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Trading results 5/12/10

A very very busy day

The day started out small with Disney and bidu neither of which went far. My big trade of the day was with ANV. It gave a wonderful gap up after a perfect B8 signal and I worked it and squeezed it for as much as I could. Great trading and the gain vs. risk was about as good as it gets. It was a long lasting trade and we talked about the trade quite a bit in the chat. I rode it until it filled the gap and this is a trade that I never set out to work on. I found this by working out my backtesting manually and this would be a about as good of an example of why I think backand forward testing should be done manually one trade at a time. Automation is fine with trade execution to make sure you stay on the correct plan but a lot is to be learned by manually back testing hundreds of trades including finding things you never thought about. I only get a few of these a year but the timing after Monday and Tuesday was just great.

My losing trade today was CREE which I had correct but decided it was a good idea to buy at the top of a move and sell short at the bottom of the next move. Both times I cut my loss and after the second go around with this one I decided that I would let that one go. In the end it did make a new HOD but not by much so I didn’t lose out on much of a gain and by using good risk management I did not allow myself to get hurt badly.

I had a major scare today. After reading about the horror stories about people adding liquidity to the markets last Thursday only to have their trades busted and to lose lots of money I thought I was going to get beat up today myself. It was announced that SY was in buyout talks and the stock shot up very quickly. I waited until my system gave the short signal and in total sissy mode I waited to see if it would move beyond and above the signal price which it did. I was impressed with the system though as it gave a signal very near the top of the move. I held huge spreads between my offers and only three offers were lifted. The price then fell and fell fast and I believe I heard that the stock was being halted. (I think perhaps it was another stock but I am as of this post still not sure. I was trading on Island and SY I believe is traded on the NYSE). I am unsure because usually when I am trading a stock that is halted I see the halt before it is announced. I see that SY is still trading and decide to cover quickly which I did and it still did not stop trading. I am now sweating bullets worried about my original shorts getting busted and end up owning this stock at a price way above normal if the buyout turns into a false rumor. I once again here the stock (again I believed it was SY at the time of trading but have serious doubts now). I then hear the stock is trading again and I started to short with a scalping attitude and try to squeeze more out of SY. The in after hours trading I was trading both long and short and then the strangest thing happened. I am net long SY and over the squawk it is announced that the buyout is confirmed and the price is at 65 and I am net long a little higher than 63 but the price did NOT move higher and actually started moving down. My reaction went from buying up a few more hundred to being worried that I was somehow making a mistake. SY traded around the low 63s for a while and I really wanted to just buy buy buy thinking it should go to 64.50ish for a buyout price of 65. After sitting in a range of about 63 to about 63.50 I started to get worried that I was missing something and I closed out for a gain of about 150 but just below 64. as the price moved to lift my offers it then shot up to way above 64 again and it turned out I was correct about the price moving higher but I have no idea why it didn’t shoot up quickly and before or at the time I heard the confirmation. What I should have done was buy up as much as I could without taking on to much risk and basically load the boat but I “sissyed” out on that one too. Just no doubt about it that reading all the money lost from Thursday had me spooked (maybe others too and that’s why it acted the way it did)

Overall the day was great and beating yesterday means today was either the best day of the year or very near the best day. This is shaping up to be the best week of the year.
Still short BP puts, GS put and covered C stock as well as short one 30yr bond futs 119 option that in close to being even after being green for the first time today in about a week. Love time decay. Another day of being on my A game even with leaving a lot on the table with SY.

SY B8, plus after hours trading + 816
SPY + 2
RIG via options trendline break stopped out + 3
NAV + 4
MS + 3 stopped out
DIS +45 trend following trade
CSTR B8 + 639 I think a bunch of us in the chat made some coin on this one
CREE – 83
CREE – 77 one trade was long and one was short via buying options both ways
CAGC + 28
BP + 22 still have the naked puts that keep my head held under water. I will be very glad when some good news comes out and this stock makes it pop higher
BIDU gapup + 27
ANV gapup after B8+ + 1086

+ 2519