Saturday, November 29, 2008

Inverse Strategy:

Buy calls when the stock is down.
Buy calls when the Mkt is down.
Buy calls when the Industry group is down.
Buy calls when the call is down.

Do inverse for puts.

Thursday, November 20, 2008

With last night's thinking that GOOG is falling, I sold the calls first thing in the morning. I was in a panic to see GOOG down -$10 in the morning. As I sold the calls, I immediately bought puts and then seeing the stock move I sold some puts against it (to protect it) in case the stock moves up. In few minutes the stock did move up and turned green, that made me feel proud of covering myself from such a situation. But the next hr the stock started falling along with the rest of the mkt and ended down a record.

I did manage to do some thinking before selling the put. I bought Dec. put and sold Nov. one as that will expire in only one day. I thought of it as a sure thing, the OTM puts will be worth nothing tomorrow as I will benefit from any upward movement this week.

To my amazement however, the stock moved down hard ending -$20 for the day. The put I sold tripled in price while the one I bought only increased slightly. The stock's decline had an inverse affect on my spread strategy, as to what I had imagined.
SLD to Open 1 GOU WN GOU Nov $270 PUT Executed $4.80
BOT to Open 1 GOU XZ GOU Dec $250 PUT Executed $16.40
SLD to Close 5 GGD KR GGD Nov $290 CALL Executed $2.10
Dow off 445; S&Pat 11-year low

Energy stocks pull markets lower after crude drops below $50. Citigroup falls below $5. A rally stalls after opposition scuttles a deal to help automakers. New jobless claims hit a 16-year high. Stocks to watch: Citigroup, General Motors, Ford Motor and ExxonMobil.

Wall Street sells off, S&P 500 at 11-1/2 year low

Stocks tumble for second day; Treasurys surge

Dems postpone vote on auto bailout

VIX 80.86 +6.60 +8.89%
SKF 262.45 +39.62 +17.78%
GOOG 259.56 -20.62 -7.36%
FSLR 87.23 -13.90 -13.74%
GS 52.00 -3.18 -5.76%
AAPL 80.49 -5.80 -6.72%

Wednesday, November 19, 2008

GOOG went down again today (GOOG 280.18 -17.24 -5.80%), along with the rest of the mkt. As I saw the stock down in the morning I was somewhat relieved. Last night I had this feeling that the stock will open up high in the morning. I had accepted taking a loss in my mind. Having seen GOOG move up almost $10 in the last hr of trading yesterday, I was very sure that it will keep moving higher in the morning. There was a sense of loss by 1. not selling when I could have early in the day and 2. puts further losing value in the morning.

After missing timely sell of this put at a goof profit twice before, I was really tempted to not miss the opportunity of selling it at a higher price this time. This thinking at the back of my mind really pushed me into selling quickly. If it was not for this was not for this background, I would have waited until the last hr (as I have been doing the last few weeks) and sold it at a higher price.

In other words I was trading today based on experiences from yesterday. I thought the stock will do something much like it did yesterday. In fact, after selling the put in the morning I was waiting for the stock to bounce near the closing today and I will be buying it again at a lower price. But in fact that did not happen, the stock kept moving down and the puts increased in price value.

After my successful sell in the morning, I felt somewhat proud of myself, by not missing out this time. As being successful this time I already had another trade figured out in my mind. I looked at the 5 day chart of GOOG and assumed (with great confidence) that GOOG (always) moves higher near the end of the day and then falls back the next morning. So all I had to do was sell now wait until the last hr buy back and sell the next day. I told myself that I finally had it figure out. The stock did bounce a little (not as much I was expecting) I did not buy. It did not move up again for the rest of the day and closed making another low.

Being disappointed at myself for missing a trade I had planned and waited on since this morning, I almost did a revenge trade on GOOG. I bought 5 call contracts. It was a very unplanned, reactive and impulsive trade. I know that GOOG sometimes spikes up for no reason. If that happens tomorrow this will prove to be a good trade otherwise it was just another emotional/irrational trade decision.
BOT to Open 5 GGD KR GGD Nov $290 CALL Executed $4.80
SLD to Close 2 GGD WT GGD Nov $300 PUT Executed $18.00

Tuesday, November 18, 2008

As I saw GOOG down -$10 in the morning I sold the calls to save what was left of them. The stock has moved down and since the calls had only 3 days to expire, I imagined that I should take whatever I can at this point.

