GOOG looks like it's turning bearish. Down day today on higher volume. If it opens lower tomorrow, I'm comfortable doing a bear call, selling the $815 or $820.
PCLN looks like it's rolling $680 to $720. Bounced up off support today on good volume - even when the overall market wasn't as strong. If it can keep going up tomorrow, it might be worth a small play. It's in a weaker industry group (151/197), but it is #3 within that group (which is positive).
AMZN looks like it's rolling $255 to $275. Got above all three EMAs today, on slightly higher volume - all of which is good. It's half way through the channel, though, so it may not be good for options, but might be OK for a bull put, selling the $255 or $260. AMZN is not in a stronger industry group (about 50th percentile), and it's not in the top 10 within that group. But the pattern looks good, and it has decent institutional support.
FFIV looks like it's bouncing down off the 10, and closed close to it today. If it opens under the 10 and moves down, it should be good for a $5 move in a couple of days. FFIV is in one of the worst performing industry groups, it's #11 in that group, and it's under institutional distribution (all of which is good for puts).
CAT, to me, looks like AAPL did in October of last year. It's bouncing down off the 10, and could hit the 10 tomorrow (and bounce down). It's in a decent industry group (64/197), and it's #5 in that group (JOY is #4). It has a terrible accumulation/distribution rating, though, which is good for puts. Given the technicals, it may take a day to be at the right point. Everything else looks OK for puts.
COP looks like it may be making a cup and handle. It has an IBD composite of 23 and is in industry group 188 of 197 - so not at all positive for an up play. That said, it is a pretty pattern. :)
NKE looks like it's going to fill the gap. If so, that could be a $3.50 move on a $58 stock - not bad. Make sure it breaks out down through the gap line around $58.
Wednesday, March 27, 2013
Monday, March 18, 2013
AAPL tomorrow?
Looks like S&P bounced back up somewhere between the 10-day and 20-day today. If it can keep that up tomorrow (in other words, tomorrow isn't a retracement to the 20-day), then I'm thinking a bull put in AAPL selling the $440 might be safe.
Rationale...
Rationale...
- $440 has the protection of the 10-day, and tomorrow, should be right at/under the 20-day.
- Friday and today (Monday) were strong up days on higher than average volume, which means it's professionals doing it - which means it's reliable.
- AAPL might pull back a little bit tomorrow - because it was such a big up move today - but as long as it bounces up off the 20-day - or stays above the 20-day - then selling the $440 should be safe.
- If AAPL continues up to the 50-day and then retraces, it should take a few days, which should be enough time for time value to evaporate so you could reverse it Thursday
Other thoughts...
MGM looks like it may be creating a cup and handle. If it bounces up off the 10-day or 20-day, might be worth pyramiding in.
GTE looks to be rolling between $5.75 and $6.20. If it bounces up off support and the 50-day (both are crossing now - double support), it should be good up to $6.20. Note that it could also be up-trending, which would put resistance closer to $6.50.
Saturday, March 16, 2013
Economic reports week of 18 March 2013
I think the overriding event this week and next is the federal budget. The continuing resolution ends on 31 March 2013, so the government has no appropriations beginning 1 April 2013 - which effectively means the federal government shuts down 1 April. Don't really expect that to happen. However, for it to not happen, there will need to be either another continuing resolution or an actual budget. The closer we get to the end of the month, the more dire things will get, and the more volatility I expect to see in the market. Because of all of that, I'm a little hesitant on longer term up plays (i.e. plays that would take more than a week at this point). However, once it's resolved (even if it's just a band-aid), I expect a bit of a bump - so I'm watching for up plays.
"Anticipated Impact" is my assessment of how much the market is "waiting for this number to decide which way to move."
Low impact means that unless it's significantly different than what's projected, I don't anticipate that it will have that much of an effect.
Medium impact means that I'm anticipating some hesitation around the announcement, with some market reaction following - but I don't have the sense that the market is waiting all week for this number.
High impact means that I think the market is "holding its breath" waiting to see what the number is, and will significantly react to it.
