Busy yet profitable week (Capital up +4.20%)

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This was a very hectic week and was a mixed bag of results for me personally. As I mentioned earlier that my new objective now is to generate about 6% per month consistently. Till Thursday close I was way above that for the past week, but y’day drop took away few percentage point gains. OPN capital closed +4.2% up for the week.

market-movement-wk-of-073007.png1-2-3, as simple as it was (pun intended), Dow dropped by nearly 1%, S&P and Nasdaq about 2% each and Russell 2000 (RUT) dropped nearly 3% during the week. This month (Aug expiration) saw my first loss on RUT where I closed it for 15.6% loss. I think I took the right decision as volatility would have crushed my adjustments. It dropped 28.54 points within a day yesterday, wow! I currently have Google trade below water as well (-2.6%). Despite these two losses, OPN Aug’07 portfolio is still up +11%.

So far I enjoyed beautiful returns from my income trades for Aug, but now I am at a crossroad and I need to make several adjustments next week if markets didn’t show any signs of strength. I would like to benefit from sell-off if it happens, but also protect if it goes up.

Due to packed schedule I also missed MA earnings, AHM and BSC’s beautiful fall from grace. Those who have been reading OP for quite sometime, know how OP readers and I benefited from New Century’s and Lend’s fall. I lost in Enron and Worldcom long time back, and they taught be good lessons on how bankrupts behave and since then “Bankruptcy play” are my favourite directional play.

Volatility is high and so is the premium and hence wider ranges to play, what more to ask ! It’s a good market for option traders, enjoy it.

Profitable trading, OP







2 responses to “Busy yet profitable week (Capital up +4.20%)”

  1. Tony Chai Avatar

    Hi :

    Nice options trading blog you have.

    Hope to achieve consistent profit just like you. I guess I’m a slow learner. Been this for two years and still learning every day to improve my probability of success with options using earnings gapping analysis.

    I’m still holding on to my Sep 50 Put of Lehman Brothers which I bought last week about $0.60 per contract. LEH has dropped below its 52-week support of $60 last week because of AHM closure and BSC exposure to difficulties in getting buyers for the dealership debts. BSC exposure to such debt was about $6 billion and LEH had a staggering exposure to such debt to about $22 billion !!!

    The thing is, LEH hasn’t step out to clarify its position so far about its sub-prime mortgage related business and its exposure to the clearance of its dealership financing debts. So the reason why I’m still holding on to the put contract.

    Yours Truly,

    Tony Chai

  2. OptionPundit Avatar

    Thanks for the nice words Tony.
    I wish LEH work out to your projections. Due to hectic time I haven’t really diggedd into the detals yet but I am sure you must have done detailed ground work to make such a confident trade.

    All the best, profitable trading, Op

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