Forex Is Crazy

I've yet to buy in to or incorporate Fibonacci lines in to my trading, but this chart is pretty hard to explain away as random. For someone that does trade technically using this indicator they've done really well the last few days.

The stock is down $2 since I sold naked calls last Friday and I was just able to double down on my short call position for one penny less than my original entry. I got .30 on 2/18 and got .29 today. The reason this is possible is the three day sell off put fear in to put buyers and they drove implied volatility up from 49% to 65%. Since put/call parity means IV is distributed almost evenly, even though its the put buyers who are driving up IV, the calls benefit from an increase in price as well. I will gladly take this gift. Here is a link to the original trade last Friday 2/18/11. http://bit.ly/gSjqLH And here is a link to Put/Call parity in case this is a concept you would like more information on. http://bit.ly/dPO2s3 I also deleted my technical analysis drawings today and started from scratch. I like to do this from time to time to make sure I'm operating under a just set of assumptions. I found something interesting. In the updated chart you'll notice I added a new set of ...

Trade Update 2/22/11: I sold 18 strike puts today for .28, which now leaves me short an 18/25 strangle at .58. The original call sale and trade idea as well as updated charts are below. The short FEB 19 puts expired worthless today.  IN THE MONEY TRADES: New Trade: RMBS Short FEB 19 Puts   And earlier today I decided to short the MAR 25 calls for .30 and here is why: IV is elevated again in the low 50's (favors selling premium rather than buying) HV has been flat at under 20% since October. Which means the IV bid has been wrong the last four months and speculators haven't been getting paid. We failed at resistance this morning at roughly $22.00 There is a second possible resistance line above near $23.50 Third possible resistance line at 52-week high of $25.50. Keep in mind that was an intra-day high and the largest closing high the last 12 months is $25.03, which is under our break-even point of $25.30.  Getting to $25 from here in four weeks looks like a stret...

While I'm happy with the realized gains of $4800 for FEB, I'm also currently sitting on MTM losses of ($3018) that were from trades initiated this month. So things need to be kept in perspective. I'm also happy to be closing in on $100,000 of total gains since I abandoned the buy-and-hold mentality of long-term investing in exchange for active trading in late 2008. Even though the historical average monthly income of $3,100 per month during this time is currently barely enough to justify trading my account for a living, there is comfort in knowing that until recently I've been very conservative and haven't used even half of my available trading capital. You can actually see from my average monthly income chart below where I started out with a bang shorting the markets during the financial crisis, where I took my losses when I abandoned my legacy buy-and-hold positions, where I targeted $2,000 a month during 18-months of MBA school, and where my average has slowly be...

Below is the original trade post on 2/15, scroll down to "Trade Update" on 2/23. After successfully shorting ZB numerous times during the recent 119-122 trading range, I wanted to take a break after it broke support near 119 to see how it acted. I had a rough target of 119'05 drawn that has historically been  major resistance over the last two years. And as you would expect it became support on the way down after the bond bubble burst. We've now stopped almost exactly on target three times over the last few days as it tests former support near 119. I'm still short 5 FEB ZB calls that expire on Friday so I can't get crazy with size here. But I am comfortable dipping a toe in and more than happy to short with larger size in the low 120's if we break 119 to the upside. Though there are numerous forces pushing bond prices down in the medium and long run, there is also always short-term risk to the upside if equities finally roll over, the middle east comes unh...

It is not often that I find a new tool that I am super excited to add to my tool box. But recently TOS released what they refer to as Monkey Bars. Monkey bars are based off the principles of Market Profile, which was origanally developed by J. Peter Steedlmayer in the 1980's in conjunction with the Chicago board of trade. Back when futures were not global, market profile was a way to tag where prices went off in each 30 minutes of the day. In short they basically used letters for each period and by the end of the trading session you would have a distribution of prices for that trading session. But as the session went on you could start to see what Peter deemed the "fair price" or the mean that all the other trades would trade above and below, think of a normal distribution. The basic idea is that as the session developed you would be able to identify TPO's (time price opportunities) where unfair prices would become obvious, trades that were out of the value area (wher...

On Monday 1/31 I was waiting to see how the markets opened and how they reacted to the weekend news in Egypt that riled the markets the previous Friday. If there was no initial follow through of fear then I was prepared to short the VXX via short calls. I picked a pretty far OTM strike in case I was wrong and gave myself some room. I sold to open the $40 strike calls at .42 and closed out today for .03. I captured 93% of the profit in 8 days so I decided the risk/reward of holding another 11 days for .03 made no sense. On to the next trade. It's a relatively small pick up with a net of $382 after commish, but risk was relatively low as well.

Turn on the TV, open the Paper let's party like it's 1999. The Good and what's working now. So here we are Feb 3rd 2011 and the market has continued it's crazy strange fed induced run. The big play has been to buy the dips and to be honest until this stops we continue to go up. I've been playing long call spreads on the several sectors, coal(JOYG, PUDA, WLT), chips(ARMH, TQNT, SWKS) and have been buying long term leaps on SLW and AGQ(3x index on silver).  The metals: I was dead on with the sell off in the silver/gold trade I wrote about back on the 1st of January and had you put on some short trades you would have made more money going down than going up. Now it's time to start getting back into the SLV and SLW trade. Do I think these will rocket up....no I think they go sideways to up as the weak hands have been shaken out and it's those of us that understand contrary to the publicly released CPI report by our beloved government that inflation is skyrocketi...