RIMM Options Looking HOT!

Today the once $80+ Billion Research in Motion was trading for less than $20 Billion. That's right the once $140 per share giant was trading near $35 a share today. First off I must say that RIMM at $140 is far overvalued, but that's beside my point. With the new storm selling out almost everywhere I think they might be able to beat earnings. Historically when RIMM reports better than expected, they rally 20%+. I think that this may be the case. RIMM has been beaten senseless in this vicious market, and I think it's time they beat for a quarter instead of miss (like they have the last 2). I bought calls today for the December 45 strike for $50 per contract. If I double my money between now and the day RIMM reports, which is the day before the contracts expire (December 18), of course I will sell half my contracts and let my free contracts ride. Pure speculation like this can either make or break you. I am hoping to hit a real homerun with these.



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Looking Ahead to Christmas...

Today is Black Friday and it seems things haven't changed too much in this horrible recession. I understand that everything is largely discounted but at least people are buying anything at all... Anyway with this market trading on its last day for November and a short day if that, I'll suggest a call I purchased today and I am confident will expire in the money making me some extra holiday spending money... Today I purchased 20 contracts of the Visa December 55 Call for $80 per contract. I am speculating that between now and Christmas Visa will give positive outlook that they have achieved record sales of their gift cards- that of which Visa gets a hefty $5.95 premium for a piece of plastic (almost pure profit for the firm), not to mention the transaction fees when someone uses the card. I assume Visa to give this outlook or for an analyst to say something along the lines of this. I purchased the rights to Visa for a premium of 80¢ a share, but I'll sell 3 quarters of my position at around $1.30 premium per share, giving me a profit and letting 5 contracts ride for free.



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One HOT Option Trade for a Volatile Market

With the November expiration coming this Friday, it would seem that premiums for an unlikely strike price would be getting next to nothing. That is not the case however with some of my holdings, as I wrote some covered calls today for SDS. Today SDS traded as high as 109.40 and as low as 99.50. When the SDS was at about $103 I wrote out 2 contracts for the $120 strike for $225 per contract! Yes I received a premium of $2.25 a share with only 4 days for the option to expire. I bought these shares less than a week ago for roughly $90 and I already pocketed $450 for the right to sell my shares at $120/share or $19 higher than what SDS closed at. For those who are familiar with the SDS you know how volatile it is and for those who don't, learned how volatile it was the minute you read the trading range for the day. Yes the SDS will fetch a better premium due to its volatility.

Okay so let's take a less volatile stock such as Caterpillar (yes I know most of the stocks nowadays are very volatile- but CAT is a stock I own and much less volatile than most I hold). The stock hit a high today of $36.30 and a low of $34.73. Now ask yourself, what do I see CAT trading at the close Friday? Your guess is as good as mine, but my guess is not too much higher than $40, if it can even get there. Then I would look at the $40 strike for November to see if the premium offered would be worth the risk of unloading my shares for $40/share at the close Friday. I see that the last contract that traded was for a premium of 18¢ or $18/contract. The high for that particular option contract was 26¢ or $26/contract. At the open Wednesday I would put a limit order in to sell my contracts for $30-$35 or a 30¢-35¢ premium per share. The chances of CAT getting over $40 by Friday is likely and you may not make as much money as you could have, but if your cost basis for CAT is below $40 and you sell your shares at $40, then so what you still made money on your common shares + the premium you sold your contracts for.

The bottom line is yes this market is horrible, but you will be able to make some income if you hold common shares (in lots of 100) off this market. If you plan on just holding your shares to sell them for a better day, there is no point why you aren't creating income off those shares! There is a way to make money in this market so don't get out of the market because you hear negative news in every direction. Remember this strategy is only for those who plan on holding their common shares no matter how beat up they get...





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I Smell a Short Term Rally coming

Sorry I have not been able to blog in a while but as usual I have been very busy. I figured since it is a Friday I can take a rest from my school work and write a quick blog. Just by glancing at the charts I think we are definitely due for an uptrend (10% or better on indexed), whether it is a 1 day move or 3 months, I think we'll get at least that out of the market on the upside before we go down again. Today as the market was selling off I was taking advantage of the bargains out there, and was buying up with all the money I had sitting on the sidelines. I think we are just way to over sold and I think it can be fairly easy to make a quick buck trading into an uptrend soon. Today I purchased call contracts on GS, RIMM, CAT, GOOG, MER, and V. I think these contracts should bank a quick dollar or even land in the money by the time I'm ready to trade them. I will start unloading the instant the market moves higher, just because it is too dangerous to stay long for too long in these markets, but I will try to hold as much as I can until they expire. I think the entire market will move higher so I would assume most names to be safe for a short term trade.



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GS update 2

Today I sold the rest of my PUTS on Goldman Sachs as the stock plunged to a new 52 week low of 74. I sold my last PUT contracts at $7490 a piece or 74.90 a share. I think I made the right choice, because I see a short term rally coming to the markets in the next week or two and these options expire in less than 2 weeks. Either way I am happy that I was able to take part in this JACKPOT trade.



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Easy Rally Quick Short!

Today as we rallied in the market (for no reason), I was shorting stocks, after covering them all yesterday. I shorted names from AMZN to ZLC and will cover them as the market gets weaker. I honestly think this trading environment is awesome, and hope nobody is trying to be rational and "invest" because frankly I think that you will get hammered short term, and you'll have a chance to pickup the stocks at an even lower price.



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WOW What a Disaster! Bailout... FAILED!

Sorry I have not been able to blog lately, I have been extremely busy with school and work. I would like to start by saying that today was a complete disaster the S&P was down over 100 points! I covered all of my shorts today, because I think everything was way over sold. I think that this bailout will EVENTUALLY get passed once each crooked politician gets his/her way. If we have more crazy selling tomorrow I will be looking at calls to buy, as well as common shares... My advice is: I think it would be smart to cover some shorts, and wait for the market to have a rally to short again. I will be shorting if we get a rally of any sort. Individual stocks not necessary to name, I don't think any stock will stay up in this market.



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Update to my Goldman Sachs PUTS

With the financial mess getting really ugly I decided to sell 3 of my GS contracts today for a total of $19,740 or $65.80 premium per share (as GS traded down near a low of 90 today)! I still hold 7 contracts which I will wait to sell, because I have a feeling GS and the market as a whole might be headed lower!



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PUT Goldman Sachs in its place

Today I am writing about some PUTS I purchased to hedge myself. I own GS stock so I purchased 10 contracts (while GS was trading at about 171 per share) for the October expiration for the 145 strike. Goldman is the last financial giant standing, and honestly I don't think they can avoid this credit mess, therefore I purchased 10 contracts for a total of $1400 today. So with almost 50 days until these PUTS expire I will see what kind of profit I can pull. I will keep everyone updated when and at what price I sell the contracts.



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Hello World

Hello, and welcome to my blog. I have been investing in stocks and options since I was 11 years old (That's over 10 years ago now). My first stock was Corning Glass Works (GLW) and I purchased 45 shares at around 34 a share. I later sold my shares for over 200 a share during the tech boom in Summer 2000. Ever since making my first dollar I have been fascinated with the financial markets. I mainly am creating this blog to share my strategies with others, as well as "journal" my ideas so I can see how I did... Hope you enjoy reading my blog.



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