Summary – Wednesday, 2008.III.19.

An easy trading day today personally, as the carnage resumed on Wall Street.  The bulls needed a decent follow-through day, but they shit the shower instead.  Now that commodities have crashed as well, what else is left?

With the short week due to Good Friday, I didn’t open any new positions and just tried to make some decent profit off my existing ones.  This wasn’t as successful as hoped for. 

The plan for tomorrow will be much of the same (I don’t want to hold anything substantial over the 3-day weekend), although I will look to potentially take a few scalps in expiring options.  More on that later tonight.

DP Sells:

• Sold the ‘call’ leg of the [[JCG]] straddle as the market turned sour. 
  • Profits will be made from the ‘put’ leg.
• [[EOG]] stopped out for a standard loss due to the asshattery going on in commodities/energy/oil/etc.
• Closed out the remaining ‘call’ legs of the [[GOOG]] & [[RIMM]] straddles.  RIMM never worked out and took the loss.  GOOG could’ve been profitable, had I pulled the sell trigger earlier in the day.
• Sold [[NG]] straddle near the close.  NG took a shellacking today:  booked a 500% profit on the ‘put’ leg!

Was going to post some expiration-week options strategy, but then I got sidetracked with some footy business. Or as JakeGint would call it, dirty-commie-ball.

It has quietly become a wide open race in the Premiership, as Arsenal try to do everything in their power to throw it away. Did you take the handbrake off yet, Wenger? Maybe you should play that Bendtner kid some more.

Both ManU and Chelsea are in action tomorrow (Wednesday), so we’ll all be back on even games heading into the huge Chelsea – Arsenal matchup of the weekend.

In fact, Chelsea haven’t lost in the league since playing the corresponding away fixture back in December… We were almost out of the race then, but now have gone undefeated in 12 straight, with only 6 points dropped. As my boy Joe Cole puts it, we are ready to strike from the shadows!

But first, it’s onto Spurs to avenge that terrible Cup defeat. Let’s go boys, let’s all laugh at Tottenham!

NOTE: Options article coming tomorrow.

Yet another Super Tuesday to light the short on fire. Not even the less than expected 75bp rate cut could dissuade the bulls, and we ended up beating last Tuesday’s effort by 5 points.

In a moment of hung-over clarity, I went long a bunch of calls this morning, while selling all my puts, thus booking about a 13% gain on the account by the end of the day. Sure makes the green beer aftermath a much more pleasant experience.

DP Sells (Morning):

• Puts in [[CMG]], [[MOS]], [[STR]]. STR was a ‘standard’ loss (2%), the other two ended breaking even.
• Calls in [[FXY]] got stopped out on the 30% trailing stop for a decent gain.
  • Somebody explain to me how the dollar gained against both the Yen and the Euro on the day The Fed cuts 75 points??
• Sold the ‘put’ legs of the [[GOOG]] & [[RIMM]] straddles, booking losses on both. Will let the ‘call’ legs run while the bulls are winning.

DP Buys:

• Calls in…<deep breath>…[[EOG]], [[GBX]], [[HES]], [[KCI]], [[PCLN]], [[WLT]].
  • Then I went back to sleep.

(A few hours later) DP Sells (just ahead of The Fed):

• Turned GBX, PCLN, WLT into daytrades.
• Also sold the [[TUP]] calls from last week.
  • These were my 4 biggest gainers of the day, so, expecting a ‘sell-the-news’ scenario, I wanted to book the profits.

An excellent 7-diamond day overall. It leaves me 100% long, with 2 straddles, in [[NG]] & [[JCG]]. This could require some quick action tomorrow morning, should we not follow through on today’s massive gain.

Apparently I make the best trades when I’m hung over from profuse amounts of Stella.

While I usually prescribe to the ‘don’t drink & trade’ rule, calls bought this morning in [[GBX]], [[PCLN]], [[WLT]] are ripping.  Hooray Beer!

But I guess it’s now time to sell them all, ahead of the Fed.

Quick summary today as there is much celebrating to be done.  Including a beer for Danny.  Plus, some drunken debating on who’s going to triumph in March Madness.  Think you know more than me?  Then back up the talk by entering the iBC March Madness Pool!

Anyhoo…today was a perfectly fine example of the George Costanza Market that we’re in right now:  on the day that one of the oldest/most venerable financial institutions collapses, the Dow finishes in the green!  Nonsense.

The Nasdaq took a beating though, which works perfectly fine for my [[GOOG]] and [[RIMM]] straddles.

DP Buys:

• Calls in [[CPO]], anticipating a breakout above $39.  Also:

  

• Calls in [[FXE]] and [[FXY]], as mentioned yesterday.  The dollar is going to get weaker yet again with tomorrow’s rate cut.

• Puts in [[CMG]], [[MOS]], [[STR]].  CMG and STR were ideas from OA’s Weekly Watchlist.

DP Sells:

• Closed out long straddle in [[TTWO]]-(loss) and the short straddle in [[TMA]]-(50% profit).

• Sold calls in [[PALM]] & [[GME]], as well as puts in [[CWST]].  PALM was a minor loss (small position), while the other two ended decently profitable.  Although, CWST was a lucky trade, considering their option volume is very low…

Sorry, BOOM, I stole the title. However, it is quite appropriate. No point in me rehashing the news…reading The Fly’s post should be more than enough.

Tomorrow, I plan on drinking copious amounts of green beer in celebration of the Greatest Drinking Day This Side of Cinco-de-Mayo. I’m assuming many others will be joining me, some in celebration, some in desperation after they will have given their 401k balances over to iBC readers.

Other plans:

• Close out long calls. No need to risk such things right now.
• Ride long put in [[CWST]]. Sidenote: don’t trade options with such low volume!
• Close out short straddle in [[TMA]]; volatility does not play well with it.
• Ride long straddles in [[GOOG]], [[RIMM]], [[NG]], [[JCG]], [[TTWO]].

As far as new positions, I like The Fly’s plan. And I quote:

Long gold, via [[DGP]] or [[GLD]].

Short dollars, via [[UDN]]

Long Yen, via [[FXY]].

Sadly, only FXY has options. So here are some options plays, more or less corresponding to the others:

• Long gold via [[GDX]], [[^XAU]], [[XME]].
• Short dollars via [[SKF]]? I’m not really sure if there’s a better way out there. Maybe [[DBV]]? Might as well just go long Euro via [[FXE]].

None of these are really ideal ‘stocks’ for options; their volatility is either too high (ex.: SKF) or too low (ex.: FX*). But in the current market conditions, low volatility may not be such a bad thing…thus, ITM options in FXY & FXE seems like a good idea to me…