The heart-ache with AAPL continues!!

40% YTD gain. Unbelievable!! The amazing run continues....waiting for pullback!

AAPL seems to be single-handedly keeping the markets alive. The hype on iPad/etc is continuing. It's like tulip mania.

1 percent trade

got into the following trade on last Friday...

 bought 2 GMCR(@69.4) Mar 55 calls for $14.8 [looking for a 5.2 (35%) profit and a stop loss of 1.8(12%); 3/5/2012 will be deadline; So allowing 2 weeks for this to play out]

currently on Tuesday; 11pm EST it's @70.75 ($16.2). So it's going good.

close of the option trade...with a 35% gain!

With the market way overbought and the FAST overbought, it's best not to press your luck :) So decided to get out of this after slight run up in the FAST in the morning today even though market is down lil bit. So closed as follows for a 35% profit in less than 2 weeks ( week and 2 days to be precise).

sold x FAST May 40 calls for 11.7 [11.7-8.7 = 3; 3/8.7 ==> 34.5%]

Of Course, this is not substantial amount as only 1% of my portfolio was deployed. But then, the risk in the trade was also very less exactly for that reason :)

update on the recent [1%] option trade

Looking good after a week. FAST is nearing $50 and look at the graph tells me that this still has legs and is in a nice uptrend! So option price today has also spiked and it's currently @10.2; that's a 17% return in 1 week. So will keep holding the following option...
x FAST May 40 call for 8.7 [3/5/2012 will be the deadline; currently @10.2; +17% in a week]

The heart-ache with AAPL!!

I was in this when the earnings came out although in a hedged kind of position (as follows)

bought x shares for 425
bought x 450 2013 puts for 63

Apple came out with earnings that blew expectations and I immediately got rid of the entire position for some profit as follows:
sold x shares for 452
sold x 450 2013 puts for 52

As you see, made a good profit in one night. But I had this nagging feeling that Apple is going to go higher, way higher. I grappled with what to do that night...should I just get out of Put and let it run. However, had this feeling that it may pullback before going higher.

Now, today Apple is at 487 and it looks like it will test that 500 before pulling back! As expected it did pull back to 440 (but was hoping for it to pull back to 420ish to enter). The graph looked expensive, overbought. Well, if you look at graph now, it's way overbought. There in lies the dilemma!!

However, there was something I should mention...I was reading the latest FORTUNE magzine edition and in it there was an article on Momentum investing. And this top hedge fund guy (forgot the name) was mentioning how when the news comes on Mo stocks, usaually they don't move all the 100% of their move, rather they move 50% of their potential on the news breakout and then over the next few sessions will slowly climb to realise their 100% potential. I read it, but I didn't connect the dots w/ the Apple earnings and move. How true he was!! If only I got in back on this one when it crossed $460. 420-460 was immediate earnings related move and the next 50% move seems to be from 460-500!!

So I'm sure Apple will climb to 500, but just afraid that it's too late to get in at this time, but will wait for it's eventual pullback to test the moving average :(

1 percent trade

going to get my feet wet with the following small option trade:
- Bought x FAST May 40 call for 8.7 [3/5/2012 will be the deadline and hoping for a 80% gain with a 20% stop-loss ]

waiting for that buying opportunity...

I don't see any reason to jump into the market. So going to stick to staying mostly in cash. Staying in VMLTX - the limited term Tax Exempt Mutual Fund - is equivalent to staying in cash for me...

• No blood (oversold conditions) in the market.
• Way overbought when you look at any chart.
• Of course, we may be in overbought territory for a while and miss some opportunities, but that's ok..
• Europe crisis(PIIGS) not resolved yet!

