For me, what makes it difficult to switch from puts and calls is it's hard to imagine the market being so weak, then flipping to strong. Or the other way around, when the market is so strong, a little selling at a certain time tanks the market.


I fear the market will fall apart when it reaches an obvious inflexion point instead of rallying, even when it appears to me that it is ready to rally.

Last week on Thursday I thought the market was set up to rally, Friday, it did sort of late in the day. And I thought at least 111 on the IWM was likely. Of course now IWM is 112.41. So maybe it goes to 114.20 or so this week.

That was a good call on the call options on BBY, congrats. Good to buy them cheap.

Almost without exception, when I look at stocks that make a move up, the options trade down till 1 or 2 days before an up move.

up until that move up, the call options keep getting cheaper.

It looks like the May 17th 25 call is a better bet right now.

Yes, the downside appears limited, but so does the upside. We get some more negative news on the consumer, that won't help BBY.

I really hate buying options that far out, waiting day by day is like watching paint dry. The only way you can usually sell those options is at the bid, there is a 33% spread between the bid and the ask.

good luck, it's cheap, but the IWM 113 puts were trading at 0.15 yesterday that was cheap also. But those are the reasons I wouldn't be interested in BBY.

I would rather buy calls on something like IBM that has a pretty good dividend to entice buyers.

About bby, I don't like the big box stores like BBY.

They have declining revenue, declining profits, and real estate. The online seller and really big retailors like sam's club and costo are likely underselling them.

Now we are after the holiday season, what is going to cause the price to spike up much?

Not sure long term, meaning 3+ years, they can survive. That's not to say they can't get a rally going in the stock, but IMO more likely the later half of this year.

I looked at bby, but up 14 cents or 0.5% in the market isn't plowing it's way up in my book.

BBY got oversold, it could bounce up some more, it might hit your 26, but I never ever buy options more than 2 days out. Seldom hold them overnight.

There are a number of stocks that are up today I would rather play on the options side. It's just as likely BBY continues on at 23.70-25 as it is that it takes off in the next 2 weeks. Builds a base in other words, which could take months.

My broker won't let me trade options so close to the close unless I have $millions in the account so that I could buy the QQQ if I don't sell the calls before the close.

Or the opposite with puts.

Maybe I could buy 1 contract, but that isn't usually worth the trouble.

Looks like IWM will settle near the lows of the day. Which isn't low enough to get a lot of buying going.

So it looks like next week, maybe after Monday, we get more downside. I still think the IWM can rally back to above 112 one day next week. Maybe even get to my current target of 113 before another bigger slide.

BUT I wouldn't bet on any upside in the IWM until we get to 109 or lower.

I would like to see the IWM get down to 109 or so before buying calls on it. Maybe 108 would be better.

IMO only certain stocks can you take the positive side in this market.

Stocks that have announced increased profits and big share buy backs.

If you do play the short covering rallies, you have to pick your spots very carefully. Like AMZN once it went down 10% was likely to come back up.

Maybe IWM hits 112.5-113. today. But if it hits 113 maybe sell back down.

EDIT In the old days, we called these the dead cat bounce. Maybe not politically correct now days.

aapl is down a small amount to 564.49, maybe the 565 puts will stay in the money, but I wouldn't hold them. I doubt aapl is going much lower than 562, and I would think if it does a rebound to above 565.

AMZN was down 9 when I posted, now it's down 17, more like it should be.

Surprised AMZN hasn't fallen much after earnings. At least not yet.

IWM won't get back to 120 high for a long, long time. I was hoping for 115.20, but the best it could do was 115.02.

Market is pretty violet and hard to trade.

I was hoping for one more push higher in the IWM to about 15.10-15.50 before buying puts on that index.

You could buy today and hope it opens lower. But likely you will only get a small gain of 20-30%, not a double or triple.

But premiums on IWM puts and calls are both declining, so many we are in a range for now.

I think the trading range is most likely. The high betas might not move much outside of the implied vol.

This market is either overbought or oversold, then gets more overbought or oversold.

Well, it looks like the general market will close near the highs of today, which usually means a little gain AM on Monday for 20 min, then selling down a little to say IWM 113.5, then take back off again to IWM 115 before the end of next week.

Been watching mostly IWM. We did hit an interday all time high on IWM just a little while ago.

Just the way the market has been going. I don't think it should keep going up, but I don't see any reason funds should sell at this point.

I really don't see any interest in selling or buying puts.

