Finally, A Positive Week in the Market

Finally, a postive week for the markets! The markets rallied on hopes that a stimulus package will be passed soon to help the ailing economy. Financials and techs (especially the biotechs) lead the markets higher. The Dow was up +279.73 points; SPX added +42.73 points; Nasdaq jumped +115.29 points!

We had a great week as the market conditions continued to improve. It looks like the changes that we've made to our trading strategies are seeing better and better results (this is on top of a good January when the markets had one of the worst opening month in the history)! You really have to have a lot of patience in this environment. We also have fewer open positions at any given time. This has been helping us to stay calm and be able to react quickly when the market fluctuates.

We scored 100% green in our trading this week, with an overnight 100%-plus gainer in Google (GOOG)!

February 06, 2009
12:08 | HappyTrading GOOG ($373.00) Sold to Close GGDBJ Feb 350 calls, at $28.10 +130%
10:09 | HappyTrading GOOG ($269.60) Sold to Close GGDBJ Feb 350 calls, at $25.00 +105%
10:05 | HappyTrading GOOG ($368.20) Sold to Close GGDBJ Feb 350 calls, at $24.00 +97%
06:53 | HappyTrading MON ($84.80) Sold to Close MONBP Feb 80 calls, at $6.20 +31%

February 04, 2009
07:48 | HappyTrading MA ($142.90) Sold to Close MALBH Feb 140 calls, at $10.50 +11%

February 03, 2009
11:19 | HappyTrading ESI ($131.00) Sold to Close ESIBE Feb 125 calls, at $10.40 +41%
10:06 | HappyTrading GOOG ($338.50) Sold to Close GGDBE Feb 340 calls, at $12.00 -11%

We were able to make good "educated" decisions to be safer in this volatile market, and yet, catch big movements, as we got back into this GOOG trade on the 2/3/09 to catch the bigger move the next day for a +53% gain:

On Thursday, we went back into GOOG again and caught an even bigger profit, with an overnight gain as high as +130%! I started taking some profits early in the afternoon. This is to lock in profits and to help calm the nerves, as we let the rest of the position ride higher on the house money. Those GOOG February calls, GGDBJ, went as high as $28.8 and closed at $25.9. So, we pretty much caught the top with our last exit at $28.1. The important thing for me is to not to be too greedy when I have lots of profits in a trade. Taking partial profits on the way up can often help balance between maximizing profits and keeping my emotions calm and centered.

We also had lots of great trading ideas and "non-published" trades in the Trading Room:
HappyTrading

• February 5, 2009 8:11 AM
  ISRG coming back up; looking interesting… buyout rumors last week…
• February 5, 2009 8:11 AM
  CEO coming up on good volume (Chinese petrochemical stimulus?)
• February 5, 2009 8:46 AM
  LFC gapped up 3 straight days!
• February 5, 2009 9:43 AM
  POT smokin'
• February 5, 2009 9:45 AM
  CEO looks so good! probably gets a pop tomorrow!
• February 5, 2009 10:43 AM
  AAPL picking up some momentum….

All of these names mentioned on Thursday recorded solid gains on Friday. I also think that these will continue to do well as the market conditions improve.

To summarize, what has been working for us in this volatile environment is:

1. Be patient and wait for the trade to come to you: This is especially true for trading options. As the market is so volatile, often times, it's not a good idea to chase a trade. A "limit order" can often fetch you a better price.
2. Have fewer trades open at any given time. This has been helping us to stay nimble and keeping ourselves calm and centered.
3. Lock in partial profits on the way up
4. When having lots of profits in a trade, even though we think the trade will go higher, we start to lock in profits on the way up. This has allowed us to maximize profits and not get so nervous as the trade fluctuates. Often times, we lock in enough profits and let the rest ride higher on house money.

Hope you enjoyed your weekend! HappyTrading! ™

Disclosure: no positions