Facebook IPO

is going to be filed today. There was a trade that I could've made sometime back on similar social networking players. There's LNKD (Linked In). I would've brought some near-term calls in anticipation and sell on news when it broke out in WSJ on Monday. Now it's too late. There's too much hype...stay away from this for atleast a year and once some kind of trading patterns are formed, we'll play it then - my 2 cents :)

idling by with respect to trading

Market seems to be running on all cylinders this new year. However, I'm just not active and lagging the market. Well the year is just upon us and long way to go.
I'll be updating the current research page. check it out and use it for your own trading purpose.

will be taking a break till middle of 2012

Since we're going to be busy preparing for Soumya's JIT, Nationals and Pan Am tournaments till July 22, I'll be taking a break and won't be active unless I see something very compelling. Happy new year!

no action...

- will continue to be on sidelines

- did some chart reading, etc over the weekend and made notes in the "Current Research". check it out in the "Pages" section to the right if interested.

- unless I see something very compelling, I'm not going to do much for the rest of the year.

update

will wait on the sidelines till many factors lineup...I don't see any compelling reason to trade technically(looking at charts). Markets getting spooked [see the VIX, it's ratios of puts to calls; which measures volatility, is trending up from yesterday] over tomorrow's meeting in Europe...

Monday, the 5th(Dec)

going to stand to the sidelines...Feeling very tempted to make some trades as the mkt is trending higher and don't want to miss santa rally!

However, may take small positions in buying puts in AMZN/CRM if they cross 210/125 respectively. Will definitely buy calls in (ISRG/CMG??) others to balance out these position when taken. will see...stay tuned :)

some weekend reading and observations

AAPL - resistance at 410 and support in the 365-375 range.
SBUX - big article in Fortune magazine; @44 - closer to 52-wk high of 44.7; short-term support at 42 and good support at 41/39;
ISRG - @434; window to the upside at 395-410 on 3*avg vol; recently tested the window when it dropped to 410 and rebounded to its current level;looks like need some digestion of the recent run up.
AMZN - @196; 52 wk high of 247; big window to the downside[225-200] on 4 times volume. so this is no going to go any higher any time soon...rather it'll trend down! has good support around this 185 level though, so can short this one around 205, with a stop loss cover of 220-225 range. good for a pair trade.
CMG - @330; is in a nice uptrend; altho having difficulty in taking out the 345 price level having failed to cross that in previous 3 occasions. so till it crosses that price action, tough to get in...altho should say when it does will run as consolidating for the past 5 mo's in this 300-330 range.
CRM - @120 and is in a downtrend w/ a P/E of 4700! [compare that to the AAPL p/e of around 14]; downside window of 125-120 w/ huge congestion around the 130 level. so can be shorted around current level with stop-loss around 130 level.
MCD - @96; good support at 90 and 86-90 band;recent pullback halted at 92; window at 90-91;
MA - @379; solid uptrend; about a third of the world's credit card bear mastercard's brand; recently gave a clear signal (hammer) at 300. Should wait for a signal like this!
BIDU - in a downtrend.

covered call exited

Exited the covered call as there is no point in waiting for 2 more days:

call bought @15.4 and AAPL sold for 385.55 for a net $4.41 profit (which is more than what I'd get [$4.26] if I wait for the cov call to expire on Dec 2nd)

% wise ==> 1.2% for around 3 weeks amounting to around 15% annual return....Yahooo :)

Borrowers (West) vs Savers (East)

Right now this is the fight that's going on....It's interesting (and will take time) to see who'll win!

Borrowers (see PIIGS and other postings below) have come to point where living beyond their means is not becoming easy and getting difficult more as each day passes and interest payments are getting due. The current euro-crisis and upcoming crisis in US is a testimony to this fact. Instead of cutting spending (slowing growth ofcourse) and raising income (by raising taxes, raising import taxes at ports, etc) which are both painful, western countries are postphoning these actions and taking the easy path (which is kicking the can down the road, i.e borrowing more )!

Savers (east, primarily, china and india) are watching in horror and saving more for the coming eventuality!!

silent QE3 easing!!

Yesterday's fed actions to lower the cost of currency-swap shows another trick the Fed has done to pump more dollars into the system, thereby lowering the dollar value (eventual higher inflation) and pinching the savers :(

The move can be interpreted as a loosening of the entire global monetary policy. By allowing other central banks to swap into dollars at a lower rate, the Fed allows these other central bank's currency holdings to be adjusted dynamically at a lower cost.

