Options Trader: Thankful Friday

I am very happy we cashed out.

We cashed out our longs, as planned, very close to the top and yesterday, at 1:47, I sent out an Alert to Members titled: "Not Being Greedy With May Shorts" in which I said: "At this point, with our put plays all back in black - we need to start stopping out if they get the market back over 8,400 (our goal was to get to cash and this is a gift). With a 50 point Dow trailing stop if we head lower than 8,360. Ideally, we should be out of any May puts (or May anythings) and cautious about June. If it’s a real sell-off, we use the cash to scale into June puts (which would include FAZ calls of course)." That was a FANTASTIC call (if I do say so myself) as we bottomed out at 8,358 at 3:33, by which time we were already cashed out ahead of the usual stick save.

It was a perfect day as we stuck with our plan from Wednesday night to press our short bets into the gap up open we expected, and we’re now in cash and are likely to day-trade a few short-side bets this morning but cash is still going to be king going into the weekend. This will be a short post as I am already working on our next round of bank plays for members as we also cashed out most of our sample $100,000 Hedged Portfolio ahead of the stress tests and are itching to take up some new positions so I wrote a new post entitled "Stress-Free Investing In Stress-Tested Banks" with plenty of new entries we’ll be looking to make into next week.

The Jobs report showed a loss of "only" 539,000 jobs but last month was revised up 69,000 which everyone seems determined to ignore. Unemployment is up 0.4% to 8.9%, the worst since Sept 1983. If the government hadn’t added 72,000 jobs (mostly census workers) this would not be at all pretty so we will be shorting the Dow at the open as a day trade and taking off our put covers against our long DIA puts, perhaps recovering into the weekend if we get a nice sell-off.

Oil is back at $58 so we’ll be shorting that into the weekend (I’m shorting the futures now below $58 with a stop there) as Toyota (TM) and Honda (HMC) gave poor reports with poor outlook. We know our auto industry sucks but if those two can’t sell cars either then the people buying oil are certifiable and we are happy to take their money.

Asia was up a point and Europe is up about 1.5% on bank fever but I see projected losses of up to $599 (not $600) BILLION by our 19 largest banks alone if the economy does not improve. So forgive us if we hold onto our cash over the weekend while we wait for people to sober up.

Have a nice weekend.

Comments

[Buy and Hol...:]

Good take on the unemployment numbers. If you listen to the permabulls, this is great news. They ignore the fact that's 539K people who won't be able to pay their mortgages or credit card bills or car loans.

May 08 11:11 AM

[Whitehawk:]

I sold my oil positions late today and am now short financials, so I agree with the author. Next week will be interesting, and I expect a selloff before options expiration.

May 08 05:36 PM

[Hasib:]

What are the chances of FAZ moving up into 20s in future..anyone?

May 09 12:47 AM

[tipalia:]

why in the world would you
permit a sick person (WHO KILLED...) post racial and vulgars messages on this site? What kind of site is this ?

May 09 08:59 AM

[User 397116:]

I still have some FAZ shares. When is best to get rid of? Anyone can advise me?

May 09 09:40 AM

[Hasib:]

At what price did you buy FAZ?



On May 09 09:40 AM User 397116 wrote:

> I still have some FAZ shares. When is best to get rid of? Anyone
> can advise me?

May 09 10:34 AM

[scousi:]

Chavez`s actions might cause some supply desctruction for Oil.

Perhaps this is baked in the Oil prices?

May 09 02:16 PM

[Sellputs:]

Chavez is nuts, we should not accept oil from his country as import, him him in the pocket book. anyway FAZ is a scary ETF for a newbie trader to be in, there is a chance it could move up to 20 bucks in the futures, but ther eis a better chance the compounding nature of the etf will make it much more difficult 2 reach that level. if you are in FAZ you gotta TRADE it, you cant sit on it. always have a stop, and do not let this thing get ahold of your emotions it will cause you to take huge losses.... sell the thing and buy it back cheaper saving the money inbetween.

May 09 09:58 PM

[g452ooo:]

Mr Tilapia..

put down that bottle and step away from that keyboard!

May 10 03:13 AM

[dplrx:]

I was wondering if anyone could explain to me how FAZ\SKF are well BELOW their inception prices when almost NONE of the banking stocks are anywhere near their prices of a year ago? I understand some of it has to do with the 2xx multiplier they are based on but if anyone has a good explanation for a newer investor, I would appreciate it. Thanks

May 10 09:47 AM

[taxed2much:]

On May 10 09:47 AM dplrx wrote:

> I was wondering if anyone could explain to me how FAZ\SKF are well
> BELOW their inception prices when almost NONE of the banking stocks
> are anywhere near their prices of a year ago? I understand some of
> it has to do with the 2xx multiplier they are based on but if anyone
> has a good explanation for a newer investor, I would appreciate it.
> Thanks
Its the multiplier and also the manipulations the FED and this administration has done with the banks. when they basically told the banks to mark their piles of doodoo at whatever price they felt (would keep them from imploding) and the FED handing over billions of dollars in free money(it will never be repaid by half who take and the returns on the investment in the ones that do repay will never be seen). Those two things alone have made the financial ETF's behave very contrary to how they should have.

May 15 03:07 AM