KCI trade - final

Well the verdict was not announced today. No news in fact. So we could have stayed in the trade and profitted the entire amount. As it was I made $10 per contract by buying back my sold position at .60. Am I unhappy with this …NO because I was unable to know if the verdict was coming today or not. I am out with a small profit and no loss.

No Tags

KCI trade - part 2

Well I did close the sold call position at .60 at 8:35 this morning.

Now it is a waiting game for today. If the jury decides to come back back with a verdict today and it is in the favor of KCI then I will close the bought call for another small profit. If anything else happens I made the wrong decision but I have limited my loss especially since I was able to buy my position back at .60!

Update later.

No Tags

KCI trade

Here is a trade question I recieved in a comment. It comes from a trade that I also am involved in. The trade comes from Income Trader

traderjoe says:
what should I do on this particular spread? tomorow it will expire. I bought this spread way back in begin of june. for a credit of .50
KCI jul call 50/55
now it is at 45.
If tomorow it expired and the stock still stay under 50 would I get my .50 credit?

right now my profit/loss show I’m still under $100.
KCIGJ JUL 50 Call 700.00
KCIGK JUL 55 Call -850.00
Can I get some input?
Thank you.

OK traderjoe, I am in the same boat as you only I have a better credit coming of .70 if the stock stays below $50.

This trade has been exciting since June 15th when it broke through the resistance of the 200dma. It WAS a good trade when we placed it in the beginning of June, but now it is a HUGE gamble to stay in the trade, even with only one day left till expiration.

Here’s why….Yahoo News

The stock moved before this news was made public to those of us internet traders and the volatility spiked to an unbelieveable 125. This killed the trade. It was impossible to close the trade without taking a substantial loss. Since this happened on Friday I waited to see what the time value would do for Monday. Well Monday the stock spiked again and the time value did very little, since I was at a large loss already but we were still below the $50 sold call so I decided to gamble a little, which is not what I normally do.

Expiration was this week, time value was on our side, and I was just waiting for the drop in stock price by profit takers hopefully before the decision by the jury. The stock drop came today! So not knowing what is happening with the case, the conservative thing to do is to buy back the sold call for a profit first thing tomorrow morning and leave the bought call open. Now it is no longer a gamble. You know exactly what your loss is going to be and it is not going to be $450 per contract or in my case $430 per contract. I am looking at a loss of $90 per contract right now if I close the sold calls for $1.00 and the bought calls expire worthless. ANd if the decision comes out in favor of KCI I wait for a profit or less of a loss on the bought calls and sell them tomorrow afternoon.

Last point if you would like to gamble, the jury needs to make the decision but it may not be in favor of KCI and it may not be tomorrow. If this is the case you can hold the trade and if it closes below $50 tomorrow both options will expire worthless no matter the volatility and you will collect your $50 per contract.

For me I am not a gambler and I will be closing the sold call tomorrow morning unless I find out why the stock dropped today like the jury has decided to wait until next week to make the decision, that would be good!

I will post tomorrow morning what I decided to do.

No Tags

Support found???

Well, after I had posted about the three indices being out of sorts with one another they sure have come back together - BEAR!!!!

Not only has the DOW blown through that soft support of the possible uptrending channel it blew through the 200dma. The NASDAQ is the worst off blowing by a previous bounce support at 2065 sitting now at 2043.

So what happens from here?

The indices are consolidating and digesting there very large moves. We are in summer and in the middle of a world crisis with the likelihood of the US being pulled even deeper into the “War on Terrorism” on a different front - these would point to continued downward movement. Now the positives - the technicals are showing this digestion and are looking to turn upward indicating a bounce coming, after large drops like we have seen a bounce is due. Lastly the price of oil has been blamed for some of this large drop considering the area in which the war is happening; however the supplies of oil are greater than they have been in 6 years! That’s right all the increase in oil price is due to speculation not supply and demand; a huge correction is in order for the price of oil. Speculators are saying $100 as the key number for oil to hit. It is the number they are looking for, if and when that number is hit (and possibly before that) the true supply and demand economics will kick in and drop the oil price down which should send us back into a bull market on the short term. It can get complicated after that; looking further into what effects a large drop in oil price will have could actually have the opposite effect of what I just stated here, but for the short term there will be a rally in the stock market.

After all these negatives and positives we may have found an area of support and a bounce should be coming.

No Tags

« Previous Page — Next Page »