Going down with the ship ...

Originally posted by aphexcoil


So in effect, what you are saying is that I am taking a hunch and just drawing lines on the chart to prove myself correct for psychological satisfaction?

Well, that might not be so far fetched, really.

One of two things is going to happen early next week, and I need to make a decision. Either the market will continue to prove me wrong and, at some point, I will need to close my two positions (short and long). Otherwise, I could close my long positions for a loss and keep my short positions open to keep at or slightly above break-even and risking two naked puts on IBM for a few weeks.

However, I'm in a precarious situation. Honestly, what I should have done was recognized the volatility of the situation and opened up a corresponding bullish debit spread and had a profit so long as IBM made some strong move away from it's current point by expiration's time.

I just like options because there is practically endless creativity involved.

I don't see the market as reversing. There is still huge looming problems ahead and this market seems to be taking a bump up from a strong trend down.

If I'm wrong next week then I'll sell for a loss. Isn't that what you are supposed to do? You make a trade for a specific reason and if you are proved wrong, you get out and cut your losses, correct?
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You argue from emotionas and hunch based conclusion to reasons.

A smart trader comes to a conclusion through a reasoning process, an objective unemotional process, and has no emotional attachment to the conclusion--therefore has no need to rationalize the position he is in.

You are betting, traders are speculating.

A different part of the brain is involved with unemotional speculation than is activated for betting. Just check your pulse when the market moves against you, and you will be able to tell where your thinking is.

The fact that you are trying to hit a home run with options, when you can't even hit singles consistently, is evidence of where your decision making process is right about now.
 
Originally posted by aphexcoil


I don't see the market as reversing. There is still huge looming problems ahead

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How do you see this? I watch the market everyday and I can't SEE this.
 
Originally posted by RAY


How do you see this? I watch the market everyday and I can't SEE this.
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derivative failures, massive ballooning debt with many corporations, war likely -- higher oil prices. Consumer debt at an all-time high, etc ...
 
Originally posted by aphexcoil


derivative failures, massive ballooning debt with many corporations, war likely -- higher oil prices. Consumer debt at an all-time high, etc ...
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And I'm sure you're right, but the fact is, a lot of that may be already priced in. We just don't know. Point is, it doesn't matter what you THINK or HOPE will happen. What IS happening is all that matters. And what's happening is that we're trending up so ride the trend. It may end on the next tick or next year, it's anyone's guess.
 
Originally posted by aphexcoil


derivative failures, massive ballooning debt with many corporations, war likely -- higher oil prices. Consumer debt at an all-time high, etc ...
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Climbing a wall of worry into the new year.

If you want to be a fundamental trader, at the very least go out on a longer term option, say leap puts or something that allows the market a chance to catch up to the fundamentals.

 
IBM may pull back into the $67 range next week. I would be looking to exit the short posie there. Then hold the calls for a bit longer - look to exit around $79.

On the weekly chart last week was a thrust move that hasn't reversed which says continued strength to me. But then again, who am I to tell you how to trade.


Runningbear
 
Originally posted by Runningbear
IBM may pull back into the $67 range next week. I would be looking to exit the short posie there. Then hold the calls for a bit longer - look to exit around $79.

On the weekly chart last week was a thrust move that hasn't reversed which says continued strength to me. But then again, who am I to tell you how to trade.


Runningbear
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IBM is a difficult stock to trade. It is such an instutional stock, and the volume reflects that it is not a major trading stock.

I was short IBM with puts when it was trading at 110 area a couple of years ago, and I got so frustrated with it. It just kept rising and rising, almost floating in air as it defied the fundamentals of a weakening technology sector. I was sure it was going to go down. I ran out of patience, gave up, then it finally began to break down. In the end, I was correct fundamentally, but I did not understand that fundamentals take their own sweet time---and often need to be dismissed if trading is the objective. It is much more difficult to short and hold than it is to buy and hold. Goes against the grain of all the programming and conditioning given to us from Wall Street.

IBM tends to have big moves, then congests for a bit.

I don't think it is a great trading stock, but then I didn't learn how to trade it well.

A tech stock/quasi growth stock that pays dividends is such a strange beast in today's market place.
 
Originally posted by Runningbear
IBM may pull back into the $67 range next week. I would be looking to exit the short posie there. Then hold the calls for a bit longer - look to exit around $79.



Runningbear
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I'm sorry I may have worded it incorrectly. I have a PUT debit spread -- so if the prices did fall to $67, my LONG 70 puts, with the higher delta, would have moved up moreso than my SHORT 65 puts (so the spread would widen) -- so I could sell them -- or exit one position ... or do a lot of different things with it.

I will have to wait and see what happens next week.
 
Aphie -

You ever notice how you give yourself such a broad number of ways to be correct that you can't ever be wrong?

For some reason you think that being wrong as long as you've supposedly accepted being wrong up front is just as good as being right. Makes for far less pain I supposed in the short term.
 
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