HOT TRADING STRATEGIES FOR A COLD MARKET
Daily Stock Market Equity and Options Trading Commentary

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Saturday, February 28, 2009

Party Like it's 1996!

With the S&P closing the week at the lowest close since December 1996, I had to cover a lot of my short positions. I think we could go lower still maybe to S&P 600 because this market is being totally irrational. Once analysts are out saying S&P 600 it is almost a sure shot it will get there. I have about 30% of my portfolio short right now, and I have made the decision that for every 10 points lower we go on the S&P I am covering 10% of my overall short positions. Of course with my long portfolio sinking and my short portfolio growing (assuming we go lower) 30% could become 50% and so on. If we do hit S&P 600 I will cover every short position I have and buy back every PUT I have in place. I don't think we'll get that low, but all it takes is a couple analysts to get it another 135 points lower.

It feels like a rally is due, but I have been saying that for 5 trading days now. I am sure we will get a rally soon enough- we are just way too oversold! It is too easy shorting the market! I bought SDS Thursday at less than $88 a share, and flipped it after hours Friday for $99 a share. That was the easiest 12.5% I have made in this market (trading securities that is; with options I have made bigger gains easier). I am by no means bullish going forward, but we have been too oversold and the market will need to adjust on a short-term basis!


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Thursday, February 26, 2009

A Blog About HOG & Update to Crude Oil Blog

Today I was buying contracts for the March 10 strike for HOG (Harley Davidson) for $1.00 a share or $100 a contract. I think this could be a good trade. It was near its 52 week low today and held, so I think it may have a chance to rally. The last time I bought HOG calls I was able to make a quick 500% return. I am looking at getting out of these while the time value is still above $.70 a share. The ticker for this particular option is JOZCB and closed at $1.10.

**Crude Oil Update**

Today I took some of my crude oil position off of the table today with a 50% gain in 2 days. I think oil has a chance to run to 60, therefore I will hold the remaining call contracts until that level.


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Wednesday, February 25, 2009

Straddling Financials in a Crazy-Volatile Market

The top ten option contracts traded today were:

1. XLF Mar 9 Call
2. XLF Mar 8 Call
3. C Mar 6 Call
4. BAC Mar 5 Call
5. SPY Mar 71 Put
6. XLF Mar 10 Call
7. SPY Mar 75 Put
8. SPY Mar 76 Put
9. QQQQ Mar 28 Put
10. SPY Mar 68 Put


This is very mixed activity. The good is that the top 4 are indicating the financials to go higher by expiration in March, and the bad is that the bottom 4 are indicating that major indices are going to sell off even further by March expiration (vise versa for the bears out there).

With the market being extremely volatile it may be worth it to buy both a put and a call (straddle) at the money on any financial such as BAC. I think it will move more than 10% one way or the other in the next 25 days. This should allow one to capture a massive gain on the position and be able to flip both within a week for a nice gain. I have been using straddles all along on the financials and have been cashing in. The key is not to get too greedy, because the time premium plays a big role for both sides.


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Stocks/Options I'm Buying Soon

I have been doing some research and have some ideas for the coming month or so...

First of all, I like Visa in general so the common stock symbol V should be a good one to own going forward, but I want to speculate with the March 67.50 Call options so I am trying to buy a couple hundred contracts for $5 a piece. With the market getting hammered and falling below its November lows, Visa did not come close to its 52 week low set January 23, 2009. So I am hoping a bottom is in for Visa.

Another name I am going long on is Caterpillar symbol CAT. I think at these levels and that dividend yield the stock is more than a bargain! I have been selling PUTS for the Leap 10 35 Strike and I received a premium of $12.80 a share meaning if I do get the stock my cost per share is $22.20. I think with the price of gold set to sky rocket, the demand for heavy equipment such as CAT's great mining equipment could also increase.

Finally, I think it is time to get long black gold or Crude oil. One fund I have been buying calls on for the July 30 strike is USO. USO description from TDAmeritrade: "The investment seeks to reflect the performance, less expenses, of the spot price of West Texas Intermediate (WTI) light, sweet crude oil. The fund will invest in futures contracts for WTI light, sweet crude oil, other types of crude oil, heating oil, gasoline, natural gas and other petroleum based-fuels that are traded on exchanges. It may also invest in other oil interests such as cash-settled options on oil futures contracts, forward contracts for oil, and OTC transactions that are based on the price of oil. The fund is nondiversified." I think Crude will be stronger getting into a busier driving season like spring/summer, and will peak sometime by July. The contracts expire July 18 which gives ample time to trade these, so even if crude gets hammered even more it may bounce back very strong. I think we could see crude get to 60 a barrel by then.


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Sunday, February 22, 2009

Say NO to "Let Wall Street Pay for Wall Street's Bailout Act of 2009"

This is aimed to collect a .25% transaction fee tax on each trade. On a $1000 round trip trade it would be an additional $5, or like charging 50% more for commissions using popular brokerages such as TDAmeritrade. Personally I think this is terrible for the stock market.

Click Here to see the entire bill


I have signed a petition to block this trader tax. Please join me and do the same by clicking here


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