Well, lot of money was made by someone! Big moves always mean someone is making money. When there is someone selling, there’s always someone buying. Not necessarily an individual investor. It might be a fund that buy at a lower since they’ll hold for longer term and might be buying dividend paying stocks. Might also be that the market makers or specialists on exchange floor are buying. But when the market makers and the specialists buy, they will make sure they get a good price. They provide liquidity. Also probably volatility.
Anyway, the MSFT calls are at this point 100% guaranteed to not be profitable. However, what is the minimal loss that I can get out with. I have almost wiped my original investment. That was one of the rules to not lose the original capital. Now, I will have to attempt to guage and estimate a correct price that is possible and attempt exit around that. I will most probably also have to fund the account again.
Never, go all in!
Market Analysis - Nov. 6th.
And then there’s the MSFT.
MSFT - Nov. 6th.
Aside, from the overall market direction, the selling pressure on MSFT seems to be cooling off. So hopefully, it will make a move up in the near future. I also have some MSFT share in a different account. Those are just for holding.
P.S. This post is made on Nov. 7th morning but backdated for continuity.
So Yahoo says that Microsoft should buy it? Why? They were too good for the original 33/share price. Then they would do anything to avoid being bought over by the “bad” Microsoft and went begging to Google. Google also tried to unnecessarily “save” Yahoo from Microsoft. For what perverse purpose? What is the big problem? Yahoo acquires news technologies and their userbase for the purpose of making money. Google acquires new technologies (some really just a teen social phenomenon) and their userbase for the purpose of making money. So what is so bad here about Microsoft buying Yahoo and it’s userbase for the purpose of making money?
This might be reflecting the new Microsoft price of 21.69 currently. Which is really bad for the calls I’m holding.
Yesterday MSFT fell below MA 20 and gapped down today. Also continues to go down today. This may be a simple following the market thing or another expectation from shareholders of MSFT that they’ll do something crazy like buy Yahoo.
Personally, I think that MSFT will benefit from the added userbase of Yahoo and if MSFT revamps the really big and overly flash based ads on Yahoo that take 50% of the screen, then it will be a good money maker for MSFT. Even as is, it might be a good money maker. But it has a slightly cheesy look. But on the other hand, if paying a premium and having the share price nosedive is gonna be a longer term thing, then I don’t want MSFT to buy and get involved in rebuilding a search engine company that long since stopped being a search engine and has become more of a web portal. Not insulting Yahoo search capabilities, but just saying that even people who use Yahoo as their main search engine, use the word “google” to mean search. When they search on Yahoo, they say they just “googled” it!
So the post election market was a down day. It’s probably not due to the election result or anything. Might be that the pre-election gains were on an optimistic note and this was the market giving those back. Still holding above the 9K mark. Only tomorrow will tell which way the focus is.
Market Analysis - Nov. 5th.
Also MSFT continued with it’s dismal performance. So those options are worth even less.
So the watchlist was not a great watchlist. It was many stocks that were very low volume stocks. And some SUNV is an OTC stock. I want to stay away from OTC stocks for options trading.
Stock
Close
Change
Volume
Notes
EFG
48.22
+2.68 (5.88%)
361,061.00
OK Volume.
SUNV
0.640
-0.020 (-3.03%)
130,320.00
Low Volume. OTC stock.
IRY
26.72
+0.82 (3.15%)
900.00
Non existant volume.
GILD
47.07
-0.24 (-0.51%)
9.99M
Above MA 20. Might be consolidating here. Seemed to bounce off of resistance.
First, of all there’s a lot of stuff that I’ve been tracking. The market charts (Indices), MSFT chart and now a watchlist. It will get a little confusing discussing previous day’s watchlists and posting new ones and discussing charts and all. So hopefully, I can have a clear format and keep it simple.
Market Analysis - Nov. 4th.
The markets did well today. There was something of a pre-election downturn but in the end, I guess most people decided it was still time to buy.
On the other hand, let’s see how MSFT did. It seems to have done well for the day. RSI is already making higher lows. MACD seems to be making level lows and CMF is lessening selloff pressure. Hopefully, it will allow the stock to rise higher and cause the option premiums to gain value. Not holding much hope of getting higher. But it is still nice to know that technicals point to a climb higher. However, on the fundamental side, the election could swing the market either way tomorrow. Most people says it should go higher on election rally. Tomorrow will solve that mystery.
