Short-Term Trading in Options.
7 February 2011, Monday
Our weekend report finds us up 43% in our options trades since December 20 2010. We like EWM, Malaysian Index ETF, RIMM, Research-in-Motion, and Google calls short to intermediate term (Feb and March expirations).
Indexes are NOT pulling back at this point.
Our options trades since 20 December 2010 are up just about 43%.
Our pick for tonight: Long UAL, UNITED/CONTINENTAL HOLDINGS. We're buying March 25 calls.
OPTIONS TRADING SCORECARD:
CGTS OPTION PORTFOLIO (Since 12/20/10) Active
% Gain 1/24/11 Profit Trades
43.43% Option Trades $647,108 149
DAILY TRADES PLUS
33.19% MJCF Close Medium 2 $86,294 26
29.83% MJC CM Simple Sum 2 $41,761 14
45.08% MJC M53 Simple 2/11 $22,541 5
61.22% MJC Char Meter Diff Tr 1/11b $110,197 18
18.78% MJC M2F M53 Combo $24,419 13
56.56% M2F 14% Trade $147,054 26
288.44% M2F AVG ALT DIFF ASP $115,375 4
49.05% M4 ACCUM 00 14 2 $93,188 19
5.40% M5 3 ASP LT 2a $16,193 30
38.16% M5 3 Avg Diff ASP Sum $38,157 10
38.22% M5 3 Test Double Combo $38,223 10
M2FALT/M5 3 Combo. Bought: SSL Feb 50 calls @ .75 1/28/11. SOLD: 2/4/11 @ 2.5. Gain 233%
Click to enlarge
M5 3 Double Combo. Bought: ROK Feb 70 calls @ 5.4 1/21/11. SOLD 2/4/11 @ 12.8. Gain 137%.
Click to enlarge
Best chart of all our buy signals today: EWM, Malaysian Index ETF. Getting buy signals on this one from several of our trading systems.
Click to enlarge
We also like Google here. Some things to notice about the chart: M5 3 Momentum (top chart, red-brown line) has worked its way lower without much selling. This is a positive. M2F Momentum (black line, pane 2) is overbought a bit. This suggests our first couple days in this trade might be down, as GOOG works off its overbought condition. M4 Sum Plus 21 Rev (third down, black line): selling has taken the indicator down to zero but NOT through zero. This is a positive. M4 Accum (14): is at -10 and flattening -- this should mean it is bottoming. T5 Simple Sum, bottom pane, is also reaching a bottom point: positive.
Click to enlarge
RIMM, Research-in-Motion. Looks like we'll have a continued rally in RIMM here. We think 70 is possible during the next leg up. Note: M2F ALT is overbought here also. This is not a negative necessarily. M5 3 is NOT overbought yet (see red line, top pane). See how T5 (short-term trade), red line, bottom pane, is making higher highs and higher lows -- this suggests the trend is still intact.
Click to enlarge
BUY AND SHORTSELL SIGNALS
Here is a complete list of today's buy and shortsell signals, with option trades we like. Issues with ** don't trade options. Some issues do not look good here because of too much appreciation already, such as SSL. Others just don't look very good at the moment and we've avoided them. Issues marked with '<--' we like alot.
