Tuesday, April 19, 2005

A reprieve from the bleeding?

Well it looks like the UNH CEO appearance on Cramer's show last night did the trick maybe? UNH was up today. TWX was up much of the day as well (closed 0.2 down though). Both are still above the strike of my short puts. Hopefully these 2 positions continue to hold out. INTC and Yahoo both reported good earnings and are way up after the close. Hopefully I get a nice pop on my QQQQ calls tomorrow. The yahoo earnings are also moving GOOG. This helps, but my GOOG short puts have always been comfortably out of the money, and have allready lost a lot of premium. I'm wondering if the yahoo quarter will be good for EBAY? EBAY is up after hours today....but if YHOO is doing well maybe that means EBAY has to spend to much for internet advertising?

Only 32 more days until options expiration. I'm starting to notice a monthly cycle. I'm biting my nails for the few weeks after expiration as my new positions for the next expiration get put on. The premium is largely a function of volatility (vega) at this point, and theta (time) helps me very little. If the stocks move against me, I see large losses in my P/L, but when they move for me, the options premium barely budges in my favor. Then a week or two before expiration, the premium starts to evaporate at a high rate and I'm much more relaxed. Options expiration has become something I look forward to every month. It's the same feeling I'd get in school when I looked forward to school letting out for the Summer.

Actually I would feel pretty relaxed now, if UNH and TWX weren't so close to there strikes. Normally I have a much larger buffer this far out from expiration. I need TWX to stay above 17 and UNH to stay above 90. Hopefully in the future I'll remember this fiasco next time I'm tempted to chase stocks up.

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