I watched GOOG keep moving down later in the day, I moved fast to cover the puts I was short leaving the long ones and let it to appreciate in price as the stock moves further down during the final closing hr of the day. Once I did cover the puts at high prices the opposite of what I though would happen happened. GOOG moved higher, the puts, I had covered earlier, became more cheaper and the puts I held lost value thus deepening my loses.

reacting to every move

Today, my bad luck continued... after I cover my short @ $24 & $21 the option moved to ask @ $17. Imagining, that I could have covered it @ $17 made me wonder, every time I think the stock is moving down it turns around and goes up.

I am not really thinking very rational, I am (more like) hoping for the price to move one way or the other that is why I am always disappointed at the price movement. Even when I can see that the price is moving down I am hoping that it will reverse soon and start going up. That is why I am almost always wrong on the price move.

Not only am I predicting the price action incorrectly, I am also acting before the move does happen. I sell just before my prediction becomes true. Soon after, as I look in despair, my price target getting hit while I just sold out my position. This must be the ultimate 'Emotional Trading' that I am going through right now. I am reacting to every little move very impatiently.
BOT to Close 1 GGD WB GGD Nov $310 PUT Executed $21.00
BOT to Close 1 GGD WB GGD Nov $310 PUT Executed $24.00
SLD to Close 10 GGD KF GGD Nov $330 CALL Executed $0.80

Monday, November 17, 2008

In utter panic, that I have been after not taking the on GOOG's fall, which had piratically doubling my position, I have been trading mostly in panic. I was very disappointed in my self with the last trade, as it turned into a disaster for me. Missing a good opportunity by not selling after good gains. I have been thinking and wishing hard to somehow make the losses go away, but instead the loss is deepening and I seem to be doing everything wrong.

After GOOG went down a lot and I kept holding on to my puts expecting it to go down more (greed as usual), the stock immediately (along with the mkt) turned around and shot high. My heavy position holding puts which were killed by this sudden move. More then anything I was disgusted and deeply disappointed at myself for not acting fast. But even then, somehow I still kept holding on to the puts, still having a belief that the stock will turn down once again. The next day fearing another rally, trying as usual to resist taking a loss, and finally to get back at GOOG I sold higher strike puts against my position. Ironically, the stock did move lower today and the day before and would have reduced the damage by not doing anything just holding my puts.

Over the weekend I had thought about how to remedy this situation under different scenarios.

My plan was:

1. If the stock moved lower I will cover my short positing and leave the long ones. Early in the morning I did follow this plan and sold 2 out of the 6 short contracts while leaving the others intact. Later in the day I did sell another two, thus well positioning my self for the down move. However, when the stock fluctuated I panicked and sold almost all of the long puts as well and also bought 10 call contracts, fearing the stock is moving higher, leaving my puts worth nothing. Near the close the stock moved lower -$10 thus proving me all wrong and killing my account badly.

2. If the stock moved up I would benefit by covering my shorts at a lower price and also adding calls immediately, thus offsetting my losses in the put position. Unfortunately, the stock moved both up and down and I only reacted in a panic.

This time my account has taken a big loss, I have almost lost all my capital and will not be able to trade for a while.
BOT to Open 10 GGD KF GGD Nov $330 CALL Executed $2.65
SLD to Close 4 GGD WT GGD Nov $300 PUT Executed $8.50
BOT to Close 2 GGD WB GGD Nov $310 PUT Executed $16.00
BOT to Close 2 GGD WB GGD Nov $310 PUT Executed $13.30

Wednesday, November 12, 2008

I am still holding all my GOOG puts today. I did not place any order today or even look at my account the whole day. This is how I behave if the the position is going well for me. I avoid looking at the account on such occasions, lest I will be tempted to do something unnecessary. I believe since GOOG has broken down a major support level $300, it will keep going down in the near term till it finds a new support level. I will be eagerly watching to see what happens tomorrow and the day after. Both today and yesterday the stock has traded at 9- 10 mil shares vs daily avg vol of 6 mil.

