Wheeee – what fun!
I love it when a plan comes together and we were not disappointed in yesterday’s action (see David Fry’s chart) as we shorted the morning gap and bought the effing dip when it filled later. That was our plan from the Morning Post, of course and we had a FANTASTIC day grabbing the DIA $120 puts at .88 at 10:50 in Member Chat and we ditched those at 1:41 for $1.06 (up 20%), flipping into the TNA $84 calls at $3.30, which finished at $3.90 on the stick save – that was certainly no surprise to us as my exact comment to Members was:
TNA – Chart looks just like an exaggerated version of the RUT to me. They are down a bit more than the RUT as the moment so, since we hit goal on the DIA puts, it could be fun to grab the TNA $84 calls at $3.30, which were $4.80 this morning – looking for a bounce. A 10% risk down to $3 would be the way to play or use the 817 line on the RUT as a sign to get out. Making 20% would be $3.90ish so that should be goal for the 2:30 stick. Done with DIA $120 puts at $1.06, of course.
People ask us what kind of trade ideas we put up in chat – that’s a pretty good example of our day trades. Of course, the day trades get all the attention because they are the fun ones but we advocate keeping the vast majority of a portfolio in long-term, well-hedged positions that you don’t have to worry about. This leaves us free to hang out and chat and make a little money playing with our cash.
As I mentioned in this weekend’s post about "Warren Buffett’s Secret to Making 100% a Year" – it’s all about compounding those returns. Our long-term picks on Monday were JP Morgan (JPM) and Google (GOOG) for 2013. Those are our "serious" picks for value stocks we look to establish a long-term position in and compound them over years of holding. We also day traded oil from $97.50 to $98 in the futures - twice - and there was a speculative short-term bullish trade on UUP off the $22 line which was not intended to be a day trade. This morning we’ll be looking to establish a long-term position in YRC Worldwide (YRCW) but we’re hedging it down to .90 – just to be safe.
We also took advantage of the nice goose to the RUT to pick up TZA (yep, flip-flopping again) as our primary hedge – just in case ... As the WSJ notes this morning, small business firms (the ones the Republicans claim to protect) want a strong dollar so that American Citizens - who live and work in America - can afford to own a heated home with enough left over to buy some food and, hopefully, even be able to purchase their goods and services. Big Business wants a weak dollar, so they can sell their goods overseas and use those profits to buy land and capital equipment from struggling American individuals and firms at relatively bargain prices – maybe even in foreclosure!
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