Wednesday, June 18, 2008

Three new option positions

I said I wasn't going to, but I couldn't resist these three small option position pick ups today after Bush's speech. Not because they had a lot to do with his speech, so much as every time I hear his voice on t.v., the market starts tanking, and then recovers some time afterward. It is almost as if it is the short sellers cue to scare the masses out of their positions. I think I will nick name this phenomenon the "chimp dip". Think it will catch on?

TRA 60 calls was my first buy. I bought the stock, and it has performed very well. I have calculated 7 to 10 more points to target from 55, so I decided to grab a couple of calls. I got in fairly reasonably, and am up about 15% as of close.

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Next I grabbed some ENER 85 calls. This one has gone parabolic lately. If you view the chart, the two long white candles prior to this one had a couple of days of consolidation with the lows hitting about half way down the candle, and then starts the next leg up. These calls ended the day even.

Click image to enlarge.

Last position I added was the POT 290 calls. I have been trying to get these for a couple of days, and never was able to get a fill. I chased them a little, and ended the day even, but I left room to average down if the price drops. Looking at the chart, you can see why folks are chasing this one. I chose the 290 calls because they were inexpensive, yet reasonably achievable in the next four weeks due to the target being raised to 300, and the stocks recent performance.

Click image to enlarge.

Other position notes: QQQQ confirms double top if it closes under 47.82. I have a few of the 51 calls and will need to watch this closely.

JRCC and PCX continue to climb. I have a very small JRCC equity position, that I am up 80% in just a little over a month in my IRA. Coal is hot right now, and I don't want to miss out on any more of this opportunity than I have. However, we have a strange few weeks coming up. The fourth of July is half way between now and July option expiration, which means two weeks out of the next four are going to be very unpredictable. So, rather than purchase options that are a bit out of the money as I normally do, I will purchase just one in the money contract, and trade it as if it were an equity. I may have some time value issues, but it shouldn't compare with the profits made if the coal stocks continue on their parabolic path.

Click image to enlarge.

continues downward in it's channel, which is expected but rough on my account balance as I hold a few shares in both my IRA and trading account. I will add more as it approaches 543, and keep an eye out for a break down.

V also on watch as it is having difficulty breaking through 85. This may be a bad sign, or it may just be because option expiry is in two days. Either way, the chart is teetering on a breakdown, and I am keeping a close eye on it.

Always perform your own due diligence before making any investment.

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