Wednesday, January 24, 2007

Trades & Ivanka

Had a nice morning on the Dow Futures (YM).....took a shower and decided to draw my fib lines and test some retracements, well I gave back all the morning gains and switched over to the S&P 500 Futures (ES), needless to say, I was down in my Futures account today but up in my Options Account by a considerable amount. I could have done a lot more right today with the Indicies hitting all time highs today, but hey one can only live & learn, and then make his fortune.

I bought the morning dip on Research In Motion Limited (USA) (Public, NASDAQ:RIMM) on the FEB '07 $140 Calls and ended up 50% on the day with that trade.

Got an idea from Trader Tim over at Perma Bears R Us, for an idea on a possible Double Top on Martin Marietta Materials, Inc (Public, NYSE:MLM). His article and analysis can be found Here.

I won't be trading much tomorrow because I'll be attending a meeting in Charlotte, North Carolina, on investing in stocks, real estate and tax liens. Special Guest Speaker Ivanka Trump, whew! Knockout!

My long term Energy Plays on BTU & CHK are doing quite nicely sitting with respectable gains of 50% & 35%, dabbling In-The-Money.

I've got some GREAT LINKS to Trading Videos, You all will absolutely LOVE THESE!
Movies on the Stock Market
Option Trading Video
Software For A Visual on Stock Options
Option Trading Strategies by
The CBOE Weekly Option Trade(Very Informative)
One of my favorite Weekly Market Recap Video Commentators

Friday, January 19, 2007

Nice Entry on NYX

Here is the classic Cramer run up on news, and steady pullback to the rising 50dma. Very nice entry for a longer term bullish view on this stock.

78.6% Retracement & 50DMA Support

Wednesday, January 17, 2007

Straddle Up!

I'm going to focus on a stock option strategy called a "straddle play". You see, the entire point of a straddle is to allow you to remain in the market, with limited risk, when you aren't sure which way a stock is going.

Take earnings, for example. Most people, even analysts, can't accurately predict corporate earnings on a regular basis. And, even if you could predict them, sometimes Wall Street can react in a completely bizarre manor. A stock can have blowout numbers and still go down. What the heck was wrong with Apple after-hours? Up 4%, then down 2%? Then up 1%!

An options straddle is a simple solution to a complicated problem. By definition, a straddle is created when an investor buys or sells the same number of puts and calls, with the same expiration, and same strike price. One would usually want to buy At-The-Money options, with the strike price being nearest to the current trading price.

The key to an effective straddle is knowing that the stock is setting up to make a "large move." Think FDA approval, merger or earnings - big events. In these instances, options straddles can help reduce risk, while allowing you to participate in an event that will likely trigger a substantial sell-off, or breakout! Options straddles are most effective when a stock has been traveling sideways, in a very tight range, ahead of a significant news event.

Credit to By Steve McDonald
Advisory Panelist, Mt. Vernon Research
Options Straddle

Let's take for example Rackable Systems, Inc. (Public, NASDAQ:RACK). Their earnings come out on February 7th, 2007. Info provided via Reuters Research estimate: 0.27 cents per share.

One would usually want to buy the options out 1 month in advance to get into the trade before the Implied Volatility starts to ramp up, and the options premium become more expensive.

Rackable Systems, Inc. was trading at $32.42 on the close of January 16th, 2007.
The $30 Call Option was Priced at: $2.45 per contract, or $245 to purchase each one.
The $30 Put Option was Priced at: $0.10 per contract, or $10 to purchase each one.

So one would purchase 1 Call option contract at $245, and 1 Put option contract at $10, for a net debit of $250 for the trade.

Today news was released and Rackable Systems announced the company's warning that it expects to miss Wall Street's fourth-quarter expectations. The stock price plummeted 38%, from $32.42 to $19.98, a loss of 12.44 points.

The call options lost 98% of their value, and the put options gained 9,700%, yes that 97 times whatever amount you invested into the put option contracts, almost 100 Fold!

After the WARNING:
The $30 Call Option was Priced at: $0.05 per contract, or $5 to purchase each one.
The $30 Put Option was Priced at: $9.80 per contract, or $980 to purchase each one.

Initial Investment:
(Call Option: $2.45) + (Put Option: $0.10) = $2.50

Final Profit/Loss:
(Call Option: $0.05 ) + (Put Option: $9.80) = $9.85

$9.85 - $2.50 = $7.35 profit, or $735 per contract on a 1:1 ratio(put to calls)

A nice 194% return on your money.


