Fas/faz - 5/4

[Trader7793]

I bought some of the May 5 strike calls on FAZ, Friday afternoon thinking that there might be a small pullback in the financials on monday. The calls were so cheap that I did not need to put up much money at all to get a lot of the contracts (actually used my earnings from the craps table to fund the purchase). To be honest, this more of a gamble than a reasoned thought out trade, and I might bail on it if the financials seem too strong come monday afternoon. It will be interesting exactly how low FAZ can go. I am curious what others on this board think will happen to FAZ in the coming weeks. Will it go to $1 or less???

 

[Eko_Trader]

Quote from Haroki:

While this sounds correct, I'll say one thing and leave it at that.

I don't know if the rally will continue, or if it'll be down 300pts on the DOW on Monday morning open.

So..... I'll take the simpler route, ignore all the speculation, quit trying to call tops/bottoms, assume that the hedgies and 401k managers are smarter than I, and continue to follow the trend.

Of course it's difficult to NOT have some skepticism at this point. But why let your skepticism rule your trading decisions? Go with the flow, until the flow changes, on whatever time frame you trade at.

Yea you do have a valid point. I'm not stupid enough to fight a trend. I'm just short biased at these level. My only hold to the short side is simply the calls I've been talking about, and they expire in June, I'll see how things play out by then.

 

[scot.mcpherson]

Quote from Haroki:


Of course it's difficult to NOT have some skepticism at this point. But why let your skepticism rule your trading decisions? Go with the flow, until the flow changes, on whatever time frame you trade at.

It's hard to manage a change in the market. Hedge funds on average did less that +1% since march 6th. The market has gained how many percent and the biggest hedge funds have been in cash, or have been until recently, because they didn't know how to handle this market. How do they explain that to their investors, that the market has been doing much much better than they have? They missed the opportunity to jump on a heavy bull market.

Go with the trend, but the moment the trend changes you will be stuck scratching your head wondering what to do. Hold cash for safety or try to learn the rules of the new market? I made lots of money (relatively speaking) betting on FAZ overnights holds, that doesn't work any more. Maybe here and there, but not as a routine any longer. Now its get into FAS early in the week, and hold it until later in the week. That will likely change too.