Hey Folks, I hope you are all enjoying the Memorial Day Weekend…as a quick reminder, coming up in 2 weeks is our June Monthly Saturday Session so makes plans to be there…our topic for the session will be Covered Calls so I look forward to seeing you all there…for those that cannot make it we’ll be recording the session for posting in our Learning Center for viewing by our members….

Now, on to this week’s market recap….enjoy!

Trade Smart — Not Often

hpb

Hey folks, so far so good…the markets are showing a good deal of indecision yet the bulls remain very resilient…I believe the markets are trying to find a position and currently we’re in a small short term trading range… when this range breaks I suspect we’ll see a lot of movement…the key is to be ready for that move and then act accordingly…

Looking at our IBM Credit Spread (Bear Call Spread) as you can see in the P&L graph below we’re running about a 10% profit so far…and we have only been in the position for about a week and a half…for those conservative folks out there that are playing this position feel free to close it out, take your gains and move on…not bad for a short term trade…for those seeking a little bit more risk keep the trade active and go for the further decay in the short option…remember, even though the markets will be closed on Monday for the long Memorial Day Weekend holiday the short option continues to loose value…7 days per week.  But, holding a gain over the weekend is a lot of time and anything can happen, be it a news event or some other IBM specific topic that could cause IBM to move against the short position…so take your pick, close out the position or continue to ride it for another 6% gain….

As you can see with the daily chart of IBM our strike selection was above the solid resistance line which was its all time high…so, in order to loose on this trade, IBM must reach another all time high in the next few weeks for us to consider shutting the trade down for a loss…

Trade Smart — Not Often

hpb

Hey Folks, hope all is well…thus far the markets are reacting pretty much as we have expected and what I discussed during our last Saturday Monthly session..we are seeing declining strength as the markets are attempting to maintain its bullish run while  the technical charts are showing cracks in the bullish armor…when the markets are in a correction mode, or looking like they are entering into a correction or consolidation mode, you should be looking at trades that plays best to the downside…

In our discussions this past weekend we looked at several stocks that looked good longer term, but for the short term the risk profiles indicated downward action was the higher probability play…keep in mind I said higher probability and even though you can be wrong with your bias you try to line up the risk and probabilities so they are more squarely in your corner…now let’s take a look at a couple of trades we just put on.

First up is IBM…it is in the Tech sector which is suffering from a sector pullback and IBM had just hit an all time high so the time was good to put on a Bear Call Credit Spread…in order to lose on this one, IBM would have to take out its all time high by a good margin for us to loose…and with the overall market looking like it would roll over this one looked promising…looking at the P&L chart you can see we are currenly standing at a 6% gain with a max gain of 16% in just about 3 more weeks..

And looking at the daily chart of IBM you can see the placement of the strikes in the Credit Spread were done to leverage the upper resistance zones…this was important to continue to put the odds into our corner for success on this one…

Now the other Credit Spread we put on was selected by our User Group….this idea came from Bill and we selected to put on a Bear Call Spread on this one as well…again, playing off the fact the markets were in a pullback to consolidation mode and with this stock hitting all time highs here is the P&L graph as of today for this trade:

And here is the current daily chart of VECO and you can see the selection of our strikes forces the stock to defy the markets and punch though its all time highs…

Folks, any time you put on these types of Credit Spreads you are looking at the very short term which translates usually into just one option expiration period or less than 25 days in most cases…we are not saying these stocks are in a bear phase, rather we’re saying that when stocks typically hit all time highs and the overall markets appear to be pulling back then credit spreads on these stocks tend to put the odds of success in your favor…the primary reason is that when stocks hit all time highs they normally pause, consolidate or even pull back just a bit before punching through to make even newer highs…combining this pullback action with overall market pullbacks causes these types of stocks to pullback even more…again, all we’re attempting to do is put the odds or probabilities more into our corner…

As a reminder for many of our newer members; -please check out and review our Learning Center Videos…they are free for our Annual Members and a small fee for Monthly Members…they will help you out a good deal…more of these videos will be posted shortly…also, we will be adding a Forum for our Members only so that they can share their trade ideas as well as get feedback from others…this is a great way to learn!  And for our non members we welcome you to come on over and join us…we are growing rapidly and we are constantly adding new stuff to our site…

Trade Smart — Not Often

hpb

Hey everyone, I hope you’re all enjoying the weekend…posted below is the update for this past trading week.

Just a quick note that we had a really good Monthly Session yesterday…we reviewed the current market as well as the Group selected a trade to put on for this next Option Expiration period…we will follow it for our Members with video updates in the Members Home page…I also want to thank many of you that offered video testimonials for joining our User Group…they will be posted shortly…for those that have not joined then I would invite you to check us out as well as look at what others are having to say our us….

Now, on to this week’s market recap….enjoy!

Trade Smart — Not Often

hpb

I thought I’d throw out a trade idea for everyone, both members and non members to take a look at…follow along for educational purposes if you’d like.  The trade is a Bear Call Spread on IBM.  A Bear Call Spread is a credit spread where you get paid to play and requires you have a margin account to put it on.  Currently IBM closed down today at 168.86 and its all time high was at 173.54 on May 2nd 2011.  This Bear Call spread suggests that if you believe the markets in general and IBM in particular will not make an all time new high over the next option expiration cycle for June (33 days from today) then its worth a look…also, if you look at the charts below you can see how volatility has risen significantly over the past few weeks suggesting folks are anticipating movement (most likely downward)..this increase in volatility has put more premium into the option prices thus this spread has a nice potential return of about 16% in a short period of time…

If you look at the price chart of IBM below you can see where the profit zone (in green) is located vs. the zone where you incur a loss (in red)….notice how you can make a profit as long as IBM does not take out its previous all time highs with a little bit of spare room left over…this trade leaves you some “wiggle room” if IBM moves up a little bit….your secondary exit point (when things don’t go your way) can be easily calculated as a percent of risk based upon what you have learned in our Risk Mgt Videos…each one of you may have different risk attributes which causes the exit point to be different for each of you…paper trade the position and learn how it matures over time…as a reminder, a credit spread has less trade adjustment abilities than a debit spread…

As a reminder, we have our Monthly Session this coming Saturday and it promises to be a good one…and timely as well.  We’re covering hedging so come ready to see some interesting techniques on how to hedge your positions…..non members can attend for the first time any monthly session for free, thereafter it will be $30 per session so I would highly encourage you to join up, become a member and learn a whole new way to protect your profits and learn how to really put the odds of success more in your corner…

I hope to see you there…as a reminder, for those members that cannot attend we’ll be video recording the session and posting it in our Learning Center under our Strategy Tab….

Trade Smart — Not Often

hpb

Hey everyone, I hope you’re all enjoying the weekend…posted below is the update for this past trading week.

Also, as another reminder, we have our Monthly Session for May coming up next weekend and it promises to be a good one; -how to hedge your existing portfolio or security position.   I hope to see you all there….

Trade Smart — Not Often

hpb