Date
|
Time
(ET)
|
Statistic
|
Anticipated Impact
|
Mar
18
|
10:00
AM
|
NAHB Housing Market Index
|
Low
|
Mar
19
|
8:30
AM
|
Low
|
|
Mar
19
|
8:30
AM
|
Low
|
|
Mar
20
|
7:00
AM
|
MBA Mortgage Index
|
Low
|
Mar
20
|
10:30
AM
|
Crude Inventories
|
Low
|
Mar
20
|
12:30
PM
|
FOMC Rate Decision
|
Med
|
Mar
20
|
2:00
PM
|
FOMC Rate Decision
|
Med
|
Mar
21
|
8:30
AM
|
Med
|
|
Mar
21
|
8:30
AM
|
Continuing Claims
|
Med
|
Mar
21
|
9:00
AM
|
FHFA Housing Price Index
|
Low
|
Mar
21
|
10:00
AM
|
Low
|
|
Mar
21
|
10:00
AM
|
Philadelphia Fed
|
Med
|
Mar
21
|
10:00
AM
|
Low
|
|
Mar
21
|
10:30
AM
|
Natural Gas Inventories
|
Low
|
"Anticipated Impact" is my assessment of how much the market is "waiting for this number to decide which way to move."
Low impact means that unless it's significantly different than what's projected, I don't anticipate that it will have that much of an effect.
Medium impact means that I'm anticipating some hesitation around the announcement, with some market reaction following - but I don't have the sense that the market is waiting all week for this number.
High impact means that I think the market is "holding its breath" waiting to see what the number is, and will significantly react to it.
A hedge thought...
Had a thought about how to reduce losses on basic options plays when it goes against me, while at the same time adding profits in most cases where it goes sideways or with me. Haven't tried this yet - still thinking about it, but it seems like it should work.
I typically do options 3+ months out and in the money. Right now, I'm in June 22 $27.50 calls on WLT. WLT also has weeklies, and that's where my thought began.
Since I own the June 22 $27.50 calls, why not sell the March 22 $35.00 call? My exit point is around $35 anyway. What I'm effectively doing is limiting my profits to whatever the June calls are worth when the stock hits $35 - because after $35, the short leg (the leg I sold - the March $35 calls) go in the money, and start costing me penny-for-penny. In reality, I'd probably lose money after $35, because the March calls have a 1.0 delta at that point, but the June calls will have less than a 1.0 delta.
Here's what I can see happening....
If the play goes against me, I need to reverse both legs. The leg I bought will be worth less than what I paid, so I'll lose a little bit. However, the leg I sold will also be worth less, and will have time value deteriorating rapidly, so it should be worth a lot less than what I sold it for, so I should make money on the short leg. In this case, the strategy buffered the loss a little - lost a little less on the play.
If the play goes sideways for a while and I want to stay in, I've made some money on the short leg. The short leg will expire worthless on Friday, and I can do it all again next week. In this case, the strategy has added profit to the overall play.
If the play goes sideways for a while and I want to get out, I need to reverse both legs. The short leg is out of the money and expires in a week, so it's value is evaporating rapidly. I should be able to reverse both legs for either a small profit or small loss. In this case, the strategy probably didn't help that much, but it probably didn't hurt either.
If the play goes with me up to the strike price of the short leg, I can let the short leg expire worthless then sell the long leg for the original target profit. Alternatively, I can reverse both legs on Thursday or Friday, and the short leg should be worth less than what I sold it for, which makes it an additional profit on the overall play. In either case, this strategy has added profit to the overall play.
If the play goes with me, but goes beyond the strike price of the short leg, I need to reverse both legs. Actually, I should reverse both legs before the short leg goes in the money. Because of the different expiration dates, the short leg's delta will reach 1.0 when it goes in the money, but the long leg's delta will probably be around .7. That effectively means I'll be losing $.30/share for each dollar the stock moves beyond the strike price of the short leg. In other words, if it moves up to $36, it will cost me an extra $1/share to buy back the short leg, but the long leg will have only gained about $.70/share - which is a net loss of $.30/share. In this case, the strategy begins to eat into profits once the stock goes beyond the strike price.
I typically do options 3+ months out and in the money. Right now, I'm in June 22 $27.50 calls on WLT. WLT also has weeklies, and that's where my thought began.
Since I own the June 22 $27.50 calls, why not sell the March 22 $35.00 call? My exit point is around $35 anyway. What I'm effectively doing is limiting my profits to whatever the June calls are worth when the stock hits $35 - because after $35, the short leg (the leg I sold - the March $35 calls) go in the money, and start costing me penny-for-penny. In reality, I'd probably lose money after $35, because the March calls have a 1.0 delta at that point, but the June calls will have less than a 1.0 delta.
