As of today the first day of October 2009, the top ten most stock option contracts traded were:
- United States Oil Fund (NYSE:USO) January 55 Call Options
- S&P 500 SPDR (NYSE:SPY) October 105 Put Options
- PowerShares QQQ (NASDAQ:QQQQ) October 42 Put Options
- PowerShares QQQ October 41 Put Options
- S&P 500 SPDR November 100 Put Options
- S&P 500 SPDR October 103 Put Options
- S&P 500 SPDR October 100 Put Options
- S&P 500 SPDR October 104 Put Options
- PowerShares QQQ October 40 Put Options
- iShares MSCI Emerging Markets Index (NYSE:EEM) November 34 Put Options
A quick glance seems to show that most traders are still bearish for this month and even November. I am a little nervous ahead of the unemployment situation numbers which will be released Friday morning, after seeing the ISM data today. Today I took profits in some of my holdings, and opened several 78/68 vertical put spreads, after closing and taking profits from the 86 strike puts I purchased less than a week ago on the Direxion Daily Financial Bull 3X ETF (NYSE:FAS). From the list above it is very strange that the most active option traded was the January 55 strike USO call option (ETF currently just above 36). It is also worth noting that while the USO was higher by only 4 cents, the January 55 call contract traded higher by a dime (66.7%) to close at the ask of $25 per contract. This struck me as quite unusual.
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5 comments:
Marco,
How are you able to minimize your risk and maximize your profit by closing yours puts and opening up vertical spreads in FAS? Given the sentiment that we could have another down day in the market this Friday, wouldn't you want to wait in closing a put position until you have maximized the profit for everything that iit worth? Is this pulling the trigger early? Thank you for your time.
I took my profits from the higher strike and purchased lower strike puts on the FAS. If the market/financials happened to rally, I was not willing to let my profits go to 0. I had to take profits when I was almost 240% in less than a week. If the FAS continues down I will also make money (not as much) but cannot lose now. Thanks for stopping by!
Marco,
What assessment tools from your arsenal were most valuable in deciding the FAS investment? Bull/Bear Ratio, IBD biggest movers with institutional investors, gut feeling?
Looks like a nice trade for you this week?
I just think the financial stocks are going lower, not to mention the FAS decays over time.
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