Forex Is Crazy

As you all I know, I occasionally check out other platforms as they make improvements and added features. A few months back I checked out a platform Livevol, which was a really cool and useful tool as you get further into your options trading career. It retails for about $100 a month. Well now trademonster is adding those same scans for free to its platform. They do not have them all but they continue to make the library larger. So if you get a chance check out the trademonster platform.

Let me tell you I am so tired of talking about QE2 and am glad that it will finally be out and in the open once the fed conludes their two day meeting next week. We have seen estimates of 500 billion to 2 Trillion. Then you have GS saying that anything under $4 Trillion will be ineffective. But since then the number has been tempered a bit to a few hundred billion dollars over several months. I think that the markets have been pricing in a much bigger package and we might get a sizable corrective move after the details are released. But you also have to look at the flip side, the market may take it as the economy is not doing as bad as everyone thought, therefore the fed does not need to print that much more money. But I will tell you, aside from teh trades that I have on that are non directional plays, I am playing this with a bias to the short side. I have the following positions to the shortside going into next week. 1) Long 5 RBOB Dec '10 2.04/1.90 Put spreads @ $0.0525 2) Shor...

Today I put on a front to back calander spread using the Dec and Jan Crude Futures. I am short the Dec contracts and long the Jan contracts. I put this trade on locking in a diff of 76cts over the Dec contract. So you would say I am long the Jan/Dec at +76. I like this trade for a few reasons. One is the liquity of these contracts is great, 2nd its easier than playing flat our direction, and lastly because of an abundance of inventory. We have more crude then know what to do with and I do not see that happening anytime soon. The spread has gotten as wide as +140 or $1.40, seen in the begining of September. There is price support around +65 ish. I am looking to add around this area if it comes in some more and look for it to expand back up towards +140. I would stop the position out below +60 and would probably sell half if not all around +100 to +110. So risk is about 10cts (assuming I get the second set of 5 lots, Avg price would be +70 with stop at +60) for a reward of 30-40cts. I ha...

I have not had a lot of time to post over the last few months due to the new trading position. But my goal has always been to make it back to the blog on a regular basis. But starting in November my goal is going to be to post and update about every position. Keep me Honest!!!

When I talk about OPEX, I am talking about option expiration for the RBOB and HO products option expiration cycle. It is a bit different then equities which happens the 3rd Saturday of every month (last day to trade is the Friday before). For RBOB and HO opex falls two days prior to the expiration of the futures contract, as is the case for Crude Oil. But note however that Crude has diferrent expirations than that of RBOB and HO. So with that said lets take a look at what I am holding onto going into OPEX tomorrow. Below you will see all my current holdings that are exposed to the NOV opex cylce. I have ran through 2 of the most likely scenario's for tomorrow and what that means in terms of P&L for me. So for NOV my P&L will fall somewhere between + $6,510 to - $14,490, or about a $20k range. My money spot is right at 2.22.

Keep a watch out on the $SPX and get prepared now for the storm before it arrives! Once again I will say if you do not have protection against a market sell off, get it now. Take a look at this chart. Now take a look at this chart. Look at the month of April up above and then down below. If this doesn't scare you I'm not sure that Halloween's gobblins are going to phase you. These charts come from Jeff Clark at the growthstockwire.com. Before you write this off as just another crazy guy with his charts know that this bearish wedge formation breaks to the downside at around 80% of the time. Jeff Clark is the best in the business at short term trading so you'd better heed his warnings. I suggest December puts against the SPY or for the more courageous calls on the SPXU(3x the DAILY move in the S&P 500, more of a short term trading vehicle, not an investment) Do Your Own Diligence....it's your money...Act like it!

It's still all about the Mighty Dollar!! Look at the chart below specifically at the red circles and you will see that the dollar is WAY oversold and becoming less so as we speak. While the old saying goes that the market can stay irrational longer than we can stay solvent we use option to try and even the odds against this fact. I mentioned this back on Sept 29th 2010 and gave you a trade to play this upturn in the dollar and even a way to benefit while we wait for the upturn to happen.  See link for more information on the trade.  http://inthemoneytrades.blogspot.com/2010/09/watch-out-for-dollar-before-deciding.html In case you've been living under a rock over the past few years and specifically the last few months and haven't noticed, the dollar has been under enormous pressure as the Federal Reserve (Ben Bernanke) has all but stated that they are going to print money in order to get the economy roaring again ala via QE2 (Quantitative Easing Part 2). While I personally b...

