OA Buys

I trust you all had a great holiday break. Let’s dive right in…

I took two positions this morning: Dec 55 CRM calls, and GURE shares.

Trying to get on base with these, missed GOGO and PRAN out the gate this morning. My watchlist was posted in the comments last night, and will be my main focus for today and tomorrow.

More later,

OA

I picked up shares of GRPN and URRE today, and bought some Dec CTRP calls.

As you take to the shopping isles this Black Friday, I encourage you to buy Solar Panels, and Coal…and advertise it on every social media account you have.

I’m done for the week, but will take some of our ideas from last night and plug them into a watchlist on Sunday evening.

Enjoy the family time and start prepping your buy lists for Mutual Fund Monday.

OA

Dec 5 calls. Yep.

OA

My original thesis on these social media stocks were that they were high beta names that money had rotated out of in October, that would make for great year end buy candidates. Using LNKD as my template, we wanted to buy these into the bear trap. On that entry, the stock exploded $25 points in three trading days. It hasn’t taken out that entry yet, which in my opinion still says the idea is right.

The same thing is looking possible here in FB, YELP, and even in some solar stocks. Investors have been forced to the point of capitulation today. If these stocks get back into their ranges, expect the fast swing up as originally planned. Use YELP or FB as the new template. YELP has more short interest.

Suicide longs I am contemplating here are Z and YGE.

And, no, I don’t want your opinion.

OA

As we near the upcoming holiday, I give thanks for the great feast of profits that have been available this year. It has been the easiest market I’ve encountered in the last 7 years, and I’m glad we’ve made some great strides to this point. I’ve made some great calls, and been able to navigate the turns better than most. However, I sit here, having reviewed a few thousand charts today, and feel like I did back in late September – the set-ups here are horrible, and all that remains of the market here are the giblets.

I looked for stocks to buy, looked for stocks to sell, and I got very little. My watchlist is down to maybe 10-12 ideas. Everything else out there doesn’t really look actionable, which means this could be a super slow week.

Watchlist: MNST, COF, F, WIX, SWKS, JAKK, NURO, GERN, PRAN, GSAT

In closing, let me say this: if you do not like the way you are currently positioned, do something about it. Nobody is forcing you to remain invested in a place that you prefer not to. Rather than complain, why not take action? It would be easier to engage in here if there were more actionable ideas being passed out over all the bitching, moaning, and complaining.

OA

In my excitement to position myself for this move we see happening this week, I chose to overlook a common risk management principle in order to capitalize on what might be a year end run in stocks. While the reasoning was right, and the initial entry and move I nailed, I am still in the process of seeing ideas play out, but am stuck in the lull of waiting for the trades to pay out.

The risk management principle I am referring to is diversification. Normally, I am pretty well spread out in the trades I take. I might have a couple correlated trades on, but I usually enter them at different times, so I can build profits on the original position before looking to add another. I try to select fast upside candidates in at least a half dozen various groups. At present, I am levered to Solar, Social Media, and Materials – all of which are at the threshold of investor indecision.

This time around, I entered in multiple correlated trades nearly simultaneously. For the most part, the ideas worked right out the gate, but now we see stocks pull back a bit this week, and multiple option positions decay simultaneously. No way around this. It sucks. However, if the objective hasn’t been met, and neither upside or downside exit rules have been met, this is where sitting on hands becomes difficult.

I refer back to past situations like this and you’ll see how my blog has been feast or famine. The ideas over time have been great, but in dealing with options, you are penalized by time. This is why we always refer back to risk management principles, and that is because leveraged instruments can chew up big sums of capital if you are not careful. All year it has been the same story here. We put on trades. We have weeks where accounts are up double digits. We celebrate. Market pauses. We get quiet. We take some trades. We wait. We drawdown. We get patient. We want to capitulate. The market moves. Our trades explode. We celebrate.

With the luxury of hindsight, my mistake recently has been ignoring my diversification rule. This time around, it makes the waiting a little more uncomfortable.

OA