The markets have been holding on in this options expiration week. One thing that really bothers us is that the put call ratio on the day open was 0.48. It has been a long time since we saw such wild optimism. It is possible that that big money knew about the FED announcement and bought a load of calls.
If the above is true, we might see another green day tomorrow, and another push higher. Today's action looks like a triangle correction in the leg up from Mar 10th. So, we may have another rally tomorrow, followed by a sharp descent.
Whatever, the reasons may be - if the SPX gets over towards the 820 region, we will probably add some shorts, as some stocks just seem way too extended. Specifically, we are eyeing a few names in the energy complex - CVX especially stands out as having good risk reward and a well defined stop. We would short CVX with a stop on a daily close above 67. Our target is a 50% retracement of the entire move (~60).
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2 comments:
Bought CVXPM APR 18, 2009 $ 65.000 PUTs at $1.95. Thanks for sharing knowledge.
Raised some more cash earlier today by selling Long positions that are > 20% profitable. Net 65% Long, call me a bag holder, :) but hoping for the uptrend starting at the end of the month.
-- sastocks.
Glad I was of help and you made profits.
We made some $ too on CVX puts and closed the position for a nice profit at the end of the day.
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