It started with Citi Chairman Pandat leaking a letter that Citi was profitable. Today another Citi top exec is quoted as saying Citi needs no more government money and is one of the most healthy banks out there. Bank of America says they are interested in writing new jumbo loans and that Merrill Lynch and Countrywide were terrific acquisitions. To put there money where their mouth is they are hiring a bunch of people to write these jumbo loans.
Huh? Isn't this just a response to their being strings attached to free money? Isn't this just a concerted effort to show lack of stress before the government stress tests? Or are things suddenly better? Have home prices suddenly dropped dropping?
Personally I don't buy it for a second but it's great for my FAS calls. I'll be slowly moving up my trailing stop. So long as the public believes it and pours money into the financials I'm along for the ride. I just think the emperor ain't wearing no clothes...
Friday, March 13, 2009
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I just sold some puts on POT apr 50 @1.3. This would require a drop of 1/3 to be in the money. any thoughts?
solid and hopefully safe...good luck
This rally is killing me. I'm short on SPY and it just keeps going up. Being kinda new to options, the expiration deadline is a new stress Im not used to. Next friday is going to suk for me if something drastic doesnt happen early next week.
It really seems that the financial rally was big in a short time - feels like FAZ calls would be a good bet but I can't quite pull the trigger, esp being already burnt on SPY. ;<
FAZ calls would hedge your SPY puts a bit...
uhhh..no they won't I was thinking FAS :)
Hey learning...
What SPY strike are you holding? I have the same experience from before, and it really hurts. Even if you are right about the market trend, the time decay will make you nervous. One good way to manage it is to roll over to April options or later, the other way is just assume you have lost all your money and wait to see if it happens (like gambling). Here is what I suggest in general:
1) Read a lot to have an idea of market trend short term and long term.
2) Based on the information buy some options. It is normally better to buy options that are not expiring soon. It could triple your money in a matter of few days or lose it all (the second case is more possible especially if you keep looking at your portfolio which makes you panic and you most likely take a wrong action)
3) Like PC said, it is very important to hedge your investment. For example, I predict that market will keep rallying for the next few weeks and then back down. So, I made a portfolio with FAS march calls, qqqq april puts,and also selling qqqq march puts. I also manage it from time to time. So far I had a lot of gain from FAS options, although the qqqq puts are half in value, but some is compensated by selling qqqq march puts, and overall my portfolio increased 15% in value in 1 week. I have sold half of my FAS call positions to lock the gain and to remind myself not to be greedy. These all helped me improve my investment mood and to avoid panic actions.
So, make sure to calculate the worst case scenario before you start any investment. Now I am patiently looking for some overvalued stocks to short by put options. So far AZO is in my radar. Many people are looking to short it, but it may have another run up with the market. Cramer said on Friday it is time to sell AZO and called it "profit taking", but I also saw a recent insider selling which makes me more confident about it. So, I may buy some April (or later) puts. The only thing I have no idea about is how long this rally will last. In this case I should be looking for some bullish plays other than FAS too.
i bought these a couple wks back - mar71's and mar quarterly 69's. i was actually ITM until last week... I kept thinking it was just a day rally so i didnt stop out. now I'm way under water. so like you said - i may just gamble that we have a drop this week.
Would certainly like some short term premium to collect this week !!?? but Im a little shell shocked right now.
I don't think your SPY put will end up in the money, so most likely you will lose it all (just my thought). I would wait for a dip and sell it all today. Listen my advise and you will thank me.
After 5 up days tomorrow has to be down, right? I know you're talking to learning buy FYI all my SPY puts are April and later..
PC,
There is no "have to" in this market. Bulls are getting ready for another rally and bears are scared so want to cover. We already had a down day. It may continue to mid tomorrow and then shorts should cover. Nevertheless, SPY 71 by the end of the week seems a bit unrealistic to me.
Good information about markets.
Invitation letter
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