CLF- Classic "Re-Test"

CLF bounced, just like we thought it should. It also made a strong bounce, and hopefully will resume it's uptrend without further delay. The next of our trades that has be concerned is GCI. We caught a lucky gap to the downside, but now it is indecisive about going further. We will keep an eye on this for a sign of weakness to exit, but all others continue to move in our favor. Here is our trade log as of this evening...

(Cost Basis)
CLF Dec 95 calls- $2.70
UNH Dec 60 calls- $1.30
THE Dec 45 calls- $1.60
GCI Dec 65 puts- $2.00
LLY Dec 50 puts- $0.80
PD Dec 135 calls- $2.10

Here are the closing prices on these options as of today...
CLF Dec 95 calls- $2.85
UNH Dec 60 calls- $1.90
THE Dec 45 calls- $2.25
GCI Dec 65 puts- $3.30
LLY Dec 50 puts- $1.10
PD Dec 135 calls- $2.90

The profits continue to rise....


Trade Updates (All Six Of Them...)

So here are the six option trades we are in and our cost basis...

CLF Dec 95 calls- $2.70
UNH Dec 60 calls- $1.30
THE Dec 45 calls- $1.60
GCI Dec 65 puts- $2.00
LLY Dec 50 puts- $0.80
PD Dec 135 calls- $2.10

Here are the closing prices on these options as of today...

CLF Dec 95 calls- $2.05
UNH Dec 60 calls- $1.50
THE Dec 45 calls- $1.80
GCI Dec 65 puts- $3.20
LLY Dec 50 puts- $0.95
PD Dec 135 calls- $2.50

Great news traders...our accounts are up +10% in less than a week!!! We are profitable on all but one trade, and our only cause for concern right now is CLF. It has pulled back to it's old resistance level, and looks to be bouncing off of it as new support. If this support is violated (closes below) this will be our signal to exit the trade. This reaction is commonly referred to as a "re-test." Stay tuned as we will continue to monitor these trades. Also stay aware of market conditions and how the market reacts to its current resistance level we are sitting at. This might have an impact on these trades going forward. However, we are at a typically bullish time of the year for the markets. Things could easily move either way right now and would be justified in doing so. Stay tuned...


Bullish Trade- THE

THE has a solid uptrend, and currently looks as if it is bouncing off support. Im entering a trade here in hopes that it bounces. I am also entering here because if suport fails, I will know immediatley that I am wrong. Since the top of the channel is about 10 points, I am buying a Dec 45 call for $1.60. OTM will result in a bigger percent win if the trade works out. Stay tuned as we monitor this trade daily.

Watchlist trade- GCI

This weekend, we listed GCI as a bearish candidate that was added to the watchlist. The stock has started it's descent to the lower $60 range. I am looking at DEC 65's at $2.00.

Officially our portfolio is consistent of CLF, UNH, PD, LLY, and our newest addition GCI.


Bearish Cluster...

The market is approaching resistance and we are getting a bearish signal from the forecast as shown. Since we are in bullish trades as it is, this means we might want to start adding to a bearish watchlist. I am not very bearish on the market, but I think it might be appropriate for the market to pull back just a little over the next 1-2 weeks. In fact, as a homework assignment, look at a chart of the Dow over the last 5 years and look and see what happens to the market this time of year. Consumers are walking into stores and spending money. By the way, this is good for the market. Also look at the Market Forecast "Historical Graphs" and see what the forecast signaled around this time last year. My true bear signal will be for the Green line to cross below the 80 line, confirming a pullback. However, I have bullish and bearish trades I will be placing Monday morning, since I am neutral on the market at this moment. It could either breakout or turn down, right?Here are the trades I will make, they are as follows...

LLY Dec 50 Puts @.80
PD Dec 135 Calls @2.10
Watchlist Bullish
Watchlist Bearish

PD shows a pennant breakout with enormous volume, this is the reasoning behind this trade. It's implied volatility was sky high and rising so this is why I chose an OTM option. I will get small time value and a high vega. On LLY, the stock is already in a downtrend, looks to be turning down from a recent peak. ATM option seemed appropriate since time value was cheap in this option. I am unsure just how far down this might go, so again, we will evaluate these trades along with our others on a daily basis. Check back to see how these trades evolve.


UNH CLF Updates...

Both stocks have posted modest gains thus far on the day. Our call on CLF has risen from $2.70 to $3.50. (30% gain) and the UNH call has risen from $1.30 to $1.45. With today being Veterans day, and the bond market being closed, it is pretty much a dull, yet positive day on the markets so far. Oil prices are still hovering around $57 dollars a barrel, and Dell made a disappointing announcement last night that actually has the stock trading higher. Analysts speculate the reason for this is that their numbers did not fall further than what they had posted.

Stay tuned for an update as of the close.


Support Bounce- UNH

UNH makes a strong bounce off support today at it's moving average. It is up today $1.93 at $59.29 on very good volume. Considering a Dec 60 call @ 1.30. The stock puts together $5 movements without hesitation. If I can see another 2-3$ of intrinsic value, this option trading at 1.30 should be worth a few dollars. I am anticipating this to happen quickly over a week or two and get out. We will monitor this trade over the next several days to discuss exit. Stay tuned...

First Post...CLF

On the weekly trade example dated 11/7, CLF was listed as a possible breakout trade. Today was a good confirmation of this breakout. The stock closed up $1.81 on nearly double it's 20 day average volume. Considering a Dec 95 call for $2.70. Implied volatility is low relative to itself, and this option would see a significant increase based on higher price movement and will respond more to an increase in implied volatility. Exit trade if old resistance is violated to the downside. Stay tuned as we follow over the next several days (or as long as it takes) to exit this trade on the upside....


About me

  • I'm Option Addict
  • From Saratoga Springs, Utah, United States
  • I am a professional trader and an instructor for Investools. I've had relations with the markets for 9 years. Born in Concord, CA, but reside in Saratoga Springs, Utah. Father of THREE, Husband of one.
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