AMZN

I'm in the trade @ 5.20. More details later

Busy Week

I've been a little busy this week so I haven't been trading much, but I will update the blog tonight with my trades for this week.

AMZN(Amazon) is expected to report earnings today after the bell so I will be buying the May 80 Call at 2pm @ around 5.20 and setting a .50 Trailing stop. This will allow my stop price to move with the price of the option as it rises. I hope to be out of this trade before 3:55pm. Notice that I have protected my capital by setting a stop and also not assuming much risk by getting out of the trade before earnings are announced.

Current Balance: 641.11(because of some trades that I made earlier in the week)

Stopped out

I was stopped out of APVEE(APPL May 125 Call) today @ $5. Still haven't completed my rules yet but I will post them as soon as I feel they are ready to implement.

Current Balance: 614.62

Terrible Week

After being up more than 100% this week I ended up losing more than 50% of the portfolio. That doesn't matter though because I definitely learned a lot from the sequence of events over this past week. The most important lesson to take away from this is to NOT BE GREEDY. When I saw the portfolio up 100%, for some reason I didn't take it. I felt that since the market went so far in my favor that it would offer me more than what it had already given me. WRONG! That was me becoming emotionally attached to the trade and that is the worst thing that you can do. It is said that becoming emotional is a sure way to lose and I proved.

I order to protect my money, from now on I will be following a strict set of rules(which will be drafted this weekend) and setting trailing stop orders for every trade. This way, in the event that I'm up 100% I won't have to worry about a positive trade going bad. I will also be closing out my positions on a daily basis, with the exception of a few long term trades.

Yesterday(Friday 4.17.09), I purchased 1 contracts of the AAPL May 125 Call(APVEE) for 5.80. A total transaction of 593.74. Although I have been getting burned on earnings all week, I know where I went wrong and will be sure to correct that with this trade. In the event that AAPL runs up on Monday and I see more than a 20% gain, I'm out(I will go over my news rules in the post that I plan to write tomorrow). FYI, AAPL is scheduled to release earning on Tuesday 4.28.09. This may end up being a longer term play, depending on how the technicals look next week. I will also go over my technical analysis on AAPL tomorrow

I'm embarrassed about posting this but, below is the Balance and transaction history for this week.

Current Balance: 699.37
For those who want to learn to be emotion free in their trades, let me know and I will send you a copy of "The Secrets To: Emotion Free Trading" by Larry Levin. Its a great read and I recommend that everyone take a look at it

Sold HIG May 10 Call HIGEY

Sold the HIG May 10 Calls for a little more than cost basis. More details to come later....

Portfolio Update/This weeks picks

I pretty much got slaughtered last week in my short positions but was able to make a few good trades to keep my balance near 2k. View the screen shot below of my trades for last week:

The (AA)Alcoa Strangle was a total loss. The stock ended up not moving at all and time decay was eating away at my options. Note, I currently have two open positions, RIMM and HIG, both of which have been performing pretty well. I will probably sell those tomorrow to free up some cash to play earnings.

Being that I consider all earnings plays to be speculative, All of my picks for this week are spec.
I hope we all understand how important this week is considering it is a big earnings week and also options expiration week. The Out of the money options will be extremely cheap because time decay has run its coarse of them and with earnings this week I could make a lot of money if I play the right side of the fence(i.e. the Apr 55 Call for JNJ @ .08 could easily hit 1.50 if JNJ pops on earnings....JNJ currently @ 51.41).

This is what I will be watching and possibly playing this week. I don't advise that anyone make these trades with their personal money without doing your own DD(Due Diligence).

Monday
Talbots(TLB) - Price 4.11 - Buy Apr 5 Call @ .10

Tuesday
JNJ - Price 51.41 - Buy Apr 55 Call @ .08
GS - Price 124.16 - Buy Apr 125 Call @ 5.35
INTC - Price 15.99 - Buy Apr 17 Call @ .16 and/or Apr 15 Put @ .19

Wednesday
BTU - Price 28.00 - Buy Apr 29 @ .95

Thursday
JPM - Price 32.38 - Buy Apr 32.50 Call @ 1.87
HOG - Price 17.74 - Buy Apr 17.50 Put @ .80
LUV - 7.35 - Buy Apr 7.50 Call @ .30
PH - 39.13 - Buy Apr 35 Put @ .40
PPG - 44.99 - Buy Apr 45 Call @ 1.40
GOOG - 371.75 - Buy Apr 380 Call @ 10.85

Friday
C - 3.02 - Buy Apr 4 Call @ .07
BBT - 20.06 - Buy Apr 20 Put @ 1.00
GE - 11.41 - Buy Apr 12 Call @ .31
MAT - 13.37 - Buy Apr 15 Call @ .10


Unless the underlying hits these strikes tomorrow, we should see a sharp decrease in their prices. I didn't post any technical analysis for my picks this week because earnings will trump any technical indicators, so basically they don't matter. The only thing that matters is whether or not the company beats expectations.

