Still Bullish on QCOM, but Taking Some Profits

Today I am looking at closing out my October in the money call options on Qualcomm (QCOM) but purchasing longer dated call spreads... I purchased the October $37 call options for $1.19 before they reported earnings and popped. I am not looking at closing all of the contracts for a slight premium and rolling into January 41 strike calls but on half of the contracts writing the January 47.50 strike calls against them. This was I have some serious upside potential but I am taking all of my money off the table plus a couple hundred bucks. I still see some room to the upside on Qualcomm which is why I am choosing to create spreads on only half of my January option position, the other half I will either take profits or convert into either diagonal call spreads or vertical call spreads on continued strength in the underlying. To read more about these types of spreads check out my option ebooks here. Sphere: Related Content

An Alternate Investment: Domain Name Investing

I am just writing a quick post to inform everybody on domain name investing. If you have a catchy name or idea you can register a .com name for $11 a year. I just purchased the domain name BetterCheddar.com for my cheese company and I plan on having it forward directly to my site shortly. I paid a nice premium for this domain so you never know who will want to buy your domain names or ideas if you register them today! I registered a catchy name in 2008, BellaMozzarella.com which is Italian for beautiful Mozzarella. This page forwards directly to our Mozzarella Cheese page and I am still very happy with the purchase. If you ever have a good idea I encourage you to spend the $11 to register the domain name, because thousands of companies and individuals search catchy domain names for their business or if you happen to register someones business name before it is their name you could really hit a home run. I just thought I know this is a blog for stock, futures, and options but I figured I would throw a curve ball in to my redaers and inform them of an alternate investment. Sphere: Related Content

Anticipating Another BIG Move - A Look at Doji Candlesticks

Once again I find myself writing about another anticipated big move. Once again we Doji'd on the S&P 500 index, this one being the highest quality Doji we've seen in a long time. The S&P 500 traded in a decent range Thursday, but managed to close just 3 hundredths of a point or 0.03 points above the open. This price action means a big move is expected and likely. The bad thing about doji's is that we cannot predict which way the move will be (bullish or bearish). I am guessing the way we move depends on the unemployment number released at 8:30 AM EST Friday. I would assume, if we get a better than expected unemployment situation number Friday it will be bullish, and the opposite holds true (bearish move) if we get a worse than expected unemployment number... However crazier things have happened. The chart below is a prime example of a doji on the S&p 500 index.

Yea so, what's the big deal if we don't know which way it is going to move? This is true, however this is ideal for an option strangle or straddle position which is exactly what I was opening near the close of trade Thursday. Using the weekly options (newer and still testing) I purchased both the 113 strike call and put options on the S&P 500 SPDR (SPY). Each straddle ran me about $130 which means a move of 1% or greater in the S&P 500 index should make this position profitable. The worst case is if the SPY closes at exactly 113 (unlikely) I would lose 100% of the premium paid or $130 for each straddle I opened. If the market opens up flat I may decide to add to this straddle as the market should have a large swing based on Thursday's price action. If you would like to learn more about trading stock options and different strategies used to make money in any market check out my stock option trading ebooks here. Sphere: Related Content

How I'm Playing the Risk Trade

Three stocks which did very well for my portfolio this past week were: Qualcomm (QCOM), American Express (AXP), and Trina Solar (TSL). I will continue to hold the majority of my long positions (as this entire market moves as a whole these days) until I see the risk trade come off the table. Copper trading above $3.10 and holding is a signal that the risk trade is coming back for the time being. I'd like to see copper futures settle above $3.22 and then $3.40. I've moved my stops to $3.08 now and this position has been working very well for me! For a less risky investor or someone who cannot trade futures check out Freeport-Mcmoran (FCX), Cliffs Natural Resources (CLF), and the most diversified way to play the Metals & Mining SPDR (XME).

