Short-Term Trading in Options.
Tuesday Jan 4 2011
We're up 25% since 20 December 2010, with a heavy weighting in precious metals and biotech options. 14 new trades below.
Options Trading Scorecard (since 12/20/10):
|CGTS OPTIONS PORTFOLIO (Since 12/20/10)||Active|
SALES TODAY: None
|MONDAY||CGTS NEW TRADES|
|UNH||M5 3 ASP LT 2a||37.13||ENTER LONG|
|UNH MAR 38 calls||1.45||ENTER LONG|
|AHGP||M5 3 ASP LT 2a||49.45||ENTER LONG|
|AHGP FEB 50 calls||0.7||ENTER LONG|
|UBS||M2F 14% Trade||16.71||ENTER LONG|
|UBS FEB 15 calls||1.41||ENTER LONG|
|MRK||M2F 14% Trade||36.04||ENTER LONG|
|MRK FEB 35 calls||1.79||ENTER LONG|
|CAB||M4 Accum 00||22.38||ENTER LONG|
|CAB MAR 20 calls||3.6||ENTER LONG|
|POL||M5 3 Chart Trade||13.89||ENTER LONG|
|POL FEB 12.5 calls||1.6||ENTER LONG|
|BEAV||M5 3 Chart Trade||37.95||ENTER LONG|
|BEAV FEB 35 calls||3.8||ENTER LONG|
|SBUX||M5 3 Chart Trade||33.25||ENTER LONG|
|SBUX FEB 33 calls||1.48||ENTER LONG|
|ICON||M5 3 Chart Trade||20.02||ENTER LONG|
|ICON FEB 20 calls||1||ENTER LONG|
|VTAL||M5 3 Chart Trade||14.35||ENTER LONG|
|VTAL Feb 12.5 calls||1.9||ENTER LONG|
|ALGT||M5 3 Avg ASP Diff Sum||50.84||ENTER LONG|
|ALGT JAN 50 calls||1.5||ENTER LONG|
|PPD||M5 3 Avg ASP Diff Sum||62.45||ENTER LONG|
|PPD FEB 60 calls||5.8||ENTER LONG|
|AXP||M5 3 Avg ASP Diff Sum||43.4||ENTER LONG|
|AXP FEB 40 calls||4||ENTER LONG|
|SAH||M5 3 Test Combo||13.68||ENTER LONG|
|SAH FEB 12.5 calls||1.35||ENTER LONG|
|AIG||M5 3 Test Combo||58.05||ENTER LONG|
|AIG FEB 57.5 calls||4.15||ENTER LONG|
|TBT||M5 3 Test Combo||37.51||ENTER LONG|
|TBT Feb 35 calls||3||ENTER LONG|
|STJ||M4 Rev 3 Trade||42.28||ENTER LONG|
|STJ FEB 40 calls||2.94||ENTER LONG|
|FNMA.OB||M4 Rev 3 Trade||0.33||ENTER LONG|
|FNMA JAN 1 puts||0.78||ENTER LONG|
|FISV||T5 Turn (M4 Accum)||59.5||ENTER LONG|
|FISV MAR 55 CALLS||5.4||ENTER LONG|
SELECTED CHARTS OF TODAY'S TRADES:
We love this chart; and think UNH has a chance to go to 45.
Everything looks positive for ALGT to make a run at 55.
Another nice-looking chart pattern. AXP is going to try to make a new high. This trading system (M5 3 AVG ASP Diff Sum) is up 24% in two weeks.
SBUX should go higher in the short-term. It balked at a down-turn yesterday and made a new short-term high. Jan calls would be good here also.
A Disclaimer of sorts:
I will update these positions regularly, so we can all see how we are doing with our short-term speculating.
I am bullish on gold long-term (until Bernanke is fired, and more generally until about 2019, the end of the deflation cycle) -- and I'm relatively bullish on stocks until QE is abandoned. QE does many things, one of which is to try to make sure that stocks and bonds don't decline. The Fed, quite likely, has guaranteed to bankers the advance of stock prices. As long as the Fed is willing and is allowed to backstop stock prices, short positions are very dangerous, except in isolated cases. Bond vigilantes are showing Mr. Benanke that his designs may not be able to proceed without resistance however. Rising rates are a slap in the face of American power; the slap is welcomed by those of us who think debt is the problem that needs to be addressed, destroyed, rather than expanded and extended.
Trading options is highly speculative and can be dangerous. Pricing of options is never very clear; buying options is almost always less prefereable than selling options, in terms of likely profits. But buying options gives an investor a HUGE BANG FOR THE BUCK. Getting accurate price data on options (especially those thinly-traded) is also often a problem, with which we'll have to work. Typically we work with the last close, if it falls between bid and offer. If it does not, then we average the bid/offer.
If one knows what direction a stock is moving, short-term options can be profitable. The problem with options, of course, is that they, like ourselves, decay with time.
The cheaper options expire more quickly (one can always buy long-term options is one wishes to speculate on long-term stock or market moves). I like short-term expirations, cheap options, and getting in and out (with profits).
I have many short-term trading systems. I will use several in this Options Corner. The first I start with I call "M5 3 Chart Trade" which really relies on the M5 3 Momentum Indicator to trigger the trade, always in the same direction of the major trends.
Successful trading! We know the game is fixed; but let's ride on the back of the dragon for as long as we can.
More information on the CGTS systems can be found at:
MICHAEL J CLARK
Clark's Gate Timing System
84 4 221 92210
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.