Comments on: 8/7 - Weekend Commentary http://thetradecoach.net/members/2008/08/08/87-weekend-commentary/ Education, Portfolio Protection and Risk Management Wed, 07 Jan 2009 14:21:23 +0000 http://wordpress.org/?v=2.5.1 By: Coach BD http://thetradecoach.net/members/2008/08/08/87-weekend-commentary/#comment-64 Coach BD Mon, 11 Aug 2008 22:19:33 +0000 http://thetradecoach.net/?p=557#comment-64 Leo, Even though this is not one of our trades, I will be happy to go through this trade with you for the benefit of our membership. GIFI - What to do? Last week, I bought (3) GIFI Sep 35 Puts @ 1.50 for $450. [Coach BD] Where the hell did you get this trade... LOL. Did you enter this spec trade on the break below the recent lows...? ...which was a new 4 month low... and if so, when it made that strong intraday turnaround didn't that big volume near the end of the session the day before (8/5) and early in the session on 8/6 suggest to you the stock was probably making a ST bottom...? Unfortunately, GIFI is very thinly traded with wide BxA spreads (a MM's delight) and is a Theta Pig. At this point, I don't believe in this trade anymore. Choices: Let it expire. [Coach BD] NO... that's not an option. If you don't believe in the trade then it's time get out...period. Why would you let a spec trade that you wouldn't enter today just waste away to nothing...? Sell the (3) Sept Puts at the current ask ~$80 and take a loss of ~$70 per contract. [Coach BD] That's the play if you don't think it's a viable trade anymore. Although, this stock doesn't exactly ooze strength. Volume to the upside is declining and all of the ST trends have either rolled over or in the process of doing so. It could well head lower from here, so you're inclination on this trade isn't without merit. I would just point to the fact that... 1) You didn't give your trade enough time... 2) Buying OTM, unless they are really cheap, are not usually reliable success-prone strategies. Sell (1) Sept 35 Call ~$5.90 to morph the original trade. [Coach BD] That action does NOT morph the original trade. It actually makes it worse if you don't think the stock is going lower from here. That action would be making the trade a synthetic SHORT with far more risk than your current limited risk OTM Spec trade. How can this position be traded to minimize a loss? [Coach BD] Choice #1: Sell it and take your medicine. Choice #2: This actually looks like a fairly decent opportunity to make some regular income as it continues it's trend downward, or upward. We could discuss if you want. Send me a note with a time you are free. I could do this afternoon at 4:30 if you are free, or tomorrow after the close is a possibility... Coach BD Leo,
Even though this is not one of our trades, I will be happy to go through this trade with you for the benefit of our membership.

GIFI - What to do? Last week, I bought (3) GIFI Sep 35 Puts @ 1.50 for $450.

[Coach BD] Where the hell did you get this trade… LOL. Did you enter this spec trade on the break below the recent lows…? …which was a new 4 month low… and if so, when it made that strong intraday turnaround didn’t that big volume near the end of the session the day before (8/5) and early in the session on 8/6 suggest to you the stock was probably making a ST bottom…?

Unfortunately, GIFI is very thinly traded with wide BxA spreads (a MM’s delight) and is a Theta Pig. At this point, I don’t believe in this trade anymore. Choices: Let it expire.

[Coach BD] NO… that’s not an option. If you don’t believe in the trade then it’s time get out…period. Why would you let a spec trade that you wouldn’t enter today just waste away to nothing…?

Sell the (3) Sept Puts at the current ask ~$80 and take a loss of ~$70 per contract.

[Coach BD] That’s the play if you don’t think it’s a viable trade anymore. Although, this stock doesn’t exactly ooze strength. Volume to the upside is declining and all of the ST trends have either rolled over or in the process of doing so. It could well head lower from here, so you’re inclination on this trade isn’t without merit.

I would just point to the fact that…
1) You didn’t give your trade enough time…
2) Buying OTM, unless they are really cheap, are not usually reliable success-prone strategies.

Sell (1) Sept 35 Call ~$5.90 to morph the original trade.

[Coach BD] That action does NOT morph the original trade. It actually makes it worse if you don’t think the stock is going lower from here. That action would be making the trade a synthetic SHORT with far more risk than your current limited risk OTM Spec trade.

How can this position be traded to minimize a loss?

[Coach BD] Choice #1: Sell it and take your medicine.

Choice #2: This actually looks like a fairly decent opportunity to make some regular income as it continues it’s trend downward, or upward. We could discuss if you want. Send me a note with a time you are free. I could do this afternoon at 4:30 if you are free, or tomorrow after the close is a possibility…

Coach BD

]]> By: Leo http://thetradecoach.net/members/2008/08/08/87-weekend-commentary/#comment-63 Leo Mon, 11 Aug 2008 14:50:05 +0000 http://thetradecoach.net/?p=557#comment-63 GIFI - What to do? Last week, I bought (3) GIFI Sep 35 Puts @ 1.50 for $450. Unfortunately, GIFI is very thinly traded with wide BxA spreads (a MM's delight) and is a Theta Pig. At this point, I don't believe in this trade anymore. Choices: Let it expire. Sell the (3) Sept Puts at the current ask ~$80 and take a loss of ~$70 per contract. Sell (1) Sept 35 Call ~$5.90 to morph the original trade. How can this position be traded to minimize a loss? GIFI - What to do? Last week, I bought (3) GIFI Sep 35 Puts @ 1.50 for $450. Unfortunately, GIFI is very thinly traded with wide BxA spreads (a MM’s delight) and is a Theta Pig. At this point, I don’t believe in this trade anymore. Choices: Let it expire. Sell the (3) Sept Puts at the current ask ~$80 and take a loss of ~$70 per contract. Sell (1) Sept 35 Call ~$5.90 to morph the original trade. How can this position be traded to minimize a loss?

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