So much for banning short-selling, huh? Financials were weak all day and were an obvious short...if you could short them. Shorting via DITM puts was an option but the bid/ask spread would cost you $1-2 in premium. If you were buying puts in GS, $1-2 dollars would have been acceptable if you knew it would come down $9+...I didn't.
BTW, Para-Olympics concluded in Beijing on 9/17. Maybe all the cars and factories are up and running again. Oil sub-$100 was very short-lived!
Looks like this week will continue last week's volatility. I think most stocks will retrace Friday's gap as everyone takes their profits and as soon as the bailout is approved and finalized, we'll get another rebound.
I was a bit too trigger-happy today...
SRS - Moved the stop up too soon. Bought @ 73.20 and stopped @ 74.50.
AAPL - Bought @ 136.63, Stopped out at @ 137.10...and didn't re-enter...
MOS - Bought @ 95.00, Sold @ 96.70
AMGN - Bought @ 58.33, Oct 65 Put...time to close the gap at $54!
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Hi OE... i'm thinking, you of all people, should know that we still can "short banks/financials" via ITM puts or puts. Right now, it makes sense to me to buy a long term strangle on a few of these banks/financials, since Beta is high. What do you think?
-gio
Hey Gio, you're right. Puts are still in play. However, the bid/ask spread can be significant and the break-downs will not be the same as before so you need to time the entry a little better and trade them deep-in-the-money. I just went through my watchlist and looked at the option chain for each stock (should have done this in detail earlier). The ideal candidates in this environment would have been GS and MS during the tight narrow range. With MS, the tight range at $30 would have offset the $1 bid/ask spread...same with GS at the 130 level. I am against strangles unless during options expiration week or if you're expecting big news/events. For instance, a strangle on MS using Oct 30 Call and Oct 25 Put will cost you about $5+ in premiums. So, MS needs to close at 35 or 20 on Oct 17 just to break-even. That's little reward for the risk. I'd rather wait and buy calls when the financials close the Friday gap or buy puts when the next run-up fizzles.
Oe, take a look at the semi-holders..out of favor again could mean a good set up shortly. look at the bullish divergence on the chart. I used to love this one. If we do fill the gap from Friday (i'm with you)I think the SMH may outperform the financials on the next run.
D, I'll keep them on the radar. $24 might be a decent floor for SMH. My hesitancy is that I haven't heard anything good coming out of that sector. On the other hand, that could be a double-bottom for INTC.
OE, just picked up 500 SMH OCT 26's @ .58...acting well all day amidst all the gyrations. Picked up a few more (50)XLU Jan 32 puts(building a large position over the next several weeks in several strikes). Still holding everything else.
yeah... the ask bid spreads are ridiculous. I was thinking more of strikes in months in 2009, hoping that overall the sector was going to move big, but not sure which way. but yeah, the premiums get bigger.
Thanks for searching for GS, which is up after hours on Berkshire preferred stock buys, btw.
500? Damn, you don't mess around, do you? How about scaling in? That late day sell-off was bs. SMH held up well until then.
Gio, I think there is too much uncertainty to buy anything into 2009. I'm a big proponent of staying in the front month and rolling the option on expiration if you want to retain the position.
The spreads actually tightened up on the financials today...maybe due to SEC clarification for market makers.
Good news on GS. I picked up some shares...wish I loaded up though.
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