterday for a grand total of $1,000. Just because I can afford more doesn’t mean I buy like an idiot. That becomes my base position (20%) of the $5K I was willing to commit. Today it opened way higher and I could have taken a 50% loss which would have cost me $500 of my $5K budget but I decided to risk another $1,000 since it seemed pretty cheap (.60) to buy 15 more shares. Now I half out at .90+ and I now have 15 shares for .90 or less when my original intention was to spend $1.60 for 15 for $2,500 just yesterday.

Posted June 28, 2007 at 10:57 am | Permalink (Edit)

DIS – the selling is RELENTLESS and the p/e of the company has been hammered down to 16 for no reason I see (and Smart Money recently agreed with me: http://www.smartmoney.com/stockscreen/index.cfm?story=20070620intro&af l=yahoo ) so yes, I still like them a lot but I don’t trust the short game anymore (although I still have my $35 and $37 calls) so I’m going with Jan ‘09 $35s, now $4.65 and if they fail to move this month, I will make up my short losses with sales over time.

Posted June 28, 2007 at 11:13 am | Permalink (Edit)

TSO has nothing to do with reality.

Posted June 28, 2007 at 11:37 am | Permalink (Edit)

Fed – I’ve already got my puts so I’ll be taking the DIA $134s for .60 to cover with a .30 stop. Last Fed meeting there was no head fake, it just went straight up 100 points in 15 minutes.

Posted June 28, 2007 at 12:04 pm | Permalink (Edit)

WFR crankin’ – thanks Happy for getting me to buy back those covers!

Fast food is flying. YUM, BK, SONC… good a time as any to pick up some MCD Aug $52.50s for $1.05 XXX

Oil not holding $70.

Posted June 28, 2007 at 12:11 pm | Permalink (Edit)

GM should not go any higher becase they are still a disaster and this boost today is because they Carlyle Group bought a division from them for $5.6Bn, which is 1/4 of the entire market cap of GM. I’m actually looking to short GM here (I already have long puts) at Allison generated $2Bn in high-quality revenues with 3,400 people making truck transmissions while GM’s other 260,000 employees generate $205Bn of revenues at a loss.

On a bad Fed note, I like the Jan $35 puts, now $2.65. XXX

Posted June 28, 2007 at 12:50 pm | Permalink (Edit)

CROX getting killed.

Too many people think the Fed is going to go soft – not a good sign but they were shockingly easy on us last time.

Posted June 28, 2007 at 1:28 pm | Permalink (Edit)

RIMM Play

Buy Aug $175s for $5.70
Sell Jul $165s for $7.10
Buy Aug $155 puts for $4.50
Sell Jul $165 puts for $6.30

You pocket $3.20 and there is $11 in premiums on the Julys and the most you will owe your caller/putter is about $10 so any value your 2 Aug positions hold over $6.80 is profit. I’m tossing a few into Complex Spreads just to see how it shakes out. XXX

Posted June 28, 2007 at 2:10 pm | Permalink (Edit)

FED – with the market up it is time pick up some $134 puts for .43 if you are looking to collar. XXX If you are looking to “tee something up” there is nothing better than the index options and you might want to just jot down plays that are just out of the money in either direction if you are looking to play momentum. Oddly no one has their money on nothing so that may happen too!

I smell a crash myself but I have to fight that as it may just be my rational thought process imposing itself on the economy.

Posted June 28, 2007 at 2:16 pm | Permalink (Edit)

I don’t think the Fed can afford to support the markets at the cost of Int’l confidence as THEIR ability to borrow money is in peril. This is why I have my gold stocks (coming back now) as the only way for the Fed to prop up the market without selling notes is to drive the value of our currencly down another 10% – plus and that boarders on hyperinflation. While I think they would do it, I can’t believe it’s their first choice when the market is still strong enough to support a tighter statement.

Ah – ha – there it is! Hawkish on inflation as advertised!

Posted June 28, 2007 at 2:23 pm | Permalink (Edit)

AAPL certainly liked the Fed statement.

I’m out of DIA calls here, that was enough of a rally for me!

Posted June 28, 2007 at 2:32 pm | Permalink (Edit)

ECA coming down nicely. EOG diving. Even might CHK going down. BTU amazingly still up and that won’t last. BTU Aug $45 puts are $1.23 and make a nice play here XXX

Posted June 28, 2007 at 2:49 pm | Permalink (Edit)

Back in DIA $134 puts for .35 (was .55 about 90 seconds ago!)

Posted June 28, 2007 at 2:56 pm | Permalink (Edit)

At this point I’d say it’s likely they will do their best to hold this level (13,400-13,500) into tomorrow’s close so they can book their gains for the Q (and the first half), rustle up some new investors over the summer and then blame a hurricane for a collapse in the fall.

Posted June 28, 2007 at 3:06 pm | Permalink (Edit)

Pisani is right – this shifts the burden of proof to earnings.

HOC Aug $70s for $1.82 make a nice play.

Posted June 28, 2007 at 3:32 pm | Permalink (Edit)

XAL – I mentioned this morning there’s a lot of M&A chatter supporting the airlines despite the oil cost.

These little attempted rallies are running into a lot of sellers at 13,470.

BOOM is exploding. That’s my cue to get back in TIE Sept $35s for $1.67. XXX

 


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