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The market churn continues. I went back in to fully invested last week at about 90% long and 10% short, so thankfully, my portfolio's been holding its own in this market. Considering the high Beta holdings (tech, commodity and international), I lost 2% Tuesday vs. a greater than 2% loss for most of the majors.

As I've posted recently, I have 10 QQQQ contracts that I sold naked calls on at the peak; Jan 55's and 50's. I'm not too concerned about those contracts coming back into the money any time soon. I'll likely let those ride out to expire worthless and capture the >$1000 premium that's quickly eroding. Additionally, I purchased a 2 extra puts on the QQQQs when I dove back into the market last week. I'm never fully long, especially in a market like this. Like Warren Buffet would say, it's when the tide goes back out that you see who's wearing their bathing suits (or something to that effect). Lastly, I'm holding FXY, a yen currency ETF in the event the yen carry trade unravels.

What interesting plays lately?

Here's one...To go along with my cyclical Biotech post from a week ago, I went with a real speculative play here that will either net >1000% return on out of the money calls, net a few bucks on the put end, or expire worthless if the stock trades within its current range. Based on the September release of pivotal clinical trial results, expect to see Arena Pharma (NASDAQ:ARNA) move significantly up or down within the next several weeks, depending on how the news is.

The details are in a BusinessWeek article, which didn't make the news links in Yahoo, but it's essentially going to make or break the next couple years for the company. Personally, I played several calls at 15 and a put at 12.5. I could envision the stock running as high as 20 or dropping to as low as 5 during the next several weeks. At a minimum, I expect the volatility component of the stock to increase as we get into September and interest builds, so I may even be able to sell the options for a net gain with a minimal move in the stock price.

On the market in general, I think we're looking at continued choppiness and may not see a breach of the previous highs for a while. Too much liability out there in the market. I expect to see more hedge funds paring losses and perhaps some subprime contagion in international markets.

Disclosure: Author is long ARNA calls and puts

Source: Expecting a Strong Move in Arena Pharma