Did someone flush the toilet?

Did I do that!?

Well I'd hate to be a bullish cherry on a day like today's tree, so I'm surely glad I stuck to my shorts and bought puts, easily doubling them up to 100%+ on a day trade.
We've all heard this and that and, "oh the market needed a breather" but honestly could we just go straight up for 6 months? It's almost like every investor in the world has made money over the past 6 months nibbling here and there on positions to realize gains, but what about the trillions of dollars being poured into our market, hey someone had to take a flushing in order for someone else to take profits.


I feel sorry for all those poor saps who ran up RIMM yesterday to the tune of 5% just to get clobbered another 5.5%
And what about all those metals guys, sheesh TIE took a spanking outback by grandma to the tap of 8.5%



On the bright side of things, Cramer recommends buying Google around current levels. $440 to $448 based on growth and valuation, and boy did those call option holders get crushed today. I honestly don't know how a day-trader could lose money on a day like today where as soon as I turned on my tv this morning at 9am the Futures were showing a 98 point decline, while china had sold off over 8%. Hope you were on the right side of the trade.




Even if you were a long term investor you could have easily hedged your investment with stocks that trade inversely to the QQQQ (Nasdaq 100 ETF), it's called the QID (UltraShort QQQ ProShares)

My trade of the week was with the March $135 Put option on RIMM, which I purchased yesterday for $1.5 and sold today for $3 even. The put went all the way up to $4.40 and would have tripled if sold at that level, hey we can't get em' all and we certainly can't be greedy in this market, you'll chop off you're own hand, trust everyone with experience, take your money and run.

Market Bitch Slap..tbc..

Rimm Hits New Highs

It seems as though RIMM finally made it's move, and busted to new highs today when it was upgraded by RBC Capital Firm, stating:
"Industry contacts suggest a spate of pent-up demand for the handheld device Research in Motion partnered with Qualcomm Inc. to make in the second quarter..."

The stock sure took off today tacking on 4.8% and only slightly dipping during the NASDAQ's slight sell off mid-day.

Stock that I am personally watching are all the energy and oils, and I am still holding calls dating out to July 2007.

Jim Cramer keeps raving over the fact that Iran and Iraq are running out of oil to dish out to America in the short term and so drilling and contracts will surge. He keeps recommending Halliburton, &Transocean Inc., stating: "Transocean (RIG) is a fabulous company that keeps beating numbers. Transocean can't get out of its own way."

Hey

I haven't been trading much that's why there are a lack of post. I've got some good stuff coming up so stay tuned, this is only a short sabatical. I'm actually working on my own domain name and newly contructed website and blog.

Thanks
CalTrader

Read Away!

I've been spending most of my time reading market books and studying different strategies that have been written on how to trade the markets. One I just finished is, Options Made Easy by Guy Cohen. He basically goes over a lot of option strategies, and tells you the ones in which the risk/reward ratio is unfavorable. He specifically state which strategies he wouldn't implement and I now see why. I personally am warming up to the collar strategy & spreads, I like the reducded risk profile without sacrificing potential reward.

One thing that is most vague when it comes to published articles is, arbitrage. You see the definition is, "a kind of hedged investment meant to capture slight differences in price; when there is a difference in the price of something on two different markets the arbitrageur simultaneously buys at the lower price and sells at the higher price."

The one thing you'll never find out is who is doing it and where because the secret and the profits lay in the exploit itself. Of course I published a post last week regarding 1Option's neat article about buying options and then shorting stock creating a risk free trade in which market making firms execute to make money.

But there is more to it....I realized that I had indeed participated in a type of arbitrage a few years ago while in college to make money. Arbitrage doesn't only apply to the stock market, it applies to any field in which you can exploit an inefficiency for profit with no risk. The entity in which I was the arbitrageur was, AOL Instant Messenger Screen Names....I small business trip that lasted for a while and offered about a $3,000 profit for 1 month's work.

While reading, Trade Your Way To Financial Freedom by Van K. Tharp, the book vaguely, and I mean by a hair of a kitten, barely mentions the topic & a brief interview with an "arb guy" named Ray Kelly. He spends his whole life researching and studying markets to try and find arbitrage, and he says time is of the essence and if you can't get both parties to agree to conform to your business objective the profits quickly dwindle away by the second, because that gap will close, and you'll be on to your next venture.

Check out Wikipedia's numerous examples of arbitrage, I especially like the one where you buy a PS3 for $600 and sell it for $30,000 on EBAY, shwing!