It makes me nervious about the bull, but who knows how long this goes on or how high.

Roy, it is a crazy bull market,

I expect you mean you have a stop on the calls, not puts.

Smart, I don't really know how ACA affects the economy overall.

I was thinking many poor people don't have insurance at all, so they either pay the penalty or maybe get medicare if they are poor enough. But those that poor likely already have medicare.

Overall I am hoping ACA is a good thing, but it will take time to see how it all rolls out.

The only thing I am certain about is we vastly overpay for health care in the USA and we don't have the best results for the money spent.

Bot WTW 32.50 calls for Dec 20 at 0.20. Maybe I can get some cheaper Monday, hard to tell. But IMO a good gamble for a multibagger.

Health insurance might decrease spending at low cost stores.

But it could increase company profits since many companies won't spend as much on heath care.

Some people pay more, some likely to pay less, not sure about the big picture breakdown.

Shocking Sentiment
Michael A. Gayed

Sentiment data continues to get more extreme and is the biggest impediment to further gains in U.S. equities. The Investors Intelligence sentiment poll released this morning showed the fewest number of Bears (14.3%) since March of 1987 and the highest number of Bulls (57.1%) since April of 2011. The spread between Bulls and Bears of 42.8% is now firmly in the danger zone. While this doesn't guarantee a crash, it does suggest caution is warranted. As the table below indicates, the average 52-week return following a Bull-Bear spread of over 40% has been only 1.6% versus an 8.3% return in all time periods. Heading into 2014, then, what needs to be tapered are expectations.


Read more: http://www.minyanville.com/business-news/editors-pick/articles/big-bullish-backtest-GSV-Capital-Weight/12/6/2013/id/52947#ixzz2nMavF2GM

Roy I looked around the web for that piece on recession by Rich Yamarone. Didn't find it, found John Mauldin letter about it.


What I did find was that Rich Yamarone has been predicting a recession since 2011. No doubt we will have a recession at some point, but hard to use this new prediction as any kind of timing tool. Being off by a week in options can be bad, being off by 2 years isn't useful even in long term investing.

Yamarone usually uses an inverted yield curve, but the FED has distorted the yield curve, so that can't be used.

This is a new territory for everyone, I don't think there was ever a time in history when we had the sort of conditions we have now.

So how can anyone predict the near future with that in mind?

========================================================

November 16th, 2011

Economist says malaise could turn into new recession

http://www.timesfreepress.com/news/2011/nov/16/c2-economist-says-malaise-could-turn-into-new/

What are the odds of a 2112 recession?

http://www.slideshare.net/UTMcCombs/yamarone-powerpoint-060412

The Recession of 2011?

http://www.investorsinsight.com/blogs/thoughts_from_the_frontline/archive/2011/08/20/the-recession-of-2011.aspx

smart, I believe one problem you have is that you are right on the direction, but too eager to get into the trade.

You fear missing the trade more than you fear getting in too high. Waiting for it to come to you means possibility missing it.

question is, touching the 50 day moving average for the IWM mean that the selloff is done for this week?

Don't know myself, but puts seem like a sell right now.

I think the only way hedge funds and mutual funds can get new money to buy IPO is to sell their winners.


So that is the main reason the market had been weak.

Failed new high, I guess I would need to ask on what?

IWM is seems quite likely, Dow I am not so sure, SPY, maybe and how long is the failed new high?

Meaning for 3 weeks, or 3 months, > 1 year?

Are there some IPOs or new stock offerings this week?

Well, it's weakened before.

But sure, it can be a tell. IM experience these sort of tells can take 1-6 months to actually cause a general downturn in the rest of the market. So hard to use it in day trading.

Glad you were able to get out at 0.30 on those calls.

It seems like all the second tier IWM stocks are down a little, but money is flowing to the top tier like AMZN, the generals of the market.

They don't look ready to go down despite the weakness in the IWM.

out at 0.54, I think profit taking is done for now, maybe back up to close at 181 on SPY.

out at 0.54, I think profit taking is done for now, maybe back up to close at 181 on SPY.

bot IWM 113 puts at 0.58, if there is weakness I expect to see more there.

Sold the 181 puts at 0.63, the offer went to 0.70, but no one bought. In at 0.57, out at 0.63,

the rest of today looks choppy at current levels to me.

Sold the calls, bot 181 puts at 0.57, but maybe I will sell them at a small loss. Hard to say, but I think they should go to 0.70.