Stocks shrugged off the lower-than-expected consumer confidence, and managed to close higher again, now for the 3rd day! We have been taking more profits on Monday and Today. Yesterday, we locked in some nice gains, including a +103% win on MOS weekly 70 calls:
- August 29, 2011
- 09:46 | HappyTrading FFIV ($77.90) Sold to Close 0902C75 Sep 75 calls, at $4.00 +54%
- 09:16 | HappyTrading MOS ($72.45) Sold to Close 0902C70 Sep 70 calls, at $3.05 +103%
- 08:25 | HappyTrading FSLR ($101.00) Sold to Close 0902C100 Sep 100 calls, at $3.40 +31%
- 07:57 | HappyTrading MOS ($71.90) Sold to Close 0902C70 Sep 70 calls, at $2.60 +73%
- 07:55 | HappyTrading FSLR ($101.00) Sold to Close 0902C100 Sep 100 calls, at $3.35 +20%
- 07:47 | HappyTrading FFIV ($77.90) Sold to Close 0902C75 Sep 75 calls, at $4.00 +54%
We entered all these 3 trades last Friday, as the market turned up after Bernanke's speech. The thinking was that as the market turned, we could see shorts scramble to cover their positions; and, thus drive stocks higher in the next couple of days. Therefore, I was willing to get into some fast-moving weekly options.
Today, in the Trading Room, I was mainly looking for some lagging stocks to make their moves. Since the market had already made another big move on Monday, I was looking for some quick intraday trades. We traded SINA weekly 100 calls and NFLX weekly 235 calls:
August 30, 2011 8:00 AM
flying... weekly 100 calls moving well; took a quick scalp
August 30, 2011 8:09 AM
weekly 100 calls almost doubled in 45 minutes!
August 30, 2011 8:12 AM
some resistance at $105
August 30, 2011 8:22 AM
will probably overshoot to $106
August 30, 2011 8:26 AM
100 weekly calls doubled!
August 30, 2011 8:30 AM
wow, that was a rush!
August 30, 2011 8:32 AM
day high $105.99 LOL!
August 30, 2011 8:43 AM
gaining momentum; weekly 235 calls moving up
August 30, 2011 9:05 AM
took another nice scalp in about 45 mintues.
Both of these trades were intraday doubles. For myself, I left a limit order in on SINA and got shaken out early. But, for the NFLX position, I got smarter and took partial profits and caught a double on the second half:
SINA weekly 100 calls: +28.5%
NFLX weekly 235 calls: +39%, +103%
You might think that a +30% is not much. But, on a 10 contract trade, that $1 gain on the options translates to $1,000, and, it only took 25 minutes! So, sometimes, when the market is moving fast, on these fast-moving options, it's worth it to take some risk to make some fast and real money!
One thing about trading these fast-moving options, you have to know your stocks. Trade the ones that you know well. Stocks have "personalities", some have bigger momentum than others. I chose NFLX and SINA because I know they can jump once they start moving. It is not unusual for these two stocks to move $10 in one day. Next, what you need to do is to have an idea where they might move to once they start to pick up momentum. Well, if you don't, come in to the Trading Room and ask me! I also call stocks out as they start to move. Once you have picked out your stock and have an idea where it might move to, then, you can have a better idea on what option strike to play. And, as the time goes, you'll even able to gauge what the option price will be when your stock price target hits. For instance, I didn't even watch the market in the last hour. I placed a limit order on my NFLX weekly 235 calls, sell to close at $6. I knew NFLX could see $237 to $238 today, and, I knew those options could then go to $6+. I returned to my office after the market had closed, and, my limit order got filled. NFLX traded as high as $238.81, while those options went as high as $6.74 and closed at $5.3! I was not greedy. I went in knowing that I could get an intraday double. I got the double, and I got out. When you're trading these fast-moving options, have a plan and stick to it. (As I mentioned a week ago, I will start writing more and more about how to manage your trades and manage yourself. So, keep on looking for simple quick steps like the above in my articles.)
The Dow was up +20.7 points; SPX added +2.84 points; Nasdaq gained +14 points:
Most sectors were slightly up. The surprising today was that both GLD (gold) and SLV (silver) went higher as well!
SPX added +2.84 points to close at 1212.92, above 1200. Its 10-day MA and MACD went higher.
Nasdaq gained +14 points to close at 2576.11, just below its 30-day MA. Its MACD was up.
Both SPX and Nasdaq closed above their recent resistance levels (SPX 1200, Nasdaq 2550). However, after 3 days of consecutive buying, we might need to take a breather. Notice that VIX closed higher today. 32 seems to be a support for VIX. Energy stocks are still relatively weak. We might need to see a couple of days of mixed market and wait to see if the above-mentioned resistance levels have turned into support. Watch the financials, they will be among the key sectors to make or break this rally!
Good night and HappyTrading! ™
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.