News and Ramps

A great article collection about almost every possible thing you want to know about investing, to include: volume reading, stock options, ETF's, technical analysis, market research, & stock charts. Here!

Jack Steiman from wrote an article, "NYSE Group Setting Up to Run" with a annotated chart found Here. I find it very interesting that everyone thinks that the NYSE Group is poised for a huge run up, remember Chicago Mercantile Exchange (CME)?

Also check out Carl Futia, and his very knowledgeable blog on the market. I loved his annotated graphs of his index predictions, most of which are very very close to what actually happens in the market.
His synopsis of the NYSE Group (NYX) can be found here, with a price target of $152! Don't forget Cramer's recommendation as the top 3 growth picks for 2007 either, sheesh, I should jump on board.

Learn how to trade indexes using MACD signals.

Stock Scans via, StockCharts brought up an interesting chart of IAAC Corp, which is about to touch down on it's 200MA. This could certainly hold as a nice support level, I'll be watching.

Friday, January 12, 2007

Long Term Oil

Let's talk about the oil sector for a moment. As of right now I'd consider buying oil as a contrarian play, and I'm buying Out Of The Money Calls, dated out to July 2007. OPEC will cut, weather should get a little colder for a bit, and then of course summer driving season! Here are some great ideas that I would have you consider playing. Disclaimer: I'm not a financial advisor.

Chesapeake Energy Corporation (Public, NYSE:CHK)

Peabody Energy Corporation (Public, NYSE:BTU)

Caterpillar Inc. (Public, NYSE:CAT)

Wednesday, January 10, 2007

Stock Exchanges

I sure hope you had at least one of these bad boys on your watch list today:
IntercontinentalExchange, Inc. (Public, NYSE:ICE) up 9%
NYSE Group, Inc. (Public, NYSE:NYX) up 3.5%
NYMEX Holdings, Inc. (Public, NYSE:NMX) up 5%

Remember those Nymex Call Options I mentioned 2 days ago? Oh yes..up almost 50%

All of these stock & futures exchanges were up big today on news of high volume contract trading. ..

Nymex volume hits record in 2006. NYMEX Holdings, (NMX), set an annual total volume record of 276,152,326 contracts in 2006, crushing the previous record of 204,610,365 contracts set in 2005. Article can be found here.

IntercontinentalExchange, Inc., Exchange-wide volume at ICE Futures reached a record 801,714 contracts on January 9, 2007, surpassing by 15.1% the record 696,700 contracts traded on January 8. Article can be found here.

Of course NYSE Group, Inc. (NYX) was on MAD Money TV, one of Cramer's top growth picks for 2007. He currently slapped a $240 price target which is 122% higher than it's current closing price of $108. Load up on LEAPS! Article can be found here.

Goldman Sachs & NYSE Group(NYX) both decided to purchase a 5% Equity Interest in National Stock Exchange, India's Largest Financial Marketplace. "Our investment in India's National Stock Exchange complements our global growth strategy," said John A. Thain, Chief Executive Officer, NYSE Group. Cramer is right, Global domination!

On to the real interesting!
Sold AAPL calls today for a staggering 429% (my first 4 bagger, say cheese!)
Sold RIMM calls up 44%
Holding Nymex (NMX) Calls, up 47% today! Whoo!

The only thing I missed out on were those pesky ICE calls, up 700% sheesh, that's a new house if you put a decent sum of money into it!

More trades, insight, and exciting news to come,

Tuesday, January 09, 2007

Sweet Apples!

Over the past 3 weeks, I've had some incredible options trades with Apple Computer, or now named, Apple Inc. I started on December 27th, 2006, and here are some of the trades I made.

12/27/2006 - Apple JAN '07 $80 Call - Bought $3.80 - Sold $4.90 = 26% Gain
12/27/2006 - Apple FEB '07 $80 Call - Bought $5.40 - Sold $9.00 = 66% Gain
1/3/2007 - Apple JAN '07 $100 Call - Bought $0.41 - Sold $0.70 = 70% Gain

As of right now I'm still holding some of the Jan '07 $100 Calls at an average price of $0.41 cents per contract. Today they were up over 100%. I'm trying to devise a strategy to hold them into earnings. I'm looking for some advise on which strategy to employ to reduce risk. Any ideas options traders? Thanks

Today the buyers surely came out in Apple after the release of their new iPhone, iTV (Apple TV), Widescreen iPod, etc. I did what I've heard as being called, "feeding the ducks". These buyers were so strong they kept bidding up these options to 200% at one point, so I kept selling some of my position right at the top to feed these guys, and sure enough, they picked up my orders with a 116% gain. Take a look...