Here's what I can see happening....
If the play goes against me, I need to reverse both legs. The leg I bought will be worth less than what I paid, so I'll lose a little bit. However, the leg I sold will also be worth less, and will have time value deteriorating rapidly, so it should be worth a lot less than what I sold it for, so I should make money on the short leg. In this case, the strategy buffered the loss a little - lost a little less on the play.
If the play goes sideways for a while and I want to stay in, I've made some money on the short leg. The short leg will expire worthless on Friday, and I can do it all again next week. In this case, the strategy has added profit to the overall play.
If the play goes sideways for a while and I want to get out, I need to reverse both legs. The short leg is out of the money and expires in a week, so it's value is evaporating rapidly. I should be able to reverse both legs for either a small profit or small loss. In this case, the strategy probably didn't help that much, but it probably didn't hurt either.
If the play goes with me up to the strike price of the short leg, I can let the short leg expire worthless then sell the long leg for the original target profit. Alternatively, I can reverse both legs on Thursday or Friday, and the short leg should be worth less than what I sold it for, which makes it an additional profit on the overall play. In either case, this strategy has added profit to the overall play.
If the play goes with me, but goes beyond the strike price of the short leg, I need to reverse both legs. Actually, I should reverse both legs before the short leg goes in the money. Because of the different expiration dates, the short leg's delta will reach 1.0 when it goes in the money, but the long leg's delta will probably be around .7. That effectively means I'll be losing $.30/share for each dollar the stock moves beyond the strike price of the short leg. In other words, if it moves up to $36, it will cost me an extra $1/share to buy back the short leg, but the long leg will have only gained about $.70/share - which is a net loss of $.30/share. In this case, the strategy begins to eat into profits once the stock goes beyond the strike price.
Friday, March 15, 2013
CR Spreads Week of 18 March 2013
If GOOG bounces up off the 20, should be good for a bull put. 20 day is at 810, which should be good protection on a solid bounce.
PCLN is up so far today, but it has a long top wick, which, to me, is a bit bearish. If it continues up Monday, it should be good for a bull put. The 705 is right below the 20 day and should pay well.
AAPL (below) gapped up and opened right at a line I had drawn off the bottom on 28 January. The wick on 26 February also touched it. Looks like AAPL is headed to the 50 day - at least, and we may have seen the bottom in AAPL. Point is that I'm not doing anything in AAPL until I see a solid bounce somewhere, and I anticipate seeing that around the 50-day.
CMG looks like it's trying to stay positive today. With the negative move in the overall S&P, CMG is staying "strong," so that's a good thing for up plays. If it bounces up good today or Monday, it should be good for a bull put. 20 day is at $319, so the $315 would have solid protection of both the 10 and 20 day.
CF (below) looks like it's found support on a parallel line to the last up-trend. The slope of that line is the same as the slope of the support line from the last up-trend, and it's snapped in based on the width of the channel of the last up-trend. All of that to say that it's a "guess," but it seems to be holding well. Once it gets above it's EMAs, it should be good for bull puts.
PCLN is up so far today, but it has a long top wick, which, to me, is a bit bearish. If it continues up Monday, it should be good for a bull put. The 705 is right below the 20 day and should pay well.
AAPL (below) gapped up and opened right at a line I had drawn off the bottom on 28 January. The wick on 26 February also touched it. Looks like AAPL is headed to the 50 day - at least, and we may have seen the bottom in AAPL. Point is that I'm not doing anything in AAPL until I see a solid bounce somewhere, and I anticipate seeing that around the 50-day.
CMG looks like it's trying to stay positive today. With the negative move in the overall S&P, CMG is staying "strong," so that's a good thing for up plays. If it bounces up good today or Monday, it should be good for a bull put. 20 day is at $319, so the $315 would have solid protection of both the 10 and 20 day.
CF (below) looks like it's found support on a parallel line to the last up-trend. The slope of that line is the same as the slope of the support line from the last up-trend, and it's snapped in based on the width of the channel of the last up-trend. All of that to say that it's a "guess," but it seems to be holding well. Once it gets above it's EMAs, it should be good for bull puts.
Thursday, March 14, 2013
Observations...
