Today's GOOG tout suggests naked shorting some out-of-the-money calls if the stock rallies to a certain Hidden Pivot midpoint. Although I've avoided short-option strategies in the past, I plan to offer more of them henceforth, since they can open up possible opportunities in high-flying stocks such as GOOG, AAPL and PCLN. All of these world-beaters can be quite volatile even when the broad averages are mired in crud, and that's why experienced traders like to leverage them. You should check with your broker concerning margin requirements and the suitability of your account for holding naked-short positions. Although the term "naked short" is used by the news media -- ignorantly most of the time -- to elicit fear, distrust, awe or loathing in readers, the strategy itself is statistically far more likely to produce winning trades than simply being long put or call premium on a directional hunch. In any case, you should at least try to follow this trade on paper if it fills, since, as you'll see, there are ways to tightly manage the risk. In the event we do initiate a short-option position, I will try to spread it off by day's end, but in any case within no more than a day or two. Click here for free access, on a trial basis, to all of Rick's touts.
Monday, October 15, 2012
GOOG – Google (Last:735.75)
– Posted in: Current Touts Rick's PicksGoogle's gap-up opening last Thursday has turned into a bear trap that tightened with Friday's nasty selloff in the final hour. It projects to 735.47, but a last-gasp feint up to the p midpoint, 746.98, should be viewed as a shorting opportunity if tightly stopped. Assuming your options account is qualified for naked positions, I'd suggesting shorting two October 750 calls if the underlying stock rallies to within 12 cents of the 746.98 pivot. Stop yourself out, however, if GOOG goes above 746.21. I estimate the calls will be selling for around 20.70. _______ UPDATE (11:43 a.m. EDT): The stock dove this morning at the bell without an uptick. Because sellers overshot the 735.47 target, we'll move point 'A' up to October 5's 774.38 to yield a new minimum downside target at 722.41.
ESZ12 – December E-Mini S&P (Last:1422.25)
– Posted in: Current Touts Rick's PicksA weak bounce Sunday night has come from a too-obvious place -- i.e., just above a key structural support at 1414.50 created on 9/10. Look for the futures to continue lower to at least 1406.75, the 'd' target of the trend I've labeled. You can bottom-fish a single contract there with a 1406.00 stop-loss, but if you step up the size, camouflage should be deemed necessary. Please note that buyers would need to push this brick above 1442.25 today to generate a spark of life.
GCZ12 – December Gold (Last:1746.10)
– Posted in: Current Touts Free Rick's PicksAfter a month of pooch-screwing, bulls are close to giving up on an ostensibly easy rally target at 1808. It would take just a short fall to below 1738.3o (see inset) to negate the point 'C' low (1738.30) of the uptrend, returning bulls to limbo for the near term, at least. My minimum downside projection for this morning is 1737.50, an indistinct Hidden Pivot based on the 10/4 high that you should bottom-fish only via camouflage and a theoretical stop-loss no wider than four ticks. Follow these trades in real time with a free trial subscription.
