yes, i've completely blown this trade in terms of timing on the long side. there are selling forces out there much more powerful than my ability to analyse if or where a bottom to this selloff will come. the chart is very similar to the pattern RTP had taken from its bottom a few months ago, only to the upside, a constant push up by a massive amount of capital. we little guys have no idea who's behind these kinds of moves. however, i just don't believe demand for potash is going to decline, not when we're in the beginning of the planting cycle and food supply can't keep up with demand. if i were a farmer, i'd be planting every last square inch right now. normally i would not average down a position of this size, but i see the upside potential of it recovering to 105. i bought 10K at 97.14 and another 5000 at the close yesterday at 97.05 and just now, bought another 15,000 at 95.50, so i'm long 35000@100.48 average. i'll buy 15000 more in 5000 increments if it approaches it's last support level of 91.35. if it breaches that, i'll go all in short to its 200MDA of 82. but i don't think it will. too far, too fast. i've hedged and bought the JUL 100 puts just to make sure i don't lose another $200K on this trade. http://www.schaeffersresearch.com/c...tionbytes.aspx?single=true&byteID=93617#93617 Put Trading Builds on Potash Corporation of Saskatchewan (POT) Following Demand Warning 6/18/2009 9:12 AM Keywords: POT Potash Corporation of Saskatchewan (POT: sentiment, chart, options) saw some heavy option trading on Wednesday after the company warned that earnings would be weaker than expected due to a decline in demand. The security traded more than 169,700 contracts yesterday, which is more than three times the stock's average daily trading volume of 51,547 contracts, according to data from WhatsTrading.com. Overall, puts have been a favorite among options players on the International Securities Exchange (ISE). During the past 10 trading sessions, 1.09 puts have been purchased to open for every one call purchased to open. This ratio of puts to calls is higher than 74% of all those taken during the past year, pointing to a growing skepticism. What's more, the Schaeffer's put/call open interest ratio for POT stands at 2.33, as put open interest more than doubles call open interest among options slated to expire in less than three months. This reading is higher than all those taken during the past year, indicating that short-term speculators have not been more pessimistically aligned toward the shares at any other time. Technically speaking, the equity gapped lower on Wednesday, resulting in a loss of more than 10% as it closed below the 100 level for the first time since May 11. Potential support for the shares is rising into the region in the form of the security's 20-week moving average.
see that little green spike in the last half hour? that's the gap up at the open friday. i'll clear 5-10+ a share on 50,000 shares, plus my call options, make my loss back, and end up for this trade. just watch.
not relative to having another $8M in other positions. some trades don't work out, and i'd rather trade my way out of it than take the loss. all bad trades are fixable. i could just scalp an ETF $1000 x 200 and break even. or hold and write the options. you tell me how to fix it my mistake.
sometimes picking a bottom on a short term correction or selloff doesn't always pay off. i hadn't been thinking of taking a large position in POT, mostly i scalp it. the gap down surprised me, but then i looked at the options reports and saw that within $5 of a bottom, those options will be sold and calls will become attractive again. i think they call that a short squeeze. let's just watch it play out, shall we? and yes, it is absolutely gambling. that's trading.
/ZWN9 -3375 /ZMN9 -16900 /YGQ9 -300 /E7U9 S10@1.3965 -4875 /NGN9 S10@4.05 +1750 /QMN9 B10@70.375 +510