"Adjusted for Inflation, Dow's Gains Are Puny" WSJ
12 minutes ago
Monday, March 9, 2009
Shorted NASDAQ...
I bought QQQQ Mar 24 puts. This rally seems very weak although I don't like that there is leadership in financials. I have a fairly tight stop loss set and with conservative position sizing I only have 4% of portfolio at risk. [Note: Bought these at .45, bid/ask was .54/.57 at close. Decided to hold overnight. Stop limit raised to .45 so unless large gap down there will be no loss. Trying to let winning positions run and cut losers early. A rally is coming soon but when is the big question.]
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Usually, when everybody is expecting something, it won't happen :D I think market is on sideways with decreasing volume. The pattern of sell at rallies, buy back at dumps has not broken yet, but I feel the shorts are tired of making profit and a bit scared. I wrote some naked puts today most of them on one contract. March SPY 60, RIMM 30, DIG 15 puts, APRIL RIMM 30, GDX 25 puts. Also bought APRIL SPY 59 puts. It was interesting that the SPY spread both are giving me gains. I plan to patiently manage my portfolio. I just though all of a sudden that the RIMM puts might have been on the edge to some extent, so I plan to manage them soon, but am not too worried. I wanted to write EWZ puts, but the bid/ask gap was too wide. By the way, I regret that I sold my GOOG 280 puts too soon around $3. The put options on problematic individual stocks can protect the fortfolio even better than SPY. By the way, I took profit from my ERX trade. Bought around 16.37 and sold at 19 today. any thoughts?
you've been a busy boy :)
It seems NASDAQ is the last index to be taken to the woodshed. It could be that when it's taken down we'll be ready for a relief rally. Many were expecting it today...
PC, I think market was waiting for you to short NASDAQ to start a relief rally :D (just kidding). Good luck :)
Smart - when the rally comes I'm switching on a dime. In fact, I was just looking at FAS calls due to the mark to market accounting changes that may happen on the 12th.
Don't buy the FAS options. Just buy the stock itself. The premiums are expensive, while the stock price is like an option price ...
By the way, someone asked a question in another board I got curious about:
If you buy a stock before its ex-dividend day and short at the same time in another account, would you be getting the dividend at no cost? hmm!
When you short, you are liable for any dividends on the stock. So you get th dividends for the long trade, but you owe the same to the guy who you borrowed the stock from to short.
No free lunch.
Buying the stock for the dividend, while simultaneously selling a deep ITM call, or buying the stock+buying a deep ITM put are better options, provided you can find a situation where the greeks are in your favour.
PC, whats the exit plan on ERX?
I'm waiting for the rally...on some I've written calls on I'll rewrite close to the money. On naked puts at 20 level I'll take the stock and write on it. I do think it'll fly in a while with oil rising. We just need a rally. The Elliot Wavers and Fibonacci crew see a rally coming...
I'm just concerned that XLE failed in breaking above 40 three times in a row now.
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