Options Trading Blog
Options Trading Tips and Strategies
It closed on the lows of the day to $497.57 and printed a huge bearish engulfing candle. The reversals in the market today were due to the fact that markets worldwide are worried about an impending Greece default. This should not be a surprise to anyone. One of the hardest things to do when trading or investing is to determine what information the market has priced in and what information it hasn’t realized yet. The SPY closed down 0.47% to $134.56 and the uptrend is still very much intact. Crude Oil rocketed today and closed up 1.22% to $101.97 a barrel. This was due to a report stating that Iran cut oil shipments to six countries. Spot Gold closed at $1728.28 while its crazy cousin silver closed slightly down at $33.40. Abercrombie & Fitch (ANF) finally caught a bid today and jumped 8% as the company stated that it expects profit margins to stabilize. ANF closed at $48.30.
Written by Cameron Patrick
Apple is on a tear today up 100 pts since reporting earnings. Apple Feb 485 Calls today are up an incredible 3000%. Apple is responsible for 90% of intraday Nasdaq gain. Zynga is down 12% on earnings. We saw people buying FEB 18 $12 Puts at $.30. We have seen call buyers in names like Cake, LIZ, and TER but nothing that perks interest.
By: Greg Zimny
In US equities this morning, Soros buys a big chunk of his gold position as an inflation hedge as Paulson sells his stake to raise capital for his clients. The funny thing is, everything Paulson has sold in q4 last year has been the big movers in Q1. For example, Paulson sold his BAC common stake (64 million shares), Citi common stock (25 million shares), and reduced his Wells Fargo position. Comcast beats analysts’ expectations and revenue estimates. Comcast’s revenue rose 3% or $15 billion. Also, its internet subscriptions have increased and Comcast raised its dividend by 44%. Comcast is trading higher in the pre-market by 3%. Zenga reported earnings that weren’t up to par with analysts’ expectations. Many analysts believe the stocks multiple will continue to decline and that it’s booking guidance was light. Many investors are waiting for FB IPO to get true valuation of FB and Zenga. Zenga is trading 6% to the downside.
Reason I like this Trade: Using unusual options activity again, I noticed a customer sell June 2.5 Puts in ARRY for $.25. I went $.30 bid on these Puts and could not get filled. I put in a $.25 bid on the Puts this afternoon and got filled. I want to get long ARRY with a possible POP back to $3.20, so I turned these Puts into Calls buy buying stock against them. The Price of a Call w/o dividend or interest in Put Price and Stock Price minus Strike Price. I paid $.25 for these Puts and bought $2.81 stock, so $.25 + $2.81 – $2.50 gives me a $.56 Call. This stock only has to rally back to above $3 by June in order for this Trade to be a HUGE winner. Stay tuneds for more updates.
UPDATE 2.15.2012 These Calls are worth about $.55 and the stock have been moving less than in previous months. Since I have until June, I will wait it out until I get an upside POP.
UPDATE 2.16.2012 The stock did rally up to $2.87 and it got me real excited, but now the stock is back down to $2.80. Someone sold more June 2.5 Puts today for $.25 wanting to get me even more bullish and I will continue to play to the upside.
UPDATE 2.21.2012 This trade has not been a winner, but has not been a loser, but I have over 4 months until a POP in this stock so I will leave this trade on until further notice.
UPDATE 2.23.2012 With stock selling off $.04, these Calls are worth $.55. I would rather see the stock move up and down, down and up instead of flat lining. This is a BIG position, but I think ARRY could consoldate here then get a POP higher to $3.20
UPDATE 3.9.2012 With the stock rally higher and the options market being very illiquid, I sold stock at $2.97 and $3.07. This is a winning trade, but nothing a winner until the position closed.