14 March 2013
INFY looks like it made an M on 3/12, possibly with a kiss goodbye. If it bounces down off the 20 or 10, should be good for at least a $2 move.
RAX looks like it's bouncing down off the 10. $50.25-$50.75 could show support. Otherwise, it could drop all the way to $41. There's a Fib around $48.50 which could also slow it down.
RAX historically competes on service, not price. However, they've acknowledged that they're going to have to compete on price somewhat - because AMZN and GOOG are their primary competition, and both compete on price. In the last earnings call, RAX said it's focusing on using OpenStack as its primary backbone - which, if they can do that - should streamline internal processes, increase efficiency, etc. But that's a "squeeze pennies from expenses to improve the bottom line" approach, when RAX used to be in "expand and build the business (i.e. generate revenue) to improve the bottom line." When companies start scrutinizing expenses in order to keep the shareholders happy, the underlying economy can't be that great. In my opinion, RAX's moves reinforce that we're near the end of an old, tired bull market.
ATW looks like it's rolling between $49 and $55. Missed the current up move (started on 3/8). Watch for the bounce down off $55 in the next week or so. Also note that there might be a secondary support/resistance around $52.50. If so, it might be better to play the downs rather than both ups and downs.
WSM looks like it's rolling between $44 and $46.50. Currently making the down leg of its 4th or 5th roll. Remember 3, 5, and 8....
LEN looks like it's rolling between $37 and $42. It also has a secondary support/resistance line around $39.50.
OCN could be rolling $37-$41. Also has a good up-trend off the 50-day for the past 6 months or so.
EQM looks like it's making its 7th flag. 3, 5, and 8...so we should be good for one more.
WMB could be rolling $33.50-$35.50. Also historically has an up-trend, probably off the 20-day.
LO could be rolling $38.25-$40.25. Not the prettiest pattern, but it does have strong lines there.
WYNN could be rolling $116-$126. Also has a secondary support/resistance line at $121.
WLT has a beautiful huge roll from $30-$40. Also an excellent example of the power of Fib retracement lines. Notice how it hesitates around each several of them....
ARMH looks like it might be doing an M with a kiss goodbye. Since I'm in a bear put spread, I hope it's a short kiss....
INFY looks like it made an M on 3/12, possibly with a kiss goodbye. If it bounces down off the 20 or 10, should be good for at least a $2 move.
RAX looks like it's bouncing down off the 10. $50.25-$50.75 could show support. Otherwise, it could drop all the way to $41. There's a Fib around $48.50 which could also slow it down.
RAX historically competes on service, not price. However, they've acknowledged that they're going to have to compete on price somewhat - because AMZN and GOOG are their primary competition, and both compete on price. In the last earnings call, RAX said it's focusing on using OpenStack as its primary backbone - which, if they can do that - should streamline internal processes, increase efficiency, etc. But that's a "squeeze pennies from expenses to improve the bottom line" approach, when RAX used to be in "expand and build the business (i.e. generate revenue) to improve the bottom line." When companies start scrutinizing expenses in order to keep the shareholders happy, the underlying economy can't be that great. In my opinion, RAX's moves reinforce that we're near the end of an old, tired bull market.
ATW looks like it's rolling between $49 and $55. Missed the current up move (started on 3/8). Watch for the bounce down off $55 in the next week or so. Also note that there might be a secondary support/resistance around $52.50. If so, it might be better to play the downs rather than both ups and downs.
WSM looks like it's rolling between $44 and $46.50. Currently making the down leg of its 4th or 5th roll. Remember 3, 5, and 8....
LEN looks like it's rolling between $37 and $42. It also has a secondary support/resistance line around $39.50.
OCN could be rolling $37-$41. Also has a good up-trend off the 50-day for the past 6 months or so.
EQM looks like it's making its 7th flag. 3, 5, and 8...so we should be good for one more.
WMB could be rolling $33.50-$35.50. Also historically has an up-trend, probably off the 20-day.
LO could be rolling $38.25-$40.25. Not the prettiest pattern, but it does have strong lines there.
WYNN could be rolling $116-$126. Also has a secondary support/resistance line at $121.
WLT has a beautiful huge roll from $30-$40. Also an excellent example of the power of Fib retracement lines. Notice how it hesitates around each several of them....
ARMH looks like it might be doing an M with a kiss goodbye. Since I'm in a bear put spread, I hope it's a short kiss....
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