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Chris Ridder
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MSc Inventment Managment 2005 Cass Business School City University of London I started trading when I was 20 years old by shorting orange juice futures! And yes the results were not pretty.... Here is my public performance at Marketocracy which the long fund started November of 2000:... More
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  • SP 500 Head and Shoulders Top ???
    Shown below is a 60 min chart of the emini SP500 futures (symbol @ES.D for Tradestation). One can see a potential head and shoulders top forming.
                         60 min SP500 futures chart from Tradestation.com

    A trade below 1177.50 would trigger technical selling from stop losses and the adding of new shorts. Be aware that small jabs below support are possible, such as the April 17 low being only 2.25 points below the April 19 low. Usually I like to see stock index futures trade 3 full points above or below  a resistance or support area to try and filter false breakouts better.
     
    1175 (1174.50) is a nice round number and sure to be watched by a lot of traders. Long trailing stops below 1170 seem prudent. If this is a head and shoulders top the market should stop moving up and go sideways within the next day or two. It appears a key technical area has been established and traders should make plans if the price trades at or below this area. The red pivot line corresponds to a price of 118.25 in the SPY.


                                        60 min SPY chart from Tradestation.com

    Disclosure: None in futures yet but have option positions in stock index ETF's
    Apr 29 1:46 PM | Link | Comment!
  • XOM Call Ratio Backspread update
    XOM reported earnings this morning and missed estimates.
    finance.yahoo.com/news/Exxon-profit-up-38-percent-rb-3042868388.html

    In a previous post I had recommended a call ratio backspread for June options with the 67.5 & 72.5 strikes on April 26 seekingalpha.com/user/633599/instablog/symbol/xom The spread price at that time was -.97 . Currently, after about one hour of trading the spread is quoted  -.87 bid / - .81 offered. This is down from yesterday's close of the spread but still up from the original recommendation.

    XOM has climbed into positive territory on the day by a nickel as I write this after trading almost $1 lower earlier in the session. I am going to close half the position and give XOM a week to trade above $70 because :
    1) oil is higher 
    2) stock is up after "bad" news
    3) even a drop in price will help the call ratio backspread
    4) technical chart pattern ( Yes, I hear the protests of my former business professors, but how many of them ever traded a one lot ? )





    Disclosure: long xom options and option spreads
    Apr 29 10:41 AM | Link | Comment!
  • Gold Stocks: GDX, NEM, ABX

    Gold Companies such as ABX & NEM are rising after reporting earnings Tuesday night and Wednesday morning. With gold futures trading above 1150 and fragile banking systems around the world, it appears that this sector will catch a bid.
    The following charts are not finished (weekly) yet show a technical upside bias. As long as the FED does not raise rates one should expect a general trend up. I think traders can wait for a pullback but long term investors should just let their VWAP algorithms work if they lack exposure to the precious metals sector.

    One can try to pick individual gold stocks or just buy a gold index ETF such as GDX for major gold producers or GDXJ for junior gold producers. I believe that the GDXJ does have some very poor run companies in it but could raise from the secular trend.

    One can see the prices of GDX options taken at approximately 11:35am EST on April 28, 2010. The GDX price was about 49.60 and the data is from interactive brokers. It would appear bull call spreads could be attractive because of the implied volatility skew. A trader could go long an ATM June GDX 50 call at 2.45 and short the 60 call at .25 for a total cost 2.20. This position would have an approximate delta of .42 , gamma .04 , vega .047, and theta  - .0157.  The max reward to risk is 3.54 : 1 .

    I know one probably asks why sell the 60 call and not just go outright long the 50 call. First, the total maximum profit is already determined so it keeps traders, me at least (I hope!!), from getting to greedy. Also the effect of time decay is lessened. I am also thinking I might just buy the 50 call (probably wait for a pullback and after FED meeting) and then look for a run above 50 and then sell the 60 call or another strike for a higher price. A close below 45 and I would most likely close the trading position depending upon the circumstances that caused the down move.

    And now back to waiting for the FED announcement.......



                                June GDX Options from Interactive Brokers


    GDX DAily
                                           GDX Daily from Tradestation.com

    GDX Weekly
                                       GDX Weekly from Tradestation.com



    ABX Weekly Chart
                                     ABX Weekly Chart from Tradestation.com



    nem weekly
                                         NEM Weekly Chart from Tradestation.com





    Disclosure: long gold etf options, gold stocks and options
    Tags: Gold stocks
    Apr 28 12:01 PM | Link | Comment!
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