We hold two covered writes that will yield a theoretical gain of $1,286 if GDX settles $35 or higher today. The profit can still be protected against a drop below $35 by buying two February 35 puts, but I’ll leave it up to you to decide how much to pay for them intraday. If GDX appears confidently buoyant above $36, the Feb 35 puts will melt down to nothing quickly as the day wears on. However, if the puts can be bought for 0.10 in the first hour, and especially if the stock is trading 35.75 or lower then, you should buy them just so you can relax. _______ UPDATE: GDX opened strong, so the puts could have been covered for 0.05. If so, you can book a trading profit of $1,276 and buy yourself a good cigar.
From the monthly archives:
February 2009
We’re long the Feb 30-Feb 27.5 put spread twice (or a multiple thereof) for a net credit of 1.30 per. You can handle this any way you please, but the idea is to come out of expiration on Monday with no stock position. That means that if BBY settles between 27.50 and 30.00, you’ll become automatically short 200 shares through the exercise of the Feb 30 puts (which you can sell intraday to avoid this). The stock position would be canceled out if BBY finishes below 27.50, since the short Feb 27.50 puts will turn into long stock. (Check with your broker on this, since assignment on in-the-moneys is not automatic if the stock finishes very close to the strike.) _______ UPDATE: The stock settled at 27.90, so the worst you could have done was book a profit of $340 per spread. In practice, however, it would have been fairly easy to improve on that, since BBY traded as low as 27.00 intraday. Buying a Feb 27.50 call (for as little as 0.13) would have effectively locked in a profit of as much as $367 per spread.
This trade caught my eye a few minutes too late to offer as a night-owl special, but I am proferring the chart nonetheless so that you can see how succulent a pattern the euro is capable of creating for scalpers. The key to its appeal is the point ‘B’ low that has surpassed the two scrunched-up lows to the left. A bounce from the 1.2612 target remains speculative at the moment, and if such a fine pivot were to fail, we would infer that further weakness is likely, perhaps spilling into Friday.
Nothing should have changed our mind about that 6883 target first billboarded here a while back. Looking at this chart, which shows a different view of the pattern than I’ve offered before, the implied drop of nearly 600 points looks about as likely as the next high tide in Fundy Bay.
The bearish pattern shown has a compelling target at 730.75. We’ll make it our minimum downside projection for the near term — it is a high-confidence number, as far as I’m concerned — and you can trade it catch-as-catch-can. Be prepared for a potentially nasty bounce from 758.75 on the way down.
There’s an enticing Hidden Pivot support at 43.13, so let’s try bottom-fishing there with a 3.80 bid for one June 45 call (TBTFS), good through Friday. I’ll post further guidance intraday if it looks like we can improve on the price of the call, so keep your bulletin launcher activated if you want to be alerted in real time. We are going out to June on this order with the goal of shorting something against our call later. I’ve included a snapshot of an option calculator into which I’ve plugged a TradeStation volatility of 46.
Congenitally eager buyers of gold in India, China, and nearly everywhere else in the world have no idea who Jim Cramer is, so don’t worry that he may have put a curse on bullion with his recent endorsement of the stuff. Hey, even Cramer can be right now and then. This evening, there is little I can add to the technical picture detailed here earlier. 995.00 is still the most significant point of hidden resistance between here and $1,000, with 992.30 a close second, but neither is worth much for trading purposes. On a breakout, beware of a possible stall at 1006.10, since that’s as high as I can project for the very near term using the weekly chart.
The futures used every minor pivot support they could grab to avoid sinking into the abyss yesterday, and now there’s just one left: 773.00. Its appeal is mediocre as a place to attempt bottom-fishing, but it might work if it’s hit on a swoon during the night session. The action looks too subdued at 11 p.m. to suggest that such a downdraft is likely, but you can never be sure.
My wife does most of the grocery shopping, but on my last few visits to Whole Foods and Safeway, I was dismayed to find that some of the things she had sent me to buy were unavailable. The shelves where I might have expected to find these items, including fruit juices, canned soup and crock mustard, were bare. I assumed that there had been a run on them, perhaps because they had been heavily discounted. However, now comes word on the evening news that some major purveyors, including Kraft and Sarah Lee, are cutting back on selection by focusing on the brands that sell best. Signs of scarcity are not confined to branded products, either, since both stores have noticeably thinned their usually burgeoning produce bins so that they are less cornucopian. The grocer told my wife that this greatly reduces waste, and that every penny counts because profit margins in the produce aisle are so thin.
This Bailout’s Not for You…
by Rick Ackerman on February 19, 2009 8:24 pm GMT · 7 comments
A few months ago we considered telling readers to skip a mortgage payment or two, just in case the government decided to bail out hardship cases. We scrapped the idea, though, out of concern that some of you might take us seriously and risk jeopardizing your credit scores. In retrospect, we can now confess that we were serious – or at least half-serious, since it seemed likely at the time that homeowners who had gotten in way over their heads would be the first to receive special treatment after the government figured out that “rescuing” multinational banks would do nothing to staunch the tide of foreclosures.
Now, along comes President Obama’s Stimulus-of-the-Week. It would provide up to $275 billion in re-fi cash – good heavens, where does all that money come from? – for as many as five million home “owners” who either have little equity in their properties or who owe more than the properties are worth. One problem we can see with this approach is that, very conservatively estimated, there are probably at least 30 million mortgage-payers who are underwater. So how will The Government determine who gets bailed out? The rules would appear to favor queen-for-a-day types whose loans came via Fannie Mae or Freddie Mac. However, those with jumbo loans – i.e., the backbone of middle class affluence – need not apply. » Read the full article