Like I said, I'm pissed about SIGM. That a-hole analyst sandbagged us on it. But it really isn't about him it's about trading correctly and when it didn't move back up off $20 on the initial fall, that was a sign that something was wrong.
SIGM is a classic example of how full of shit fundamental valuation is. It's so subjective it's just not worth trading on.
What I'm suggesting now because of the chance that that S&P chart above is telegraphing some big downside to come with the 50 crossing the 80 week MAs, you should focus on NOT trading naked and going with my collaring trades. The idea is to make monthly income via shorting calls and using long puts to lock in your position.
So, for example you'd buy 'x' amount of shares of say, ABCD stock at $30. You'd then buy 1 put that is 2 or 3 strikes in the money 7 months out or so for each 100 shares. So, you'd buy 1 Jan 09 $40 put for each 100 shares of ABCD you bought at $30.
Let's assume you pay $11 for the puts.
That means that if ABCD falls, the second it hits $29 you can't lose any more money. The goal here is to sell call options to hopefully have expire worthless each month.
I'm using the HAL trade as my example. So far that trade is working well. The problem with the type of trading for many is that it's SLOW. But very consistent and almost risk free. I didn't have puts on SIGM like I should have.
In this type of trading you're actually making more money as these stocks fall, but are protected in the event they rally because we're long the stock.
It gets a bit complex once your stock starts to move up in a big way because there are a few strategies to take advantage of that happenng like rolling up the puts or short calls. But in this market you probably won't have that problem very much.
With $35k you could probably make $20k this year doing it.