This was one of my worst months. I've got worse but still haven't made the time to recreate my trade history going back to mid 2008. I lost big on two trades and they had something in common. The first is the VXX trade which was a lack of diligence on my part. I didn't learn of the tracking disparity of this instrument until after I had long exposure via short puts. My original thought process back on 9/1/10 was that VIX wouldn't break 20 through SEP/OCT and I was willing to get long exposure if it did. At the time the VXX/VIX disparity was only about 2, so I sold 19 puts on VXX for .80 that put my cost average at 18.20. I figured this was a good enough proxy for VIX 20. So it turns out I was wrong anyway as VIX went as low as 18 and closed today at 19.40, but I lost much more than had VXX been a better proxy. The point is I entered in to a position without having full information, and that's not investing, that's gambling. The second losing position that I'...

So I apolagize ahead of time for not being able to post in a timely matter about my positions, by my work is my priority and I post as I have time. First lets list my current positions: 1) Short 5 CL DEC 80/82.50 call spreads (left over from iron condor) 2) Long 5 HO NOV 2.06/1.99 put spreads (mostly worthless) 3) Short 5 HO NOV 2.12 calls left over from covered call 4) Short 5 HO NOV 2.27 puts to cover futures for short call above 5) Long 2.27 HO covered call 6) Short 1 RB 2.16 straddle 7) Long 10 Mar/Mar RB/HO spreads 8) Long 5 Nov/Nov HO/RB spreads So lets talk about the positions now. I am still short the 80/82.5 call spreads left over from the iron condor that I sold as I bought pack the put spreads at 10% of the original sale price. The long HO put spread is basically worthless and I do not want to waste commission buying it back, unless I can get enough to cover commission and then some. I originally had a 2.12 covered call, but I had sold the covered HO futures on accident ...

Back on September 24th  I wrote a post about two current positions I had on. I just wanted to give a visual as to why I thought the Mar/Mar season RB/HO spread is an attractive trade to me. If you recall I am long the March RBOB furtures and short the March HO futures. I am only playing the spread between the two and am not concerned with price movement in either direction. I am currently long 10 such spreads with an average spread at 18.80 cts under (meaning that RBOB is trading at 18.80 cts lower then the HO contract). Lets take a look at the historical performance of this spread: As you can see from the above chart I have plotted the perfomance of the Mar/Mar RB/HO spread for the past few years, with the dark blue line representing the average of all of the historical data from the past few years. With the execption of the 2008-2009 move this spread has worked out pretty well by moving from 20 cts under to about 2 under on average (September entry and Feb exit). I think that due...

fAfter closing out my short 300/310 call spread for a loss and analyzing the trade more, I just felt this stock had a destiny with $300 and IV was historically low so felt like being long made more sense but didn't want to take the risk of being wrong. I didn't want to pay the $6 premium for those calls, so I bought (2)300 calls and sold (4)310 for a net of $1.05. My hope was that it stayed in its uptrend channel and I could get out for a profit before expiration. But I didn't lose anything on the trade until the $320 strike so really wasn't concerned. But of course as soon as I put the trade on the stock tanks almost $20. It was meant to be a lotto ticket type play with a net debit of $210 and average possible payout of $1000 between the 305-315 strikes. So I just hung on and was able to get out for a small profit today of $300. I closed at about $301.50 intra-day. I felt that with only 2.5 days to go the likelihood of pinning near $300 was great and that would be a lo...

What happened today: Today's market really provided no clue whatsoever as to which way we're going....up or down. What everyone is waiting on is the employment report on Friday. This could be a big mover in the market as the market has priced in or is in the process of pricing in more QE2 (Quantified Easing 2), which simply means we're going to print more money and try to create inflation. I personally am bullish on gold and silver for the long time and have been if you've known me for that past 9 years. With that being said you need to be careful if you own gold/silver via ETF's in the market currently and if you do not own any protection.....you are playing with fire. Get some protection either by selling calls or buying puts. If the dollar trades higher which I have blogged about recently and have a trade that is doing exactly what I thought would happen over the past week, you better watch out, gold, silver, and oil will sink which will also sink the stock marke...

The oil complex has been on a tear the past three days with some pretty explosive moves to the upside. Although I had anticipated and had played this move to the upside, it has gone much farther then I imagined it would. Most of the move started after the DOE came out with its weekly reports and showed draws accross the board. The other thing aiding this upmove is the start of the new quater and new money flowing in. The fact that most people have forgotten is regardless of the small draws seen last week, this market is still way over supplied with inventory builds at multi decade highs. There are still a lot of issues out there that need to be resolved. Housing continues to suck...GDP continues to slow on a sequential basis...and where are the jobs? We can't have any sustained recovery on without jobs. I know that the fed has hinted towards QE2...but with a balance sheet already carrying well of 2 trillion, what is the talked about 500 billion really going to do? And even if it is...