This fall in GOOG couldn't have come at a better time for me for these three reasons:

1. I had several losing trades in a row in the last two weeks,
2. I had given back all the gains I made in the last month or so.
3. I had (accidentally) bought two many puts (6 contracts almost 60% of my account) on GOOG.

Hopefully, I wont be proven wrong and the stock will not reverse on me tomorrow morning. If it did that will be a huge disappointment for me, since my hopes are high for regaining some of my recent losses with this trade.

I do believe there is nothing certain in trading and especially in my way of trading. My trades can reverse at anytime and show a loss after being up several times in the past.
Treasury backs away from plan to buy bad assets

The Bush administration on Wednesday publicly backed away from using a $700 billion bailout fund to buy toxic mortgage assets as originally intended, and said it will focus instead on shoring up financial institutions with direct investments.

Stocks fall further on deepening economic woes

Best Buy cuts forecast as sales slump

Congress panel eyes $25 billion automaker loan bill

Dimon: Recession could be worse than market crisis

Google falls below $300 for 1st time since 2005
Google shares slid $22.27, or 7.2 percent, to $289.19. The stock, which traded over $700 as recently as last December, earlier hit a new year low of $287.76.

VIX 66.25 +4.81 +7.83%
FXP 172.98 +16.98 +10.88%
GOOG 291.00 -20.46 -6.57%
FSLR 110.06 -20.84 -15.92%
GS 66.79 -7.89 -10.57%
ISRG 161.94 -7.43 -4.39%

Tuesday, November 11, 2008

As I saw GOOG down -$9 in the morning I immediately sold my calls that I was holding since yesterday. I started to think that GOOG has broken the $310 support level and is heading for a further decline. This being at the back of my mind, I placed an order to buy 3 put contracts which was executed in few minutes. Later when I checked my account, I found to my surprise, that I had somehow bought 6 contracts of the same puts when I meant to buy only 3. I was confused and upset as I did not meant to keep my risk low.

After I bought the puts the stock moved further lower to being down -$15 at one point, but then reversed and ended being down only -$6 for the day. It moved from being down -$15 to down -$1 at one point and then moved down again.

The stock mkt also moved lower today for a while and the moved back up.

Today realized that mornings/opening times are very hectic these days. There are a lot of sharp movements in prices. Stocks are moving very fast just displaying the high emotions that traders must be going through at that time.
BOT to Open 6 GGD WT GGD Nov $300 PUT Executed $13.30
SLD to Close 3 GGD KE GGD Nov $340 CALL Executed $3.6
Economic worries weigh on markets

Gov't to announce new loan aid effort

Oil falls to new 20-month low below $59

A look at economic developments around the world

Health insurer stocks see sharper fall than market

Stocks drop as Tyco, Alcoa fuel economic worries

Stocks slid on Tuesday as production cuts at aluminum maker Alcoa, a dismal outlook from Tyco International and weak results at Starbucks underscored fears the economic slowdown will deepen.

GOOG 309.34 -9.44 -2.96%
BIDU 192.90 -18.38 -8.70%
FSLR 131.12 -7.38 -5.33%
FXP 75.31 +5.81 +8.36%

Monday, November 10, 2008

I got rid of the MA calls at very low price, taking a big loss on the trade. Although, my guess was right for the morning. The mkt infact was up early around 6:45am. MA was up too at that time. The calls were up quite a bit. Then I decided to wait for more upward movement. I told myself that MA has just turned around it will keep moving upward now for few days at least. But later in the day MA and the mkt as a whole turned around. I had to sell my calls almost at 1/4 of the price of what they were in the morning. MA ended up being down -$5 for the day.

GOOG was down a lot today too, at one point it was down -$20. I was watching and waiting for the calls to get lower and lower in price as the stock kept moving down. Near the close of the day the stock started moving up and was down 0nly -$13, at this point I decided to buy the calls feeling desperate to catch the upward move. In the morning I had set a limit order to buy 3 contracts for $5 when the ask were more then $12. Ultimately the calls came down to $6 I got my fill @ $7 for three contracts.

