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CGTS OPTIONS CORNER FOR FRIDAY 7 JANUARY 2011: BUY CALLS ON ARUN, PDLI, POL, SAH, TXN, MWW, HLF, ECH, FDX, EDU, ARNA, EWC, IRE, JJC, DBB, BIIB, ICN, RRGB, AMAT, AMTD, SNDK, EWG; BUY PUTS ON CLWR.

|Includes:AMAT, ARNA, Aruba Networks, Inc. (ARUN), BIIB, DBB, ECH, EDU, EWC, EWG, FDX, HLF, ICN, IRE, JJC, MWW, PDLI, POL, RRGB, S, SAH, TXN
OPTIONS CORNER
Short-Term Trading in Options.

Friday Jan 7 2011

It looks like stocks are trying to pull back a bit.  Look to take profits on options that expire in January.  We think there will be another move up -- but caution is ALWAYS good when trading options.

Options Trading Scorecard (since 12/20/10):

CGTS OPTIONS  PORTFOLIO (Since 12/20/10) Active
% Gain 1/6/11   Profit Trades
11.76% Options   $111,767 95
Click to enlarge


SALES TODAY:

M2F ALT 14% Trading System: NVDA JAN 15 calls bought 12/29/10 @ .53.  Sold today @ 4.3.  Gain of 711.32%.

M5 3 AVG ASP DIFF Trading System.  PCLN FEB 390 calls bought 1/3/11 @ 32.5.  Sold today at 57.32.  Gain of 76.37%.

M5 3 CHART Trading System.  POL FEB 12.5 calls bought @ 1.6 on 1/3/11.  Sold on 1/6/11 @ 1.5.  Loss of 6.25%.  Trading Signal gave a sell signal.

PURCHASES TODAY:

THURS CGTS NEW TRADES        
6-Jan          
ISSUE TRADING CLOSE SIGNAL    
  SYSTEM        
           
ARUN T5 Turn (M4 Accum) 23.75 Long    
ARUN FEB 23 calls   2.12 Long    
PDLI T5 Turn (M4 Accum) 6.2 Long    
PDLI FEB 5.5 calls   0.75 Long    
POL T5 Turn (M4 Accum) 13.35 Long    
POL FEB 12.5 calls   1.5 Long    
SAH T5 Turn (M4 Accum) 13.26 Long    
SAH FEB 12.5 calls   1.5 Long    
TXN M5 3 ASP LT 2a 33.25 Long    
TXN FEB 30 calls   3.4 Long    
MWW M5 3 ASP LT 2a 25.27 Long    
MWW FEB 25 calls   1.35 Long    
HLF M5 3 ASP LT 2a 69.2 Long    
HLF FEB 65 calls   5.1 Long    
CLWR M2F 14% Trade 5.77 Short    
CLWR FEB 6 PUTS   0.85 Short    
ECH M4 Accum 00 75.38 Long    
ECH FEB 75 calls   2.05 Long    
FDX M4 Accum 00 93.1 Long    
FDX FEB 90 calls   5.05 Long    
ARNA M4 Accum 00 2.11 Long    
ARNA Feb 2 calls   0.32 Long    
EDU M4 ACCUM 00 14 105.23 Long    
EDU Feb 105 calls   5.5 Long    
ARNA M4 ACCUM 00 14 2.11 Long    
ARNA Feb 2 calls   0.32 Long    
EWC M4 Blank 2 30.83 Long    
EWC FEB 30 calls   1.35 Long    
IRE M4 Blank 2 2.48 Long    
IRE FEB 2.5 calls   0.25 Long    
JJC M4 Blank 2 57.52 Long    
JJC FEB 55 calls   4.26 Long    
DBB M4 Blank 2 24.3 Long    
DBB Feb 23 calls   1.75 Long    
TXN M5 3 Chart Trade 33.25 Long    
TXN FEB 30 calls   3.4 Long    
HLF M5 3 Chart Trade 69.2 Long    
HLF FEB 65 calls   5.1 Long    
BIIB M5 3 Chart Trade 67.26 Long    
BIIB FEB 65 calls   3.79 Long    
EDU M5 3 Chart Trade 105.23 Long    
EDU Feb 105 calls   5.5 Long    
ICN M5 3 Avg ASP Diff Sum 26.18 Long    
ICN JAN 23.71 calls   2.85 Long    
TXN M5 3 Test Combo 33.25 Long    
TXN FEB 30 calls   3.4 Long    
RRGB M5 3 Test Combo 21.78 Long    
RRGB FEB 20 calls   2.05 Long    
AMAT M5 3 Test Combo 13.89 Long    
AMAT FEB 13 calls   1.12 Long    
AMTD M5 3 Test Combo 19.82 Long    
AMTD Feb 16 calls   2 Long    
SNDK M5 3 Test Combo 52.73 Long    
SNDK Feb 50 calls   4.9 Long    
EWG M5 3 Test Combo 23.56 Long    
EWG Feb 22 calls   2.15 Long    
Click to enlarge


___________________________________________________

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:
home.mindspring.com/~mclark7/CGTS09.htm

MICHAEL J CLARK
Clark's Gate Timing System
Hanoi, Vietnam
84 4 221 92210





Stocks: ARUN, PDLI, POL, SAH, TXN, MWW, HLF, S, ECH, FDX, ARNA, EDU, EWC, IRE, JJC, DBB, BIIB, ICN, RRGB, AMAT, EWG