Is TODAY the day???

Discussion in 'Trading' started by T/A_Bo, Jul 23, 2002.

  1. Today was a hiccup. More downside in my opinion. Earnings aren't pretty and the market is too over valued. I think the dow needs to be around 6000 and the naz around 1000.
    #31     Jul 24, 2002
  2. T/A_Bo


    hehe, thanks Eric :)

    I still have one of those "Bo knows" T shirts in my closet! :D

    #32     Jul 24, 2002
  3. Ikspec


    I'd be very hesitant about buying OTM options now. Volatility is huge, you're paying through the nose for the options and are going to get killed if volatility collapses. Other than that, good rally call :)

    #33     Jul 24, 2002
  4. bosstin


    5th & 15th were not key, just plain ol' reversals. Technically, todays reversal took out the highs & lows of the previous day and many regard it as a potent signal of a change in trend. I would imagine all those who see the key reversal tonite flooding the market with buy orders tomorrow.

    I'd be a nervous short right now...
    #34     Jul 24, 2002
  5. T/A_Bo


    Actually, the premium seen in the OTM calls is a representation of the “hope” that they will eventually trade in the money. When I took mine, the Dow had just broken to new lows, and nobody in their right mind would be buying calls... :D SO, as a result they were very cheap as there was little “hope” value built in. Nobody wanted them as the market was “obviously” in meltdown mode. Now today, we get a gap and snap, the biggest day since 1987. The market has just whacked the majority upside the head, telegraphing REVERSAL REVERSAL!!! They get greedy and hopeful in short order, and as a result, my calls doubled in price today. As the bullish argument grows, so will the hope, and with luck a little ITM value will kick in for the final day and reward me for the risk I took.

    The market is set up perfectly for a breakaway gap tomorrow, keep an eye out for high tick readings, and a lack of gap fill in the first 30 mins as confirmation signals.

    Good Luck and Good Trading!

    -Bo Yoder
    #35     Jul 24, 2002
  6. I hope you got your cheap calls and are prepared to dump them on a moments notice, or else buy puts at a high point to make a straddle. If you can leg into a straddle you can make serious cash or at least get a free position when you leg out.

    My attitude is that the economy and the general market fear will not allow a "V" bottom right now. I am looking for a real bottoming pattern like a double bottom or a reverse head and shoulders, etc.

    I went long puts on djx and qlgc this afternoon.
    #36     Jul 24, 2002
  7. Ikspec


    Hope schmope. They were expensive. Take a look at Implied Volatility in the past year on the DJX (I'd say DIA, but since they've only been trading options on DIAs a month or two, DJX should mirror the IVs on DIAs pretty much), now look at the IVs of the calls you bought, now look at IVs on the DJX for the past 5-6 years. Yep, expensive options.

    #37     Jul 24, 2002
  8. If he bought calls when he posted his message he made out like a bandit. IV's from 5 years ago don't mean much. I've never heard of a 5 year old option.
    #38     Jul 25, 2002
  9. T/A_Bo


    As I write this the Dow is sitting +375 for the day!!

    I took 1/2 profits on my call position a little while ago as my options have now more then tripled from my entry. Banking some of these gains as the dow is up near my target of 88-90. Would rather take some green off the table now as the Dow is so extended, and then hold the remainders for a continuation of trend.

    This play shows why I did this with options rather then futures or DIA. Went long as DOW was near 7700, and then would have stopped out hard on my outright positions the next day as the gap and snap took off. In stead I had the staying power with options to not lose my position, and be able to ride the dow up more then 900 points :)

    WHen there is a shock move waiting in the wings, OTM options are a nice way to ride the volatility to a nice r/r scenario!

    Good Luck and Good Trading!

    -Bo Yoder
    #39     Jul 29, 2002
  10. <cough> trade....:cool:

    -Flyin it High
    #40     Jul 29, 2002