With election day, it will be tough to navigate the markets. It might be best to not play. However, in general using some candlestick patterns here’s a watchlist.
Bullish Abandoned Baby
EFG
SUNV
IRY
Bullish Engulfing
GILD – Target $50. Higher volume than yesterday.
DUK – Target $17.30 – $18. Volume bar low than yesterday.
LNC – Not above 20 MA Yet. If breaks on 5 min and holds then Targets $26 – $30. Higher volume last bar.
BRCD – Above 20 MA. Declining volume. Might have a quick play. Not a target higher than $4.1. Next stop $6. MACD higher lows. Price falls straight without making many lows.
YUM above 20. MACD higher lows. RSI almost crossing 50. Volume lower. If crosses $31 then might go to $32.
Currently, my portfolio is down 87% or something crazy. This goes to those rules I hadn’t made yet and that I didn’t stick to. Well, not having made the rules is an excuse, since I really knew money management is the only thing that separates the tranders from the dice rollers.
All I can say it that having my money tied in microsoft has taught me the following:
Just because the stock is a good stock, doesn’t mean the options are worth trading. If the stock is not trending those options mean nothing. Actually, in that case those options are losing time values everyday. Especially, with front month options.
Too far out-of-the-money options lose value very fast once there’s only 3 weeks or less left.
When you’re down more than 50%, get out. Some people might be more inclined to cut their losses earlier, however, with options you have to give it some room. I have been down 40% and then gotten out at a good 10% profit and watched the options to up to almost where it would be 100% profit. When it’s down 40% and you’ve been holding for 2 weeks, it is already time to cut the losses and leave. Realize that at that point anything short of a huge spike in the stock is not going to get to even breakeven.
Refine the trading rules and make them a concise list of rules that can be easily be followed.
Looking at the MSFT chart, is shows it might go up a little tomorrow. However, in general this is such a slow moving stock and anything less than one of those 900pt rallies in the DOW will not make the options move.
I was also playing options way far out of the money to get cheaper options and hoping that buying more would benefit more. That is simply not true. Closer to in-the-money or at-the-money options will move that much more if the farther out options move a lot. So still bigger gains will be at the closer to at-the-money options.
Might have to try to get out around 0.10 or .11 or possibly higher. Although, I won’t hold my breath for .11 or higher. Just wanting to free up the money to play other trades.
Seems it stayed quite alright until 1:00pm – 1:30pm. After that more of a selloff. Possible pre-election feelings? It sounds as if both parties will possibly have a positive effect on the market. Not like either has a really good plan. So it has to be either a downturn on either due to lack of a plan or that people slowly start getting back in the market and letting the winner take office and move on with running the office. Hopefully, it will be the latter. Otherwise, it will just whipsaw until next year and go nowhere as people wrestle with different emotions.
Keep in mind that as options traders, we don’t really care which way the market moves. Just that it moves. And possibly more important than that is that we possible the trade on the right side of the market.
Which reminds me that my next post will discuss my current portfolio.
The market closed green today. Quite a fall in the first 3 hours. But then a steady rise until the very end. Last few days, the market does rally in the second half of the day but then does a sharp decline in the last 1 hour. Yesterday’s sharp decline didn’t turn around. Today’s decline turned around just fine, without any issues. This is the second close above the 9K mark in the last few days. Doesn’t mean much in and of itself. It will have to close above 9K mark consistently for it to be a good support point. For now it seems to be fine.
Most securities that I’ve been watching closed green today. Except, MSFT. Which is the one I hold some calls on. If the market continues, the uptrend, MSFT should rise as well. Without issue. However, hypothetically, if the markets were to decline, then those calls wouldn’t be worth much. Not betting on those to fall. So will continue to hold for now.
Let’s see the MSFT chart. It is still showing the CMF is indicating some sell off pressure.
MSFT - Oct. 30th.
Although, it is pixel-splitting, the MACD line seems to be above the trigger line. There seems to be a little red dot visible below the blue line. But that’s not as much as technical thing as wishful.
