8 results for tag: panic


Jan 20 <> Down 400 again…….

In my options portfolio, I track the available cash by subtracting the value of all the short puts (as if they were exercised - because they might be) from my cash. Today, that leaves me about 25% in cash. I don't want to go any lower, so I will only be selling premium (calls) against the portfolio until cash is back closer to 50%. I never use margin, I'm not smart enough for that. My account value is down about 5% since Jan 1, while the S&P is down 9.4%. If I was a mutual fund I would run an advertisement trying to convince you that is good performance. I'm not going to convince anyone that a 5% drawdown is good. I don't like to see it, but it ...

Jan 13

After closing the WalMart puts for 5 cents, we waited until a day when WMT was down 1%. We got it Tue and Wed and have a new position that is short three 63 puts, expiring Friday. This position needs to be rolled now, on Thursday morning. We have placed an order to roll this out for one week at 48 cents and subscribers will be getting the price adjustments as we click them lower during the day. We like to try and roll weekly options on Thursday so we avoid getting pushed into the last few hours of a contract. The market makers know that you want/need to roll on that last day, so pricing deteriorates. Sometimes we end up rolling expiring weeklies on ...

Ignore it.

The market is up big one day, and then down big the next day. We try our best to ignore it and trade according to our plan. You know Warren Buffett always says that he doesn't pay a lot of attention to daily market swings. That is not his plan. He buys good companies cheap, and waits patiently. Of course, he has enough power to influence the Board and the operations of said companies, should he choose to do that. On the other hand, some people DO trade the daily swings, and that is their plan. They like the excitement of the quickly moving game. This is the game that most people fall prey to - and they lose everything as they watch their account being ...

What to do on a big down day?

Trade according to your plan. Ignore the noise. Know exactly how your account makes money, and keep doing it. You cannot see your account value increase every day, or every week, or every month. But, you can take correction periods like this one and do the things that set you up to make a lot of money when the selling ends, which it will. Look for opportunities. Today, we increased our new XLB position and it's now down $167. We adjusted our WalMart position by rolling all of our short puts out to the MAY2 weekly expiration. That position is now down $520 with continuing daily time decay of about $27. Please stay tuned for the lessons that will ...

New trade opened today.

We look for things that are obvious, without listening to all the talking heads. It's so easy to be distracted by the noise on the TV and in the financial press, and you can miss things that are staring you right in the face. Today was a nasty day with the DOW down 1.6% and the NASDAQ down double that, or 3.1%. It would seem that the train has come off the tracks. However, when we look at the relative strength of the Select Sector SPDR's, we see an interesting dichotomy. Outside of the XLU, which has the best relative strength due to the selling (and the flip-side buying of yield) we notice a different picture. The XLB (materials) and the XLI ...

Gaming the market…

Some headlines from the press tonight: "...any rebound may be short lived", "...the shakeout in stocks is likely to persist", "...scared....get out of stocks". It's hard to find anything positive - so you would think the markets are falling apart. But, what has changed lately? Little. If we go back just 3 weeks to March 19 when Fed Chair Yellen issued her "6 months" comment, we have gone nowhere at all. The DIA closed at $162.16 today, and on March 19 it closed at $162.19, virtually the same level. There has not been a surprise structural change. Everyone knows that the Fed is getting out of the QE morass. I guess you could guess that maybe her ...

Staring down dragons…..

I like to use the Deep Pocket Options blog to teach a little bit about how traders think. The market has been down in a somewhat disorderly way since the third week in January. There has definitely been some panic selling in certain symbols and sectors. Retail is down big (we trade the XRT), Boeing has been sold off savagely, just to give a couple of quick examples. Downturns like this one, where there is no clear reason for the fear but many cloudy speculations about the future, are usually great opportunities. There is an old Chinese proverb that goes something like this: "When you see 10 dragons coming down the road, 9 of them will never get to ...

Market Panic? Trading Options? The Fed?

The Fed was pushing up the markets over the last few years. They were right, and have been right all along. The doomsayers were wrong. Now, after being right for 5 years suddenly the Fed has it completely wrong, ---or right, ----or they don't have a clue. It's all BS and the truth is that no one knows what the future brings. We must choose to trade based on history and experience and use this knowledge to gain our edge. This kind of market, where the DOW is down 300 and the S&P is down 400, is a newsletter writer's dream. Panic sells and you can be expecting to be contacted by lots of publishers over the next few days and weeks. They will be ...