Friday, January 05, 2007

Nymex Holdings

My synopsis of NYMEX Holdings, Inc. (Public, NYSE:NMX) is that it's been coming down off it's recent high of $132.99 in a steady pullback. Today that short term pullback may have seen it's last breath. It printed a textbook Hammer Candle and firmly reversed on a 30 min time frame. I'll be keeping an eye out to add to a longer term position I've started.

Position: NMX June 2007 $150 Call
Purchase Price: $2.45 per contract
Objective: I put on a small position to add to later, if it pulls back to $115 support, or trends higher to $120.

Near Term Solid Support: $115.00
Current Closing Price: $118.86

Today's Chart:

Since IPO:

More Techy Analysis Coming..

Thursday, January 04, 2007

GROW - Technical Analysis

Here I'm going to highlight a possible short play on U.S. Global Investors, Inc. (Public, NASDAQ:GROW).



Best Buy Co. (BBY), the nation's largest electronics retailer, Friday said December same-store sales rose 7%, boosted by heavily discounted sales of flat-panel television sets and sales of digital music players.
Revenue for the five weeks ended Dec. 30 rose 15% to $6.6 billion, compared with $5.7 billion for the fiscal month ended Dec. 31, 2005, the Minneapolis company said.
Best Buy projects fiscal 2007 per-share earnings of $2.70 to $2.80.
The mean estimate of analysts surveyed by Thomson First Call is for 2007 earnings of $2.75 a share.
In premarket trading, Best Buy shares were up 4.3% to $52.

I'm currently in the FEB '07 $47.50 Calls...
Up 6%

My Futures Trading will resume very shortly...I'm excited!

More to Come.

Wednesday, January 03, 2007

Options Trades

Today I picked up some The Home Depot, Inc. (Public, NYSE:HD) - HD JAN '07 42.50 Calls for $0.40 cents a piece.

I also wanted to hold a longer term bullish position on the Home Retailer so I decided to pick up some of the HD MAY '07 45's for $1.20 a piece.

Oil was down big today and I saw this as a long term bullish play on oil. Let's face it $50 a barrell oil is just soo 1990's and there's no way Iran is going to let us have cheap oil anymore. On that note I decided to pick up some of the Peabody Energy Corporation (Public, NYSE:BTU) JUN 45 '07 Calls for $1.85 per contract.

Apple Computer, Inc. (Public, NASDAQ:AAPL) - I wanted to throw in some speculative money today. Apple pulled back a bit and of course I saw this as a buying opportunity. I bought some Out of the Money Call Options. My choice was the $100 Strike, JAN '07 Calls, for $0.45 cents per contract. We'll see how this one plays out in the upcoming weeks.

A possibly Google-Apple alliance? MacWorld Buzz. Very interesting!

My Rambus Inc. (Public, NASDAQ:RMBS) FEB '07 $20 Calls took a jump to the tune of 6% on news of using a license they hold in the Playstation 3.Rambus' XDR memory technology. puts Rambus in In Play.

My IBM FEB '07 $95 Puts are down 5%.

Monsanto (NYSE:MON - News) reports quarterly earnings Thursday morning; look for $0.10 EPS.

Interested in Learning how to Trade Options? Here's a great article on The Relationship Between Volatility And Time by John Knott. An options trader who turned $300 into $220,000 while in college, and went on to trade on the CBOE, and Wall Street.

More to Come,

Tuesday, January 02, 2007

Upcoming Week

7 Stocks You Need To Know For Wednesday, earnings, news and stocks to keep on the radar. Good Stuff.

Could this be a week of profit taking, or will new money continue you flood the markets? Check here for one floor traders view. Floor Traders View of the Upcoming Week's Numbers and Forecast of Market Breadth.

Dick Arms, from, has some market commentary on buys and sells, using his Equivolume Software (Metastock), eResearch Technology, Inc (Public, NASDAQ:ERES), Leucadia National Corp. (Public, NYSE:LUK), Redback Networks Inc. (Public, NASDAQ:RBAK), Bed Bath & Beyond Inc. (Public, NASDAQ:BBBY).

IBM Shooting star pattern. We'll see how this pony plays out. Note: I have purchased the $95 FEB '07 Puts.

Would you like to sign up for a free trial of an Options Newsletter? I sure did. They post monthly newsletters with trades you should be a part of. Also very detailed reasons with specifics on buying prices, targets, etc.