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Michael Clark
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Michael J. Clark was born and raised in Sinclair, Wyoming. He is a poet, novelist, artist, historian, and market analyst. His fine arts portfolio can be found at the following address: http://www.hoalantrangallery.com/MJC2.htm His writing portfolio can be found at:... More
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Clark's Gate Timing System ©
    Feb 9, 2011 5:13 AM

    Short-Term Trading in Options.
    9 February 2011, Wednesday
    We know this rally can't go on for ever.  Or can it?  Dr. Ben believes it can, as long as he just transfers money from the US Treasury to Wall Street -- we are not supposed to see that the money is going out of one pocket in to the other.  Hell, I'm not looking.

    Indexes still look strong.  Except Emerging Market indexes.
    Our options trades since 20 December 2010 are up just about 50%.
    Our picks tonight are for Bernanke Plays: as long as he keeps inflating commodities, how can you not like KOL, Coal ETF, X, US Steel, BAL, Cotton ETF, UGA, US Gasoline ETF, DBB, Base Metals ETF.

    We sold calls on EQR (up 118%) and HAL (up 186%).

    We realize these type of gains won't go on for ever, and we will need to be ready for some swift, hard selling, when the government stops giving money away through Mr. Bernanke.

    CGTS OPTION  PORTFOLIO (Since 12/20/10)    Active
    % Gain    1/24/11    Profit    Trades
    49.64%    Option Trades    $978,001    197
    32.00%    MJCF Close Medium 2    $128,015    40
    15.19%    MJC CM Simple Sum 2    $28,861    19
    195.30%    MJC M53 Simple 2/11    $136,713    7
    68.84%    MJC Char Meter Diff Tr 1/11b    $144,567    21
    59.56%    MJC M2F M53 Combo    $59,562    10
    47.93%    M2F 14% Trade    $172,553    36
    270.63%    M2F AVG ALT DIFF ASP    $108,250    4
    61.55%    M4 ACCUM 00 14    $166,184    27
    6.62%    M5 3 ASP LT 2a    $21,849    33
    42.14%    M5 3 Avg Diff ASP Sum    $67,425    16
    34.75%    M5 3 Test Double Combo    $76,442    22
    0.01%    MJC T5%Close Trade 1    $1    1
    -44.07%    MJC T5%Close Trade 2    -$4,407    1


    M5 3 AVERAGE DIFF ASP SUM Trading System.
    Bought: EQR Feb 50 calls @ 1.7 on 1/13/11. 
    SOLD: 2/8/11 @ 3.7.  Gain 118% 

    M5 3 AVG DIFF ASP SUM Trading System.
    Bought: HAL Feb 38 calls @ 2.43 1/15/11. 
    SOLD 2/8/11 @ 6.95.  Gain 186%.  

    We have several 'favorite' charts today.  BAL, Cotton ETF, is getting ready to rocket up again.  We favor Feb expiration calls on this one, 90's for those with itchy triggers, 85 for those who are a bit more conservative.

    Our theme here is that we still like commodity plays, since Dr. Bernanke is still inflating every bubble he can.  US Gasoline is also ready to go higher.

    We like US Steel here also, for a short-term play.  We meant to draw charts for two others, DBB, Base Metals, ETF, and KOL, Coal ETF...both of which look very good here
    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:
    Clark's Gate Timing System
    Hanoi, Vietnam
    84 4 221 92210
    Long UGA Feb calls

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