Thursday, October 13, 2005

Did I turn bullish?

With the close of trading today, I have to wonder if I turned from short-term bearish to bullish? I don't feel very confident in this market, but my trading says something else. I found myself buying stock and selling puts today.

I lightened up on my ECA stock short today, returning my position in ECA to delta-neutral. I think I have have scalped about $0.45ish off of the long ECA calls at this point (I would have to look through my statements to get the exact number). I wrote in my last post that I planned on covering all of my short stock after the profits from the short position were large enough to cover the entire price of the calls, leaving me with a free call option. At one point today I probably could have done this while hanging onto almost a buck in profits. I just couldn't bring myself to do this though. I still feel that ECA will go lower.

I also bought GG shares against some GG puts I purchased a couple days ago, to bring myself to delta-neutral in this position. This locks in about 70 cents in profit on those puts at this point. This puts me into the synthetic GG Jan 20 straddle at about $1.80 I think. This is almost half the current market price to buy the straddle.

My buying today was not limited to getting delta neutral in my straddles though. I have been closing out my inventory of SPY options over the past few days to lock in profits on the bearish side. My position in SPY as of today, now consists entirely of some Dec 113 short puts (which was originally part of a bull put debit spread). I also opened up a position in the SMH Nov 35/32.5 bull credit spread which is profitable by about 0.80 on the close. I am pleased with the execution of the SMH position. I believe I legged into this spread for what was the highest credit a retail trader could have obtained today for that spread.

My long term portfolio has given up almost all of the gains I had in this latest decline. Fortunately, gains from my shorter term trading during this decline have offset about half of that loss. So far this leaves me still nicely positive for the year. I do really regret being to quick to hedge my short SPY calls early in the decline. They could have offset all of the losses and then some...

With my new bullish positions in SMH and SPY I am now more exposed to downward market movement than I have been so far during this decline. I definately need and am betting for a turn-around soon, so regardless of how I "feel" about the market, I must be a strong bull.


At 9:44 PM, Blogger Gunslinger said...

Ahh, my friend! Good to see that you are rubbing elbows with some of the same blogs as me. Any objections to me linking you off my site? I plan on coming down to see Steve this spring, hope it works, and hope we can have a few hundred drinks!

Take care.

Eric "R"

At 2:48 PM, Blogger Quant Trader said...

Yeah I'd be honored if you linked my blog. I check yours almost every day. it's one of my favorite reads. I'd prefer if you'd link my political rant blog

instead of my stock blog.

I'm trying to keep this blog strictly about stocks. Everywhere else I post I mainly post about politics.

I haven't really been using my other blog user name to post because my political blog was kind of incomplete and had a stupid name, but I've updated it and changed the name and will probably be posting everywhere else on the internet not relating to stocks using my CapitalistPig blogger name from now on which is associated with my political rant blog.

At 4:48 PM, Blogger U_Forks said...

I think the market will be bullish to the end of the year as general sentiment is bullish as seen in the VIX, as it is very low. I mostly have bullish positions except on GM, where I have a downside OTM Butterfly. After the first of the next year however, I will see if the market turns and may start putting some Bearish trades on the DIA and the OEX.


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