Current Account Balance: 1910.37

Portfolio Update

Yesterday was a bad day for my portfolio. It was the beginning of earnings season and the market was down as a whole. I was however, able to make a good trade. I purchased the HIG May 10 Call @ .45(HIGDY) and so far in Pre-Market trading HIG is up over 29% which is more than a 100% move in the option. Being that options don't move in premarket I wont know my gain until the market opens at 9:30a. IF you are wondering why HIG is up so much, it is because the treasury has decided to extend TARP money to Life insurers, including HIG(Hartford Financial Services Group).

RIMM was hit pretty hard but the uptrend is not yet broken. I won't sell the RIMM option unless the underlying stock falls below 59, which I doubt will happen. On the upside I will sell as the stock approaches 70.

AA is up 4% in premarket, so I will more than likely sell the week leg of that trade which is the April 6 Put(AAPJ). I will realize a loss on the Put the but the Call(AADK) is up, so a profit is still made. All in all, The AA straddle turned out to be a bad trade because it didn't make the big move that I was expecting. Hopefully my next earnings play will work out better.


Below are my transactions so far for the week:
Balance as of 4.7.09: 1734.36
I will also post my balance at the end of the day to show how easily money can swing and also since all of my positions are currently up in premarket, the above balance is not an accurate depiction of the acct balance.

HIG Trade

I will probably be buying HIGDY(HIG April 10 Call)....More details to come later...

Alcoa(AA) Strangle

I decided to implement a strangle strategy instead of a straddle for my Alcoa(AA) trade. A strangle consists of buying a call and a put with the same expiration at different strike prices. I did this because I feel that AA is going to make a big move after earnings are announced, so I want to benefit from the swing in either direction and the volume on the Out of The Money(OTM) was way higher then the ATM strike.

This is a play on earnings, so I have no technical reason for this trade. FYI...AA earnings is the kickoff for earnings season, so I will be implementing a lot of strangles and straddles.

Below are current positions in the account

Account Balance: 2335.35

4.6.09 Trade

I'm going to jump back into RIMM. There is a big bullish engulfing pattern on the daily candle sticks and the daily/weekly MACD and Stochastics say that it is a go. As I was writing this entry I put my buy order in @ 4.55 for the 3 contracts of the May 65 Call(RFYEM).

Daily Chart: On the daily the next line of resistance is the 200SMA which is at 71.04 and the 5 period EMA is still above the 10 period SMA

Weekly Chart: On the weekly, the next line of resistance is the 50 period SMA, which is at 80.25

Based on the above 2 charts, I will monitor the stock and possibly sell the option when the stock reaches 70 or 80

Order:
Total Transaction: 1380.24

Account Balance: 2278.83(the balance is higher because the option has gone up before I was able to finish this post)

Possible Trade

I'm thinking about buying Alcoa for earnings. Ticker is AA. I would buy the 7.5 Strike prices for April. I haven't decided whether I'm going to make the move yet. Current price of the stock is 7.87 in Pre-market trading. More details to come...

April Goal Accomplished

My apologies to those who have been following my blog for not posting my trades for this week. It ended up being a pretty good week overall, even though I was down over 50% at one point in the week.
View this weeks transaction history below:

As you can see in the screen shot above, I lost early in the week being that the market began to rally on the news that Banks would start implementing Mark-to-Market accounting, which would free up a lot of cash on their balance sheets. That being said, I closed my short positions in APC and BAC and just took the loss.
However, the week took a positive turn when I decided to play RIMM because I knew that they were going to be announcing earnings on Thursday. One thing that I have noticed in this recession is that people have not stopped buying Blackberry's(RIMM product), so I assumed that they would beat estimates on their earning and I was right. The RIMM trade ended up making me about $1300(over 200%). The only mistake that I made with that trade was that I became emotional during the day and decided to take profits when I should have just stayed in the trade until earning were released. As you can see in the transaction history above I checked my emotions later in the day and jumped back into the trade before the company announced earning.

Current Account Balance: 2249.07 (beating the April estimate on my Million Dollar timeline by 749.07)
Being that the account balance is over 2K I am now able to trade on Margin(low interest loan from the broker and only charged a fee when margin is used), which will allow me to trade with 6189.52. Based on how many indicators I have going in my favor, I may use the margin on some of my technical trades but for speculative trades I will continue to use my cash balance.

I will post my trades for this upcoming week, either tonight or in the morning before the bell.