February Trade Filled

On the new President's first day in office the market rose more than 200 points. The markets are going to have lots of good news over the next 3 weeks so I feel very confident in trading the Bull side of the market this month. If the market retracts with 2 weeks remaining I will look for a safe RUT Bear Call trade in order to complete an Iron Condor.

January Trade Expired Worthless on 1/16/09

Our January Bear Call trade expired worthless this week. A new tirade will be emailed and posted this weekend. Unfortunately Bull Put trades are to risky so we are not able to complete Iron Condor trades. The markets are continuing to drop each week so all we can safely do is keep trading the call side.I am still bearish and only want to trade the call side.

December Trade (Expired on the 19th)

The market increased enough to cause our December trade to be compromised and closed when the RUT Index value touched 470. If you did not exit this trade your options expired worthless on the 19th. Trading credit spreads 30 days out is very tricky because this market continues to be very volatile. It's very hard to predict the direction of the market on any given day. Bad news occurs every day as firms announce layoffs and shutdowns. The credit markets are still very tight, even for folks wanting to re-finance or buy a home. Even though long term interest rates are at historic lows credit scores have to be very high in order to qualify. Subscription fees are being refunded next week. A new trade will be emailed and posted early next week.

December Trades - Update

With only 12 days remaining to expiration it is very hard to predict the direction of this market. The trade we opened on 11/23 could quickly become un safe and have to be closed next week. The market is so volatile making it hard to know what direction and how much stock prices will move each trading day. The hedge funds are executing their orders at the end of each trading day causing huge swings in the last 60 minutes. All the news is very bad and every other business article includes a reference to the recession our country is experiencing. The debate is how long and how severe this recession will be.

November Trades Expired Worthless

Our November RUT and IWM Bear Call Trades expired worthless this past Friday earning 3.1% and 5.8%. Our new Bear Call trades expires in 27 days on 12/19/2008 and will also earn 3.1% and 5.8%. If we can get this trade filled early next week before a major drop then we could have a very safe trade that expires worthless. I am only trading one index on the call side this month. Since all the indexes are moving in tandem now it only makes sense to trade one index.

November Trades

The market is projected to continue dropping the remainder of 2008 and into 2009. The cost to short this market (buy put options) is very expensive. In the past we could buy put options for $10 and less each. Now the farthest away put options are $30. This months trade is a RUT Bear Call trade that expires in 27 days. If we can get this trade filled early next week before a major drop then we could have a very safe trade that expires. Also, I am only trading one index on the call side this month. Since all the indexes are moving in tandem now it only makes sense to trade one index. I have received many emails requesting fewer trades so now is a good time to start. Plus we will reduce our trading fees processing one spread trade, or one Iron Condor trade when they are safe, each month.

Bull Put Trades Expiring in October must be Closed

With the markets in the US and now all over the world dropping we must close all our Bull Put spreads. Subscribers who had their trades closed automatically with a stop loss order are OK this weekend. Others have 2 options.

1) If you have the funds buy back the short option you sold on Monday and keep the long option open. The long options will grow in value as the market drops and can be sold for a profit that will more than cover the cost of buying back the short option.

2) Exit the entire bull put trade for a net loss. Unfortunately their are no save trades to roll to and the premiums on Bear Call trades are very low.

The only relief that will might stop the markets from dropping is an interest rate cut next week. Below is a text being included in many market updates this weekend:

Roberts and other market watchers say it's possible that the Fed, and perhaps other central banks, could cut interest rates this week — ahead of the central bank's scheduled meeting at month's end — if the credit markets don't show signs of life. With oil prices well off their midsummer highs and indicators pointing to a slower economy, the Fed's worries about inflation are less than they had been, making it easier to justify a rate cut.

We were in a Bear Market but now it is worse with bank failures and a major credit crisis. The Dow is expected to keep dropping for the remaining of the year reaching 9,000 or lower. The only safe option trades that can be completed are Bear Call Credit Spreads and the purchase of DIA and SPY put options. Iron Condor trades cannot be completed in a market like we are experiencing now. I will be refunding all subscription fees since we are realizing a net loss for a second month in a row.