My take is even though stock mkt rallied, eventually it'll run into headwinds as the overall malaise of excessive debt (world, specifically Europe, drowning in debt) was not addressed.

So what can be done. Ideally buy gold and short dollar. At some point will enter into GLD (gold) as hedge against inflation and maybe short dollar by buying UDN. Will post when I take these actions. For now the covered call on AAPL is working perfectly and the probability of profiting from this trade is looking more than 100%. So maybe, will get into GLD, etc somewhere next week when AAPL covered call will be over? Not sure at this point...

Status of the covered call

Here's the whole story on the covered call initiated sometime back.

1. On 11/11/2011 bought x AAPL @384 - sold y Nov 18th 375 calls for $12.6;On 11/14/2011 covered call [bought back as stock was dropping] for $8.74; Net profit of $3.76
2. On 11/14/2011 sold y Dec 16th 360 call for $27.16; On 11/22/2011 bought back y Dec 360 call for $22; Net profit of $5.16
3. On 11/22/2011 sold y Nov 24th 375 call for $3.5; On 11/23/2011 bought back y Nov 375 call for $0.4; Net profit of $3.1
4. On 11/23/2011[wed] sold y Dec 2nd 370 call for $6.26

*** 3.76+5.16+3.1 ==>  $12.02; Bought price came down to $372 because of all the actions[1,2,3] above, but at the same time stock has continued to drop to $370 level. ***

[more than 1 week away; 5 1/2 days only since Thursday is holiday and Fri is 1/2 day]
if called profit of 6.26-2==>$4.26[3k]; break-even of $365.7; currently stock @369
    a) On wed, 23rd call closed @5.7 and stock closed at 367
    b) On Fri, 25th morning @6.2 and 370,
               but at 12pm; @3.6 and 364.3 [very volatile!!];
                at closing; @3.3 and 363.6
        - Hole is becoming deeper and deeper. Down by 5 pts!AAPL right at it's 200 day MA!!
    c) On Mon (after thanksgiving), things are looking positive again with Mkt sitting at 300+. Appl also crept back and position is currently @7.6 & 374.75
                  update --> @8.5 & 375.9;
                             @8.4 and 376
        - cheerful again! as very likely that it will stay above 370 by Fri close. But then cautiously optimistic as it can all go sour based on bad news from Europe. That's how bad things are!
    d) Tue; @9.7[-3.4] and 378.4[+6.4]===>+3 @10:30am and mkt at +90. Looks like we're out of woods on this one :)
                             or we're not @5 and 372 and mkt @60;
                             @5.9[+0.3] & 373.8[+1.8]; at close.       
    e) Wed; @11[-4.7] and 380.4[+8.4]

Debt, Debt, Debt

I always worry about what will happen when creditors simply stop lending money to US! Right now for every $ spent, 50 cents is borrowed money!!

When Washington can no longer borrow it has to slash spending! Not send those checks to many groups [senior citizens, medicaid, etc] Thereby bringing fear to masses.

Will we see rioting? Will immigrants become a target?

Financial Armagaddon? Economic and political death spiral?

Should USA be rated a 'C' rather than AA?

Remember no one believed Soviet would collapse so spectacularly. Remember no one believed an attack like the 911 would happen!!

What are the precautions that one should take to weather the coming storm? And even if that storm turns out to be less severe, how could we make some money in the process having all this knowledge than the average Joe in America?

US Treasury holds every 2 weeks 30-year bond auctions and also shorter-term auctions. When creditors don't show up, we know the storm has come!!

- Buy some GLD/SILVER
- Hedge against Financial Loss.
- Buy Puts on stocks that will likely crumble when the storm comes!

update...

just tracking the prices as AAPL moves....Today when it's at 384, call was at 30 and later on when it's at 388, call was at 33.