|REMX||MJCF Close Medium 2||24.622||LONG|
|REMX FEB 22.5 calls||2.372||LONG|
|CDNS||MJCF Close Medium 2||9.49||LONG|
|CDNS Feb 7.5 calls||2.24||LONG|
|CSUN||MJCF Close Medium 2||4.53||LONG|
|CSUN Feb 2.5 calls||2.28||LONG|
|FMCC||MJCF Close Medium 2||0.73||LONG|
|MTL||MJCF Close Medium 2||33.49||LONG|
|MTL Feb 34 calls||0.7||LONG|
|PBTH||MJCF Close Medium 2||5.88||LONG|
|PBTH **||MJCF Close Medium 2||5.88||LONG|
|RIMM||MJCF Close Medium 2||63.69||LONG|
|RIMM Feb 65 calls||0.89||LONG|
|TAN||MJCF Close Medium 2||8.3||LONG|
|TAN FEB 8 CALLS||0.4||LONG|
|ITMN||MJC CM Simple Sum 2||36.91||LONG|
|ITMN FEB 35 CALLS||2.84||LONG|
|MSI||MJC CM Simple Sum 2||39.31||LONG|
|SAH||MJC CM Simple Sum 2||13.33||LONG|
|SAH FEB 12.5 CALLS||1.08||LONG|
|VZ||MJC CM Simple Sum 2||36.31||LONG|
|VZ FEB 35 CALLS||1.56||LONG|
|X <-||MJC CM Simple Sum 2||58.17||LONG|
|X FEB 57.5 CALLS||1||LONG|
|ICON||MJC M2F M53 Combo||19.5725||LONG|
|ICON FEB 20 CALLS||0.4||LONG|
|REMX||MJC Char Meter Diff Tr 1/11b||24.622||LONG|
|REMX FEB 22.5 CALLS||ı||2.375||LONG|
|PTP||MJC Char Meter Diff Tr 1/11b||45.3||LONG|
|PTP FEB 45 CALLS||0.55||LONG|
|SSL||MJC Char Meter Diff Tr 1/11b||52.32||LONG|
|XHB||MJC M53 Simple 2/11||17.375||LONG|
|XHB FEB 16 CALLS||1.988||LONG|
|TEVA||M2F 14% Trade||54.1||LONG|
|TEVA March 52.5 calls||∫||2.61||LONG|
|CSUN||M2F 14% Trade||4.53||LONG|
|CSUN March 2.5 calls||M2F 14% Trade||2.28||LONG|
|BLK||M2F 14% Trade||194.35||LONG|
|BLK March 195 calls||7.68||LONG|
|HGX||M2F 14% Trade||114.87||LONG|
|HGX Feb 114 calls||M2F 14% Trade||2.55||LONG|
|XHB||M4 ACCUM 00 14 2||17.7375||LONG|
|XHB Feb 16 calls||1.988||LONG|
|SSL||M4 ACCUM 00 14 2||52.32||LONG|
|NILE||M4 ACCUM 00 14 2||61.06||LONG|
|NILE FEB 55 calls||6.31||LONG|
|MSFT||M4 ACCUM 00 14 2||27.77||LONG|
|MSFT FEB 27 calls||1.02||LONG|
|IGT||M4 ACCUM 00 14 2||17.51||LONG|
|IGT MARCH 17 calls||1||LONG|
|ICON||M4 ACCUM 00 14 2||19.5725||LONG|
|ICON FEB 20 calls||0.4||LONG|
|HOV||M4 ACCUM 00 14 2||4.26||LONG|
|GOOG||M4 ACCUM 00 14 2||610.98||LONG|
|GOOG MARCH 610 calls||17.7||LONG|
|EWM <--||M4 ACCUM 00 14 2||14.5425||LONG|
|EWM April 14 calls||0.792||LONG|
|CPA||M4 ACCUM 00 14 2||56.97||LONG|
|CPAFEB 55 calls||2.9||LONG|
|BA||M4 ACCUM 00 14 2||71.38||LONG|
|BA March 70 calls||2.75||LONG|
|AKAM||M4 ACCUM 00 14 2||47.88||LONG|
|AKAM May 47 calls||1.13||LONG|
|WBD||M5 3 Avg Diff ASP Sum (NYSE:W)||32.87||LONG|
|WBD FEB 30 CALLS||3.12||LONG|
|MSFT||M5 3 Avg Diff ASP Sum (W)||27.77||LONG|
|MSFT FEB 27 CALLS||1.02||LONG|
|AXP||M5 3 Avg Diff ASP Sum (W)||43.82||LONG|
|AXP FEB 40 CALLS||4.07||LONG|
|ICON||M5 3 Avg Diff ASP Sum (W)||19.5725||LONG|
|ICON FEB20 CALLS||0.4||LONG|
|EWM||M5 3 Test Double Combo||14.5425||LONG|
|EWM APRIL 14 CALLS||M5 3 Test Double Combo||0.792||LONG|
|EL||M5 3 Test Double Combo||93||LONG|
|N225||M5 3 Test Double Combo||10543.52||LONG|
|HK||M5 3 Test Double Combo||20.68||LONG|
|HK MARCH 18 CALLS||2.93||LONG|
|PDE||M5 3 Test Double Combo||34.39||LONG|
|PDE MARCH 34 CALLS||1.8||LONG|
|RSX||M5 3 Test Double Combo||40.12||LONG|
|RSX FEB 40 CALLS||0.37||LONG|
|KSU||M5 3 Test Double Combo||51.11||LONG|
|KSU FEB 48 CALLS||ı||3.36||LONG|
|SCC **||M5 3 Test Double Combo||20.59||SHORT|
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
Long AHGP Feb 50 calls.