Daily Stock Market Equity and Options Trading Commentary

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Tuesday, July 14, 2009

Research + IBD = HUGE Profit

Thanks to some tedious research and some help from IBD, I am up over 600% in just over 1 month on STEC Inc (STEC). On June 5, 2009 I speculated with purchasing July 17.50 Strike Call options for STEC while the stock was below but close to 18 a share (I blogged about a covered call strategy on June 8, 2009 which I am also up 13+% on - see blog post here). I paid $145 per contract and as of today the bid is $9.60 a share or $960 per contract and the ask is $9.90 a share or $990 per contract. The stock is up slightly after hours so I am hoping it carries into trade Wednesday. I have decided to sell 75% of my contracts tomorrow, and hopefully can get STEC above $27.50 which will translate to more than $1000 per contract for these July 17.50 calls. If STEC does not break this bullish pattern, I will roll the remaining 25% of my calls for a higher strike (thinking the 25 or 30 per share strike) locking in some profits. I may also allow 10% of the contracts to expire in the money and keep the shares to write out for August. I will update my status on this position accordingly.

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fx said...

how big are your typical positions?

Marco H said...

fx, I usually don't disclose this information. But when speculating like this, I don't allow the position to exceed 1% of my entire portfolio value; Its just my rule of thumb. When getting into longer leap options, I'll consider anything up to 5% of my entire portfolio.

Anonymous said...

how much does IBD cost?
how does it help you?
is this the newspaper version or the web version of IBD that you use?

Marco H said...

IBD allows you to track your personal portfolio and evaluate stocks, based on the criteria I've listed on my blog post "One of My Methods to Finding Bullish Stocks" under my hottest blog posts.

I am a firm believer that when stocks run up on big volume it is a buy signal. IBD has these stocks listed daily and are always good to keep an eye on.

I only have the online subscription which I think I paid about $150 for the year. It is definitely been a great investment. Most money managers and traders use IBD for this reason.

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