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John The Trader for Friday November 7th 2008
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John The Trader for Friday November 7th 2008
Yesterdays S&P Close
The S&P Falls from resistance and heading down groping for support along the way.€
Below the Russell 2000 or the RUT.
Update November 7 Dow poised to open higher at 7:53 futures are pointing to a 80.00 to the upside. The Russell will follow.With the VIX up above 50's :) 6 days left on European Option Trades still lots of premium to be had but be careful with these giant swings. Looks like we called this one right on time with the Russell now falling. I'd hold off to see how far this market falls before entering the otherside of trade completing condor the 610 620 position is looking better all the time.
Buy to open the November 620 RUT CALL Sell to open the November 610 RUT CALL. Practice trade till you are confident. Should be able to pick up a .70 cent credit. or 700 dollars on 10 contracts. Wait for market to fall then add PUT side to complete an iron condor.
Added Nov 6th 12:38 est
We're 100 pts away from Call Positions. Would love to get into Nov 370/380 position but not enough credit yet looking for .70 cents. If you entered top side of trade this is free money no maintance. We'll keep watching :)
Want to learn how to trade these Credit Spreads? Take our class and we'll have you trading them in no time. Earning up to 15% return on investment each month.
These trades require what is called maintenance, an amount of money held by broker until trade expires. The maintenance on a credit spread is $1.00 per point on the amount of points between the strike you bought and the one you sold. If you bought the 45.00 put and sold the 50 dollar put there is a 5 point spread. Each contract would require 500 dollars maintenance. The premium is immediately transferred to your account and available for with drawl. However the maintenance is held till the position is closed.
There are 2 kinds of credit spreads 1)American style options, these are the most common style option and they are on equities, also there are 2)European style options, these have no underlying stock they are against an indices it.s a pool of money, the European style options you can not be assigned because there is no stock instead they do a cash settlement, On the RUT Russell 2000 or on the SPX S&P500 the last trading day is the Thursday before expiration Friday and they settle on following day towards end of day. Basically they settle at the opening price on that Friday however since not all stocks open immediately the settlement takes a few hours. You can also watch the settlement figures in your live market software by typing in symbol RLS for the RUT or SET for the SPX. The beauty about the European style option is since you can.t be called out or put the stock. If you have an iron condor which is both the bear call and bull put position they only charge maintenance on one side since it.s not possible for the European option to end up in the money on both sides of trade.
Below a snap shot of end of day candle for yesterday the 5th. The DJI expected to open lower by 120 pts based on futures vs fair value.
November 14 NOTE:Update: 12:00 EST. We are still working on developing the back end of this site. Until completed enjoy the charts news off the wires and realtime quotes. Hope to have site fully functioning in next several weeks. Thank you for your patience
Dow up 185 points in early trading. Stocks are making solid gains in the session's opening minutes. Eight of the ten economic sectors are trading higher; only financials (-0.4%) and consumer discretionary stocks (-0.2%) are trading lower.Futures were pointing to upside this morning at 8:00 AM EST This could change when the employment numbers come out in a half hour. As jobs are lost consumers spend less look for significant impact on Market today based on Employment report. Economists expect October to mark the 10th consecutive month of payroll declines. Futures seem to indicate the bad news is already priced in.
Employment Report 8:30 AM
8:40 am The national unemployment rate now stands at 6.5%, which is up from the 6.1% unemployment rate reported last month. Economists were expecting an unemployment rate of 6.3%
Pending Home Sales 10:00 AM
wholesale inventories 10:00 AM
Consumer Credit 3:00 PM
Pick nov 6 ABK, Low cost optionable security beat to the ground by Moodys ratings even after they provided all documentation moodys requested. Chanelling nicely and near or at support as of Nov 6 11:15 am EST trading at $1.50.
ABK: Nov 6 11:24 est am. Just bought 2,000 shares @ $1.46 and sold the December $2.50 CALL for .25 20 contracts returned $500.00.
Ambac Financial Group, Inc. (NYSE: ABK) (Ambac) today commented on Moody's announcement that is has downgraded the rating of Ambac Assurance Corporation (AAC) from Aa3 to Baa1, developing outlook. David W. Wallis, President and Chief Executive Officer commented, "It appears that this rating action has been precipitated by our earnings announcement. It is disappointing that Moody's has come to a ratings conclusion without the benefit of completing its own analysis of our portfolio."
SOLF,JASO,FSLR-- Jaso closed on Friday around $4.85 the December $5.00 call returns a premium of $1.10. One might consider buying 1,000 shares for $4,850.00 watch for opening price. Then sell the $5.00 December call 10 contracts returning $1,100 premium. Effectively reducing price of underlying by the premium amount. Purchase stock on margin and make incredible return.
Update November 6 When this trade was posted Monday morning at $4.85 we advised to enter a covered call two days later its trading at $6.40 You would of made maximum profit .15 cents on stock move to $5.00 plus the premium should be yours of $1,100 for a $1,250 return.
With the markets declining now hoping you got out with profit. There will soon be another great entry point for Covered Calls after Market finds buyers and support.
By John The Trader
Possible straddle play please practice trade these till confident. Set contingent order to buy the MAY CALL if UPS opens up .50 cents greater then its Friday Close of $53.00. If UPS opens down over .50 cents from Fridays Close purchase the PUT for May 50.00 strike. If it opens up or down and triggers contingent and retraces below or above Friday Close of 53.00 buy the opposite direction. Get out when you have made 10% on however many positions you are holding.
Updated Nov 4 Had you entered the above trade when posted you would be in great shape as the UPS option is almost in the money
If you are interested in learning this well tested trade which works great in this current market with incredible accuracy. Includes a trading plan so you know every move to make at any time after entering trade. Will also send you list of options that meet criteria and picks for following day Market. Very High profitability if you follow exactly plan will win on 90% or money back.
The majority of our teaching centers around trading options before we can proceed, you need to understand what exactly an option is. An option is the right but not the obligation, to buy a specific equity at a specific price before a specific period of time. Read over and practice the following information it can be confusing when first looking at it. The specific price is called the strike price. The option will expire on a specified month the third Friday of the month is the last day to trade them, however the true expiration is the following Saturday at midnight. Options only trade during market hours unlike stocks the stock may move in value after the close of trading on the 3rd Friday. You are basically buying and selling the right to buy or sell a stock. You buy Calls if you believe the stock is going up. Bullish strategy You buy Puts if you believe the stock will go down. Bearish strategy If a stock is trading at 100.00 a 100 Call or Put is called At the Money. A 95 dollar Call is In the Money. A 95 dollar Put is Out of the Money. A Strike price of 95.00 was used in the previous scenario. Depending on the price of the equity/stock options are available in 1 dollar 2.50, 5.00, and 10 dollar increments. Call as the underlying stock moves up in value the value of the Call also rises. Put as the underlying stock moves down in value the value of the Put moves up in value.
If you are a beginner and want to learn to leverage high priced stocks for very little investment you can learn the basics of Option Trading we have video and text for you to follow through with all included in our package
A donation of $20.00 I'll reply with my list of straddles, and covered calls I'm watching. One good trade could make you thousands :)
Date Time (ET) Statistic For Actual Briefing Forecast Market Expects Prior
The Dow Jones Industrial trading sideways seeking direction. Watch for buying opportunities at the 3/17/2003 levels break out above the rectangle, or shorting opportunities at resistance.
