Hope you all had a Happy Thanksgiving! A great holiday for us foodies and those who just love to eat. A mess of leftovers is in the fridge. Another rule – make what you like for holiday meals so you have great leftovers!! Now, here are the trades put on for the week, both were call spreads:
S&P 500 Index SPX
SPX 1200 Call $1.19
SPX 1210 Call $(0.61) This gives a Net Credit of $0.58 for a 5.8% ROI
Russel 2000 Index RUT
RUT 710 Call $0.84
RUT 720 Call $(0.28) This gives a Net Credit of $0.56 for a 5.6% ROI
Breakdown
SPX
I returned to my normal pattern of trading the indexes. I have always liked the SPX for its high premiums, but sometimes the volatility of the index spooks me. This week events in the world made it pretty easy to go the index route. The failure of the Congressional Super-Committee to come to any agreement on the deficit issue (I refuse to call it a crisis – we have seen this coming since the end of Geoge W’s first term and have kicked it down the road ever since. And yes for those of you who are wondering I am a card carrying Republican. But I can criticize an unfunded mandate whether a Dem or a GOP puts it forth, same goes for an unfunded war in Iraq, but that is for another blog post.) Then the Europeans got into the act with their bond sale issues.
As can be seen in the chart last week continued the trend from the previous week of heading down. This movement led me to make the call spread for the week. I entered the trade on Wednesday per usual. With the benefit of hindsight I could have made a few extra bucks entering on Monday or Tuesday, but my rule is trade on Wednesday or Thursday. Also with the short week due to the holiday the Wednesday trade helped us take even more risk off the table with regards to time.
RUT
Many of the same things said for the SPX held true for the RUT. Recently these have been moving very similarly, although the RUT has not swung as wildly. Following another rule I like to diversify my spreads in different indices and/or stocks. I also like to have both put and call spreads going at the same time, but this week that would have been a practical impossibility. All indices and stocks I like to spread all were heading the same direction. So, I picked two I was really familiar with and looked for returns that held to my rule list (For a complete rule list look in the archive, July 5, 2011 is the date I first put up the trading rules.) .
Giving up thanks to freestockcharts.com for the charts. a very good free stock chart site that I use a lot. I am still learning how to use this tool and as I do my charts here will hopefully get a little more sophisticated!!
I will be putting up a book list and some reviews of books that I have found useful soon.
If you have any questions or comments please leave them below or contact me at the following:
email: hashleycm@yahoo.com
Twitter: @awagel01
L8r
Ash
No comments:
Post a Comment