Raytheon (RTN) has been beaten very hard recently. From a high of $67 to current $57.5 levels. To me, it offers a short term buying opportunity for a bounce that may happen as soon as it touches the $56 area. There are many ways to play this bounce ranging from straight calls to bull put spreads. I am looking for a bullish call debit spread that is currently selling for $0.90/spread (Jul 57.5/60 calls) or play via 60/62.5 Jul/Aug call diagonal spread. The downside of diagonal spread upto $61 is “0″ and the trade will make the most money if RTN is at $60 at Jul expiration i.e. nearly 30%. The vertical debit spread will make money if the RTN is above $58.5 by July expiration and if it’s above $60 the returns are going to be nearly 155 for each 95 investment.

Almost similar opportunity will exist in CocaCola (KO) if Coke falls to $53.5. Currently it trading at $54.18. Similar strategy can be created for Coca Cola as well.

I just closed GLD speculative direction trade for +68%. I first mentioned this on the forum on June speculative trade alert (part of OPNewsletter Bonus trades)

Gold is approaching it’s solid 200 day moving average. There are several “right” reasons for gold to fall;) but I am personally long term bullish on Gold. It may offer a short term buying opportunity. If you play, play it safe i.e. via spreads for instance 84/86 bull call debit spread, or 84/82 bull put spread or 88/90 bull call diagonal spread.

Whatever strategy you use, be careful as gold is known to be harsh for short term traders.

These are speculative directional strategies and therefore if you do decide to play these, pls make sure you are allocating capital appropriately and ensure that you are willing to lose all or have your exit very well defined. I generally like to invest only 1-2% of the capital.

These are not recommendation. Pls do your due diligence before making any investment decision.

Profitable trading, OP

An excellent month for OPNewsletter with double digit gains. OPNewsletter’s June 2008 was closed for +11.1%. This is nearly double of my own target of 5-7% per month. These returns excludes the bonus speculative trades on JOYG (+40%), RIG (Multiple Profit Points), GLD and CME (Multiple Profit Points-Shared for free with OP Readers), With this June’s closing OPNewsletter is up nearly 60% in the past 5months, i.e. nearly 9.9% compounded monthly that is nicely above even my own internal target of 5-7%. We usually assume US$10,000 as minimum investment and these can easily be scaled to $50, 000 or above. Considering market actions in the past 5months, this is a good and satisfactory returns.

This month’s strategies included Iron Condor, Debit Spreads, Calendar spreads, Straight calls, Diagonal Spreads and credit spreads.

I have opened two OPN Mini-portfolios for July expiration cycle and shall be opening 2-3more next week. If you want to sign-up for the newsletter, Pls read more about OPNewsletter here. If you would like to read customer testimonials pls read those here (Part-1, Part-2, Part-3, Part-4)

A few more things about the Newsletter-

1. OPN uses its Member’s fills for tracking (Not the newsletter suggested one)
2. OPN uses maximum investment for calculating returns for the month, even though it was for 1day (For example- 10K portfolio, we used 6K for the month, but we used 1K more for one day, the whole portfolio returns are calculated using 7k as base)
3. Starting May’08, OPN now factors commission in it performance tracking.

Next week is going to be interesting week with Goldman Sachs (GS) and Morgan Stanley (MS) reporting earnings and setting tone for the financial sector. I may play these two and share my thoughts with OPNewsletter subscribers.

Profitable trading, OP

Amongst all the bearishness in the market you might think there is none except one obvious answer OIL. There are many areas that are just moving up with their own share of correction along the up way.

I have been mentioning my “Fantastic Four” for quite sometime. Even since my last post, in just less than two weeks POT is up >+10%, MOS is up >+20%, CF is also up >+10%, and MON >+5% after touching 52wk high. In fact, Intrepid Potash (IPI) touched 52wks high today (My post here). But keeping them is not easy and requires guts, well more than guts it is how well one hedges against any sharp corrections on the way up. A very simple and popular way will be buy puts and fund the cost by selling calls. For instance POT is currently $223, so you buy 220 puts and sell OOM calls to offset the cost of puts. I shall cover this in more details some other day.

Another sector on the roll is coal. Check out the PCX, ANR, BTU, FDG, and ACI. Oil has its impact of alternative energy fuels as well. As Oil prices are climbing higher, all other energy resources are becoming cheaper relative to oil. One may argue why Rails are falling apart, but there is more to rails than just oil’s rise. But still it’s not a beaten down sector if you look at short term horizon of say 3months.

Above are just two examples. You may find even more. However, as these are moving-up, the risk of their fall is also increasing. So be careful about your entry and exit points.

Last point, the bull is on the downside as well. It’s all a matter of perspective. Almost similar strategies can be created for the downward move. However, the risk is higher. Our human brain in general is “bullish” so at the first moment of upward move (assuming I am bearish), I am more “panicked” than if I would if I were bullish and if there was a reversal.

Have fun, Profitable trading, OP