Weekend Trade Alert Update - August Trades

With 21 days remaining to expiration all filled trades are out of the money but have to be closely monitored these next 3 weeks. One or more of these Bull Put trades will need to be adjusted if the market continues to drop. If the sell off is over we should know early next week but no one really knows what direction the market will take. Last week investors sold their holdings and stopped buying due to concerns with the sub prime lending market, high crude prices and the lack credit availability for some of the companies buying other companies. Since this is very "oversold" market now, the hope is that investors will return next week bargain hunting and buying the equities that lost 10% or more of their value.

The RUT Index price is only 27 points away from our short option, and only 17 points from our stop loss price. I am sending a Trade Alert this weekend detailing the adjusting trade that closes this August spread trade and opens a new 20 Point RUT Bull Put spread expiring in September. The cost to make this adjustment should be very minimal depending on your trading costs. I will be sending additional Trade Alerts to adjust the NDX and SPX Bull Trades if and when the index prices are 20-25 points away from our short option prices. Many subscribers have requested these adjusting trade alerts be emailed earlier. Having a plan of action to adjust a trade in trouble is a conservative risk management strategy.

GOOD NEWS !!!! The MSFT Put option hedge trade is very profitable now. These Put options have a bid of .15 cents. These options brought for $2, or $3, a contract earlier this month can be sold next week for $15 a contact. This is a very respectable return in a very short period of time. I know one subscriber who is buying 500 contracts as a hedge each month. These 500 contacts are very profitable now and will help offset future losses, previous hedging costs and trading commission costs. Many subscribers are buying 50-100 contracts using 5%-10% of their collected credits as a hedge.

I am researching Bear Call spreads very carefully this weekend and have one very safe NDX 25 Bear Call spread I will be emailing shortly. The RUT and SPX Bear Call spreads I have on my watch list could be good candidates later next week.