I made out nicely today in the futures market profiting from that nasty fall of which I was stalking all day...on the Dow Jones (YM)


A chart & stock I like is NYX:


Yesterday I purchased the RIMM FEB '07 $135 Puts for $1.20 a contract and sold half for a loss yesterday for $0.70 a contract and the other half for $3.50 today, a 191% gain on the latter.

Welcome Back I Say!

Thank you for patiently awaiting the wonderful post I'm about to unveil for my day trading, option scavenging, investment guru audience! (ok so maybe some of you just started putting a couple bucks in the market like I did 2 years back...)

I've been doing some serious soul searching lately and I'm going to make this the personal part of this post. I've been trying to be the best trader I can be, a scavenger of information as soon as it hits the wire, an alert....all out hacker of the market, no limit hold em....die till I win with the money in my account and not yours mindset. I've been searching, testing, studying, reading, and taking on the most challenging battle I've ever fought. I believe this to be the best and most informing venture I've ever ridden. When I got into this mindset, I knew I wanted to form an all out blitzkrieg on the market...a self fulfilling adventure to turn my mind into a stone wall of psychological strength.

Now on to market stuff....
My Caterpillar Inc. (Public, NYSE:CAT) call on January 12th, 2007 is now up 231% on the FEB $60 Call Option. Remember Me? I called for long term support, and it bounced nicely. Seems as though cyclicals are definately back in the groove..

My long term Energy & Oil positions are boding well. In this post Here I said it would be a great idea to start buying up energy stocks as we all know oil wouldn't go any lower than $50 a barrel, come on Saudi Arabia loses billions each day oil goes down $1 buck..


Some random quips that have been on my mind lately:
The Metals sector is hot! (one of my first daytrade fetishes, Titanium Metals.

Corn which is eventually made into Ethanol has been on a tear, scalp! (ADM, ANDE, PEIX)

Stay away from Apple Inc., at this point in time you will get burned like a hot day in Miami while wearing baby oil..

RIMM options are a daytraders dream come true..30% a day is my forte

QQQQ options move slower than your grandmother's driving..

Follow oil & gas inventories, they make for easy money on the stock trading side...(BTU, CHK, DVN, CNX)

Make the best $69 a month investment of your life and follow Phil over at, Phils Stock World, he teaches me about trading the markets, how oil really works, and even manipulation in the market is easy to catch when you know what to look for..He only trades options, and always hedges them to even out the risk/reward, plays on momentum and sells into the rallies...don't we wish we all traded like that..?
*-Some of my favorite insights are:
"If I own $100Bn worth of energy stocks in my fund, what do I care if my energy trader loses 10% buying $1Bn worth of NYMEX barrels this month if it boosts my portfolio 5%? There are hundreds of funds with the motive means and opportunity to do this - all it takes is one dishonest fund manager - thank goodness there are none of those!"

"Don’t forget when I sell a contract, I buy it back when I feel like it (in a virtual sense). So If I sold 1,000,000 shares of $500 calls (10K contracts) for $22 yesterday to pick up an extra $22M against my $500M position, all I have to do is sell off 10 or 20,000 shares here and there to drive the price down so I can buy you out for $7, a $15M gain for me. If I shave $10 off Googles price in the process, what does that really cost me? At most $10M. And if I know the sell-off is BS because I’m causing it, all I have to do is wait for the other suckers to panic and then buy back my shares and cause a buying frenzy the other way.

Not that anyone would ever actually manipulated the markets for personal gain of course…"


I would like to say that this is one of the toughest businesses in the world. You fight for every dollar. Anyone who ever says playing the stock market is easy and money just flows like wine should be smacked. Wall Street is vicious, and there are hungry hedge fund managers ready to eat you alive. A great story of success goes to Steve Cohen, ever heard of SAC Capital? Baidu.com? Yea well he owns a large percentage of the companies shares for himself. A self made billionaire. His first day as a junior options trader in the Arbitrage Dept. he made an $8,000 profit, and eventually was making around $100,000 a day for the company.


Well if you want to know what arbitrage is, it's one of the greatest things one can ever get involved with...why you ask? No RISK! No way, a no risk trade in the stock market you say, yes well you have to be set up to do it, like a firm on Wall Street. 1 Option gives a great example of what Market Making Firms do in ARBITRAGE Plays. I found it to be very very informative & interesting...because it's for the big boys.

Trades today included scalping RIMM & QQQQ options, and buying the dips in the Dow Jones Futures (YM), and boy did that pay off today, whew!! New All Time High!

I shorted TIE near the top for 2500 shares and covered for a couple of nickels as it came down....
More to Come...
CalTrader