Today was quite the interesting trading day. After missing a long entry with Research In Motion (NASDAQ:RIMM) several times, I took a break from writing and put my order in to write a covered call. I happen to time it with a price of $15.86. This happens to be the high of the day for RIM. This is a great example of why hedging with options is so useful. It also helps make my point that scaling in and out of trades can help average a longer term position in without having to micro time it (like what I would do with a day trade).
I am also currently watching Sears Holding (NASDAQ:SHLD) for a long entry. Target entry is currently in the mid $20s and with another strong leg down or two we could get there. Ideally it gets there Thursday for a long entry and does the bounce higher on Friday and implied volatility shrinkage over the weekend for the profit target.
Weight Watchers (NYSE:WTW) was my trade today. I received two different short signals. The first was the double overbought on the 10 min bars, and then later a B9 short signal. I started shorting and went heavy short via buying puts when it went over $67 a share. My computer kicked out a short signal at 67.18 and I had to hold back and not short the stock due to not knowing what the reason for the climb was. Knowing the stock was heavy short and it could be a possible buyout company limited my ability to get too aggressive.
Sears Holding is still falling. I ran the numbers today and it appears the stock can fall much further and is anything but a value buy. If they get in any kind of trouble the shareholders could get wiped out as a liquidation would possibly mean a sale below liabilities.
As I understand the situation Sears may be tapping into credit lines and that is pretty much the opposite direction a retailer should be going during the holiday season. Option premium is sky high and while I was looking for a long entry (hoping to buy in the mid 20s) I will have to see a very strong leg down to entertain that idea.
I rolled over the Research In Motion (NASDAQ:RIMM) weekly calls today to the January monthly. I really like this covered call and will look to add to the position tomorrow into the weekend. Implied volatility of the options is sky high and I want to catch the weekend time decay.
@RobertWeinstein
Robert Weinstein G+
Hi Robert,
I happen to be short WTW as well. I would love to learn more about what constitutes these short signals you mention. Does your software merely alert you to possible shorts, or does it pick levels that it determines are optimal? Shorting run ups is my primary strategy. You may have something that might help me further develop my own trading.
Thanks,
Bruce
Hi Bruce,
Sorry for the late reply.
I have several short signals that I have developed. My primary intraday signal is based on multiple time frames and is a fading signal to allow me to capture the spread but requires me to take some heat at times (no such thing as a free lunch). It works well though and I continue to profit from it.
One overnight signal I like a lot is based on what I call a gap higher plus two. There is a lot to it but the basic break down consists of a stock performing well, gaping up on good earnings/news etc... and having two strong following higher days. I fade that near the close on day two (there is an entry signal I have) or day three and has provided some impressive results.
Feel free to share your thoughts and what you are doing and we can start to compare notes.
Best,
Robert
@RobertWeinstein
Robert Weinstein G+
@RobertWeinstein
Robert Weinstein G+
Heads up on Tomorrow.
Apple is near a short term top
Sears is not a value buy here. look for it to trade lower
EK is officially on my death watch
@RobertWeinstein
Robert Weinstein G+
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