Post feed*Yawn*....and a trade on THE
Does anyone have something interesting they would like to talk about? I'm golfing in the morning....Taking the rest of this week off....oh the Market? What 
about it?
Did the market do something interesting? NO!
What started out to be a generally optimistic day, ended up only slightly down on little conviction. The Fed paused. Isn't that a good thing? Guess not.
In any event, the news has come and gone. The show must go on, so there are plenty of trades to place. I bought puts on THE anticipating a breakout. Yes, I know I broke the rules, but it looks too good to pass, so I took a huge position. The options looked quite cheap. One upside to buying in anticipation of a breakout is that the options are not chucked full of implied volatility. This creates a cheaper premium...so I decided..."what the hell" and loaded the boat.
about it?Did the market do something interesting? NO!
What started out to be a generally optimistic day, ended up only slightly down on little conviction. The Fed paused. Isn't that a good thing? Guess not.
In any event, the news has come and gone. The show must go on, so there are plenty of trades to place. I bought puts on THE anticipating a breakout. Yes, I know I broke the rules, but it looks too good to pass, so I took a huge position. The options looked quite cheap. One upside to buying in anticipation of a breakout is that the options are not chucked full of implied volatility. This creates a cheaper premium...so I decided..."what the hell" and loaded the boat.
I also took a position in UNH to hedge, just in case. It was a good re-test of the old head & shoulders neckline.
Even though I will be out of the office, I will still be posting regularly through the week. So continue to check back to see what's going on.
I'll also be posting later tonight. Thanks!
First I want to say that I love your blog site. I am very happy to have a place to come and check in and see what is going on inside the mind of a successful trader. I check in several times a day and look forward to your next post.
Now, about breaking those rules where you need confirmation before entering a trade. Is it possible that this is actually a safer way to trade in this market which is so volatile? As long as you have a very tight stop--and then here's the hard part for me--actually following through with that stop!
What is your exit point for THE? If you are trading in anticpation of a break of a descending triangle, then THE has no business being above $33 and if we want to be generous, perhaps give it till $34.00 for a risk of $1.00 with a possible reward of $12.00 or so, although I would personally find it impossible to ride a trade for that long. I would find a more realistic target to be $6.00 down to $27 for a 6:1 reward to risk ratio.
Compare this scenario with a stock such as BNI that has shown confirmation of the MACD but has already moved $4.00 from it's recent high by the time the confirmation has been given. It seems to me that often times the stocks have already made a large move with the confirmation. Anyways, enjoy your time away & good luck with THE & UNH!
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8/08/2006 11:13:00 PM