I am expecting GOOG to bounce off the $310 support, I waited for the stock to hit that level before I get in. It did hit $310 and then moved higher.
BOT to Open 3 GGD KE GGD Nov $340 CALL Executed $7.00

SLD to Close 6 MAL KM MAL Nov $165 CALL Executed $1.10

Friday, November 7, 2008

GOOG was not moving, it was not moving up or down (-$1). At one point it was down -$5 and then moved back up again. I thought it would go down again soon that fear resulted in me selling the calls at a loss. I did felt better as I cut my losses on this trade. I was too quick on jumping on the calls this time. I will monitor the stock on monday again.

After my MA calls losing more then 1/2 of its value the stock started showing upward movement. I thought my inverse inverse strategy has started to work on this. May be I was too quick on buying these calls earlier in the week. I also covered the calls I was short of earlier in the day. As I saw the stock up, I assumed it has turned around and I doubled my position adding 3 calls to the existing 3 contracts. MA was +$4.5 for the day.
SLD to Close 3 GGD KE GGD Nov $340 CALL Executed $13.00
BOT to Close 3 GGD KN GGD Nov $370 CALL Executed $5.00

BOT to Close 3 MAL KO MAL Nov $175 CALL Executed $1.30
BOT to Open 3 MAL KM MAL Nov $165 CALL Executed $2.40
Stocks are higher despite jobs data

The unemployment rate hits a 14-year high of 6.5%, as the economy shed 240,000 jobs in October. Revenues plunge at Ford and General Motors. Microsoft's chief says the company is not interested in buying Yahoo

Pending home sales fall, tight credit bites

Financial rescue not yet done: Treasury's Kashkari

MA 147.73 +4.43 +3.09%

Thursday, November 6, 2008

I sold the FSLR puts, the stock was down -$9 for the day, it kept moving down today like yesterday. In two days it has dropped more then -$35. This steep decline had an impact on my decision to sell the puts. As soon as I saw that the stock down this morning, I was delighted and was ready to sell. I watched the stock all day, as it moved down -$13 at one point, but I did not sell, waiting for it to go decline further (as usual greed).

MA has been on a decline as well. It closed down -$12. I am still holding to both of my long and short call contracts, hoping the stock will turn around tomorrow. With this trade I am hoping that my inverse strategy will ultimately work as well. If the stock moves up a little in the morning I am going to cover the short contracts and double on the long ones.

I have an overall bullish bias for tomorrow (I think the mkt has declined a lot in the last two days and should rebound tomorrow or Monday, as it usually does). With this thought in the back of my mind, I bought some GOOG calls near the close of the day. I also protected the position by selling some OTM calls against it.

Soon after buying the calls I felt like I had jump too quick on this, may be I should have waited for another day or two to see which way GOOG moves and then apply my inverse strategy.
Dow drops 443as slump deepens

The Dow's 2-day loss is its worst since 1987. Big drops in retail sales and weak forecasts from Cisco Systems, Toyota and News Corp. signal a weak economy well into 2009. Crude oil drops below $61. Stocks to

Wall Street sinks on retail sales, Disney drops late

GOOG 331.22 -11.02 -3.22%
MA 143.30 -12.57 -8.06%
FSLR 143.60 -8.49 -5.58%
ISRG 174.36 -12.36 -6.62%
FXP 101.99 +14.99 +17.23%
VIX 63.68 +9.12 +16.72%
SLD to Open 3 GGD KN GGD Nov $370 CALL Executed $4.80
BOT to Open 3 GGD KE GGD Nov $340 CALL Executed $14.70

SLD to Close 6 QHB WH QHB Nov $140 PUT Executed $12.00

Wednesday, November 5, 2008

I sold the GOOG calls at a loss, instead I could have sold it at a good profit yesterday, but I did not. I was of a very bullish mind set yesterday. GOOG went down -$25 for the day. This morning when I saw the indexes down, I was really shocked and wanted to cut my loss as much as I can. First thing I wanted is to lighten up on the long side quickly.

MA has gone down -$14 today, the gains I had in the calls yesterday are gone. Near the end of the day sold 3 calls, against the 3 call contracts I am long, out of fear of further decline.

