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Wednesday Virtual Portfolio Moves

Posted August 29, 2007 at 10:50 am | Permalink (Edit)

AAPL – be happy here (around $132), especially if the market starts to fall (watch the Nas). If GOOG can’t break $510 I will start adding back the overly excited $130 covers against my longer plays. As to the $135s, we take that bonus and run in this kind of market (when in doubt, sell half!).

Sorry but I forgot I had the radio show. Picked XOM $85s and VLO leaps (’09 $70s) and TSO $50s as plays off a very big drawdown (about 7M oil and gas) ahead of the holiday. Obviously not a good time to have puts in energy but we may shape up to a nice shortign opportunity ahead of the weekend, which I still think will be disappointing from the demand side.

Posted August 29, 2007 at 11:21 am | Permalink (Edit)

GS – I prefer the BSC Jan ‘10 $110s for $24.25 against which you can sell the $115s for $3.50 (but waiting for a bounce). On the GS, absolutely when you get way ahead early you want to take out your caller (with stops) or roll him down to one with a bigger premium if you don’t think it’s going to bounce. In GS’s case, it looks like this may turn into a real rebound so maybe see how they do around $175 before reselling. Also, whenever you take out a caller, one of the things you should consider first is should you be rolling yourself down to a tighter call, it reduces your margin requirements and increases your leap’s Delta so a strong rebound won’t burn you as badly when you have callers.

COST/OTHER puts – my rule from Monday applies both ways, let yourself stop back to cash. Oil is at $73 and that’s got to be bad for someone but you wouldn’t think so from this market. We are in real manic/depressive mode right now.

Posted August 29, 2007 at 11:39 am | Permalink (Edit)

AAPL puts – I’m not a big fan of those. I really like selling the calls much better (Google too) as they are so much slower to gain than lose value. I’ve sold the $130s for $8 with great success and am now contenting myself with $7 on 1/3 so far at this level. If Apple goes to $137 against my longer calls, paying back my caller is a minor issue.

Posted August 29, 2007 at 12:02 pm | Permalink (Edit)

Apple calendar spread – My ‘09 $140s have been very good to me but the ‘10 $150s are practically a no brainer. They are $32.45 and the roll to the $140s costs just $4 more if you need to roll down (and if you don’t go into your leaps knowing this stuff then you are not doing enough homework!). Since you can sell the current $140s for $2.77 and you have 28 months worth of leaps to sell, it’s a very positive return expectation without much fuss. Of course you can get riskier and play around with selling tighter calls and never forget you don’t have to sell all of anything. If I’m thinking of selling the $140s for $2.77 against my whole position, wouldn’t it make more sense for me to sell the $130s for $7.35 against 1/2 of my position? I collect about $1 more per leap than I would by selling the $140s and I have less upside risk and the flexibility to do something else with the other half.

GOOG still can’t break $510 but the indexes are holding up well. I’m fine on the calls and chasing my puts up to follow the Dow. This is great for the LTP, now up 190%, a really good recovery from yesterday and the STP was bullish enough that this only gave back 5 of yesterdays 20% gain there.

Posted August 29, 2007 at 1:06 pm | Permalink (Edit)

COH – no, I was so busy with the silly DIAs that I forgot but this is a good spot for a long-term play – notice the huge buy volume when they touched $40.50, someone seems to have a pretty good order in down there…

Posted August 29, 2007 at 2:37 pm | Permalink (Edit)

What possible rationale could there be for CAL to rally on a $1,50 rise in oil? US Airlines fly 3.5M flights a year at about 1,000 gallons per flight = 83M barrels. That means a $1 rise in gas costs the airline industry $3.5Bn or pretty much $100M for every dollar rise in a barrel…

The air force (who are not even in Iraq in force) uses 60M barrrels a year too = $4.3Bn

Thank you GOOG, sold some $510s to cover too.

SIGM is flying!

Posted August 29, 2007 at 2:48 pm | Permalink (Edit)

Wow, huge buying program (I know it’s a program becuase someone is buying GM, no human would be so stupid!). These are good levels and the VIX is sure happy about it. Stops still apply both ways on winners but I’m more inclined to roll or DD on puts that aren’t working right now.

Posted August 29, 2007 at 3:05 pm | Permalink (Edit)

This is the result of a letter Schumer released where Bernanke said Fed was ready to act… Not a very strong run-up considering but that explains the buy programs kicking in.

Posted August 29, 2007 at 3:15 pm | Permalink (Edit)

Despite this madness, I will rebuy DIA $132s and/or $133s by the close, I’m not going into the close without being fully covered but you’ve got to respect this market move.

AAPL $130s (would I sell at $8)  - generally yes but I’m not too keen to short here, I’m off the Googs already even. I’d rather let my calls run

Posted August 29, 2007 at 3:16 pm | Permalink (Edit)

VOLV Apri $17.50s are $1.93, I have them for $1.80 but I like them for a recovery. XXX

Posted August 29, 2007 at 3:25 pm | Permalink (Edit)
I like the DIA Oct $132 puts at $3.60 (less than what I paid today) and the Sept $133 puts at $2.75 but these are protective puts, not market plays!!!!
MA is going up, now we know everything is recovering..

 


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