Thursday, February 19, 2009

blackvaultcm.blogspot.com Will Be Shutting Down!

I'm not going to be updating this site anymore. The reason is that I'm working on a new site http://www.blackvaultcm.com/. I don't have the time to work on the new and update the old.
My goal is to create a community where everyone can exchange ideas and communicate with one another and add other features that are difficult to do with this site. (blogger.com)

If you're still interested in receiving updates as what I'm doing and market analysis, then shoot me an e-mail and I will add you to the distribution list.

Sorry if this caused you an inconvenience.


Intraday Update - 02/19/09

Purchased PFE @ 14.22
Purchased ATVI @ 9.43
Purchased OZCAY @ 8.31

The plan with PFE, ATVI, CSCO and XOM is to sell calls if they rise 5-10%. If they move further down, then I'm going to keep adding to the position to cost average.

OZCAY is a call option contract on QQQQ. 25 strike and expires December 2011.
Using this as an insurance policy to hedge my position.

Wednesday, February 18, 2009

Current Holdings & Realized Positions

To make it easier to track what I'm doing, I put together two spreadsheets.
One shows my current holdings and another displays settled investments.

I will be updating this on a daily basis, but it will be done through links located on the right hand side under "Current Holdings & History"

Current Holdings


Settled Investments

Recycle Your Options!

Most individuals I've come across shy away from selling calls/puts because it's a slow way of making money. People don't seem to want to wait a whole month to collect a few percentage points. I must say I agree...that strategy does sound boring.

When I deal with options, more often than not I'll be the seller. Statistically alone they say that 2/3's of all options expire worthless. So if you're the buyer, you are already down to a 33% chance of winning. If you happen to be buying at the wrong times on top of that, then you're pretty much doomed to be on the losing side of the transaction almost 100% of the time.
There is an easy way to make selling option contracts exciting and more profitable. Recycle!!!

Here is a quick example. Let's say that Cisco is trading for $15 a share and you want to sell 10 calls expiring 30 days from now @ $15 strike for $1 (you own 1000 shares of Cisco). If the stock does absolutely nothing over the next 30 days, you will collect 10 x 100 x $1 = $1,000!

But that is the boring part. Throughout the month the stock will move up and down. So let's just say that about a week later the stock is trading at $13.50 a share and your option contract you sold has devalued to only $0.10 cents! Now what I find most people doing is just riding it out and waiting until it expires and goes to zero! Recycle instead!

If the option devalued to $0.10, that means you're up 90% in a week. So why wait three more weeks to collect the remainder $0.10 cents? The odds much better for that option to go up in value than down. What I do here is buy the calls back to close out my position and wait for the stock to move back up. So let's say the stock moves back to $15 or even as little as $14 a share the second week...the option contract will increase in value. This is when you re-sell for a higher price and repeat the process if available.

Real life example. Just last month, I was able to sell Cisco calls for $1.53 when it was around $17 a share, then closed my position for $0.28. Re-sold for $1.25 and bought back for $0.08! If I didn't recycle, I would have watched the call devalue to $0.28 cents and shoot back to $1.25.

So in summary, if you ever have your stock move quickly in a direction over a short period of time, it is a good idea to close out your position especially if you have collected 75% of the premium already. You wouldn't want to risk it going back in value and losing your gains. Then just rinse and repeat!

Tuesday, February 17, 2009

Trading Strategy - 02/17/08

Take a look at where the S&P 100 is trading and the next critical levels.


Trading Update - 02/17/08

Sold JP Morgan March 25 strike puts @ 4.40.

JPM had a decent move to the downside, no point on push my profits further. My target is $19 on this stock, however if it moves sharply in a single day I'll always sell puts and take profits. If the stock bounces back, I re-buy the puts. 96.4% return is satisfying enough.

I've also purchased Cisco @ 15.42. If the stock moves lower I'll sell puts, if the stock moves higher I'll ride it and sell calls. I also purchased some April Cisco 13 strike calls. I'm doing this mainly for protection from the market as a whole. We are approaching uncharted territory and it can get real ugly. This gives me protection in case the market declines 15-20%.

Monday, February 16, 2009

Trading Strategy - 02/16/09

I can't wait until markets open tomorrow. I really dislike having a day when markets are closed.
Some important events happened over the weekend, so take a look at where we could head next.

S&P 100


Exxon Mobil


NVDIA


JP Morgan


Cisco Systems