Adding to FSLR puts, doubling the position yesterday had really paid off today. The stock is down -$25, the puts has almost doubled in value. It has really saved my account today from a complete disaster. Although I was very hesitant of keeping the puts and, as I tried to sell them near the end of the day yesterday. I was disappointed in myself for holding on to the FSLR trade yet today I was proud. What has prevented me from holding on and until the puts ultimately worked as selling lower strike puts against it.

There are two lessons in the FSLR trade: going inverse, i.e., buying puts when the stock was moving higher. Selling lower strike contracts gives me hope, reducing my fear and helps in holding to the position until the stock turns around.
SLD to Open 3 MAL KO MAL Nov $175 CALL Executed $2.80

SLD to Close 3 GGD KL GGD Nov $360 CALL Executed $14.00

what happened here?!

I had a very deep conviction yesterday that the bear mkt was over. The election was over. All the reasons for the stocks mkt to go down were not there any more. I strongly believed that the stocks will only be move higher and higher from now on. I even told my friends to buy as much stocks as they can, "the stock mkt will make a strong move higher" I said to a couple of friends last night, adding "put all the money you have into stocks right now!".

In my mind of minds I was calculating, multiplying my gains, the amount I will make on each position I have and what not. I even felt somewhat left out for not buying enough! The thought, that the mkt will be going up in one direction only from now on, seemed boring. I felt I would have nothing to do day in and day out.

The mkt will always surprise me.

Tuesday, November 4, 2008

As per my 'hunch' GOOG went up $20 today. My calls play went well. It was very obvious that the stock mkt was going up today, as the uncertainity about the election will be over today. As for GOOG it has gone down alot form $550 --> $350 and it very natural that it will go backup.

FSLR is still a loosing trade for me, it keeps going up. Every time I think it has gone up enough it moves up more. It was up $15 today. As usual, for my inability to deal with loses, I added 3 more puts to my position doubling my current FSLR position. At the back of my head I am thinking that if the stock falls, I will quickly recoup my loss and even make some profit.

I bought MA calls for two reasons, it was up a lot in the morning $16 when I checked. The news MA has reported MasterCard shares soar on 3Q quarterly results. This report and the general bullish environment, yesterday and today, I thought the stock is very likely to go higher today. MA was up $26 by the close my calls almost doubled in value.
BOT to Open 3 QHB WH QHB Nov $140 PUT Executed $4.60
BOT to Close 3 QHB WT QHB Nov $100 PUT Executed $0.50

BOT to Open 3 MAL KM MAL Nov $165 CALL Executed $7.60
Stocks surge on Election Day

Wall Street rises as end of election brings relief

World markets surge as America votes

Wall Street shrugs off weak economic news

Stocks that might win with Obama

VIX 47.73 -5.95 -11.08%
BIDU 234.62 +29.90 +14.61%
FSLR 177.52 +15.61 +9.64%
GOOG 366.94 +20.45 +5.90%
MA 170.24 +26.35 +18.31%
FXP 75.20 -10.80 -12.56%

Monday, November 3, 2008

As per my prediction GOOG did fell to almost -$17 at one point today but reversed and ended -$13 for the day. I sold my put for a profit and was happy with this trade. However, I bought 3 calls on GOOG using the same reverse strategy of buying calls when the stock is down and buying puts when it is up.

Although, I believe I hastened the move, the last trade worked because I waited for a few days after the stock has gone up and let it come down a little before buying puts. I also bought only one put the last time but this time I bought 3 calls. The reason I was being so bullish is that of the environment at the time. In two days the election will be over and everyone thinks there will be a rally after the election. I don't want to miss that rally.

FSLR trade has gone into a loss the stock was up $19 for the day. It seems to be unusually strong this time. I could not get out of the trade today, hoping the stock is fall soon but instead it kept moving up.

I am unwilling/unable to admit that I was wrong about FSLR and take a loss. I am still hopeful that the stock will go down tomorrow and I will recover my losses.
BOT to Open 3 GGD KL GGD Nov $360 CALL Executed $14.00
SLD to Close 1 GGD XJ GGD Dec $350 PUT Executed $32.00