I have purchased December 50 strike call options and will look to turn the position into a vertical call spread. I will decide to write upper calls against my lower calls as I'll be watching the ETF near close everyday and monitor the price action. It is also worth noting I may look to write nearer term strikes out on strength; such as the August 56 or September 58, etc... on strength in the XME. To learn how to create similar option strategies and for information on options in general check out my Options Trading Books. Sphere: Related Content

Risk Trade Coming Back

That inverted hammer pattern on copper futures worked like a charm. However we must break through the $3.10 resistance level with two consecutive closes above it. If it does I'm watching material stock names including Cliffs Natural Resources (CLF), Freeport-Mcmoran (FCX) and the the metal and mining SPDR ETF (XME). Stops in on copper futures at $2.99 Sphere: Related Content

Big Call Option Bet on Telecommunications Sector Index Fund (IYZ)

Tuesday, very heavy volume traded for the September 20 calls on (IYZ). Most traded near the bid price of $35 (0.35) so it could be slightly more bearish. 15,000 contracts traded on an open interest of zero. I actually liked the price-action on Sprint (S), so I will be watching that out of the group. I also will be watching price-action on AT&T (T) and Verizon (VZ) the next few days. Sphere: Related Content

Expecting an Above Average Move Part 2

Last week I wrote about an expected above average move on the S&P 500 index. The open and close price were different by just 3 pennies which indicated a very strong doji. Yesterday the S&P 500 index opened and closed within 44 cents which is still considered a doji, just not as strong. I am expecting an above average move today (>1%). I may take a shot at strangling the S&P 500 ETF (SPY) at open. I would look at purchasing the 110 calls and the 109 puts, or if it opens near 110 I may take a shot at a straddle. Sphere: Related Content

Time for Another Bounce? Three Stocks I'll Be Watching Today

Morning traders, I'd like to see a follow through of yesterday's price-action. If we get a move higher today, I think we could bounce back as high as 1150 on the S&P 500. Watch 106.77 on the SPY as it is a gap we need to fill. If we fill it and start heading lower, I think we could sell off. However if we fill it and keep rallying we could be heading as high as 1100 very short term. Three stocks on my watch list today are: Teva Pharmaceutical (TEVA) which put in a nice doji, Sourcefire (FIRE) which put in a very nice hammer, and Gafisa (GFA) which broke out yesterday and the chart predicts it back as high as 16 a share. Sphere: Related Content

Doji Confirmed! SPY Option Straddles Paid Off Big!

As stated this morning I expected a major move in the equity markets based on Tuesday's price action - I just didn't know the direction. As stated I was looking at opening option straddle positions on the widely traded S&P 500 SPDR (SPY). An option straddle is ideal for this type of situation.

Many use straddles before big events such as earnings, but be careful as the volatility will collapse following earnings and if the stock moves less than the derivative market is anticipating (which happens more times than you may think) you could lose much of the premium paid. To learn about straddles check out my Advanced Option E-book! But getting back to today's trade, once the market volatility came in from the initial spike at open, I took a slightly bullish bias and straddled the SPY by purchasing the 104 weekly put options and the 104 weekly call options. These new weekly options are ideal for this type of trade (closed at the end of day) as the premiums paid are very small. I am glad to say I closed my position at roughly 3:55 PM banking a very nice one day gain! Happy trading! Sphere: Related Content

S&P 500 Chart Predicts a Major Move

Happy lucky 7's day (7/7)! I'm expecting a big move in the major indices today as the S&P 500 had a doji candle pattern yesterday. Doji candle patterns do not predict the direction of the move, they just predict the magnitude. The S&P 500 index closed 0.03 below the open price which is a major doji on an index of 1,000 plus! Last time I noticed a doji was on the S&P 500 ETF (SPY) was on May 19 and that was followed with a huge move the following day. I now see a major doji on the actual index so time will tell if it works again. I'll look at opening straddles on both the S&P 500 and the Powershares QQQ at open today. The chart below is the of the S&P 500 and you can see the doji candle pattern we had on July 6, 2010.

Click chart to enlarge
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