Last night, in my Market Forecast, I said,
“VIX‘s daily and weekly charts are all maxed out! I think we’ll need to see VIX drop below 60, early in the week, to get a sustainable bounce. With VIX at 70, and a record high, it has a lot of room to come down to earth. This means that if we see confidence level rise, the markets could have a strong week!”
Today, the markets responded positively to the efforts of governments around the world to stabilize the global financial crisis. The US stock market gapped higher and never looked back. As the day went, more sectors joined the rally. The Dow added +936.42 points; SPX gained +104.13 points; Nasdaq jumped +11.81 points. All 3 indices recorded over +11% gains! VIX closed at 54.99, below 60!
Some of the big gainers include: BIDU +24.47% (up $52.3!!); GOOG +14.77% (up $49.02); AAPL +13.9% (up $13.46); RIMM +15.54% (up $8.59); CHL +18.41% (up $8.09).
It was another “happy” day in our Trade Room. We cashed out on some good trades on the call side:
Frosty Muggs October 13, 2008 12:07 PM
GS Nov 120 calls half out at 8.7 from 5.2 +67% Happy Trade!
OptionDragon October 13, 2008 12:24 PM
GOOG doing well for me….really well…too bad I didn’t buy BIDU though
Happy bought some on friday though!
MarketQuest October 13, 2008 12:28 PM
Out of AAPL tkx Happy
HappyTrading October 13, 2008 12:41 PM
daily double!! (+100%)
Allan B October 13, 2008 12:43 PM
GS Oct 110 calls…GSJB…in at 5.4 and 2.5…out 9.5 (+76% and +280%!!)
tc924 October 13, 2008 12:51 PM
Happy – thanks for GS, AAPL and CHL trades!
goldy October 13, 2008 1:00 PM
Oh man I was out for some shopping.
How about those AAPL, GOOG and OIH
Bagger Vance October 13, 2008 1:03 PM
fantastic trades today, Happy!
As you can see, we have members sharing great trades no matter what the market conditions are. Just last week, our members were locking in profits on the puts, notably, Mr. Bagger Vance! We “compliment” on one another’s success and “complement” our weaknesses with others’ strengths. Together, we aim to create wealth! So, if you have been reading the articles on our site(s), please come and join us. Even if you are already a great trader, you’ll still likely to benefit from the information and trade ideas posted by the others; and, you’ll have a platform where you can share your wisdom and experiences! To become an “active” member, please read about our Services. If you have questions, please don’t hesistate to Contact us. This “Help” page may also answer some of your questions.
Oh, about that BIDU trade. Here it is:
I posted on the member board today:
This was the trade that I should have held. I got back in on Friday on the Oct 240s at $6.5. Got out at $15 today. It’s more than $30 at the close!! I’ll write about this trade in tonight’s post. The idea was right; timing on execution could have been much better. On Friday, I saw unusual buying on the 240 calls, but, could not bring myself to publish the re-entry because of the weekend and the expiration.
I wanted to talk about this trade not because of the +130% gain, but, because there could be things to learn from this trade. These options closed above $30 today and went as high as $33. In other words, I left at least $15 to $16 on the table on each contract (doubled what I sold at)! The idea was right, but, the timing of my execution could have been much better. In a strong environment such as today’s, I should have held it longer, at least ’til the end of the day. BIDU was just climbing its hourly upper BB today. We talk a lot about the upper BB in our Trade Room, and, those BBs are like “magnets” sometimes. Once a stock gets “stuck” on them, it just keeps going along the BBs. It was obvious that BIDU was strong today. I locked in the profits early because those were October options. What I could have done was buying both Oct 240s and Nov 310s (for instance). The Nov 310s opened at $4.70 and closed at $14.8 today, up +208.54%!. If I had gotten both the Oct and Nov options, I could have still taken the profits on the Oct 240s at $15 and kept the Nov 310s. Having pocketed profits from the Oct 240s, I would have felt much more comfortable to let the Nov 310s ride higher (plus, Nov 310s has a lot more time).
Finding the month and strike price that are “comfortable” for you is part of being successful in options trading! Sometimes, adding a “supporting” play to your “main” play could help you calm your nerves and perhaps maximize your profits!
Let’s take a look at how the market closed:
We got quite a few double-digit winners today: INX2 (Internet) +10.95%; OIH (oil services) +21.78!! (wow!!); XME (metals and mining) +11.92%; XLE (energy) +16.47%; SWH (software) +11.63%; FXI (Chinese ADRs) +20.27%; PBW (clean energy) +17.14%; MOO (agriculture) +14.64%!
SPX added +104.13 points to close at 1003.35, above the 1000 level. Its MACD turned up.
Nasdaq jumped +194.74 points to close at 1844.25, above the 1800 level. It closed just below its 10-day MA. The MACD went higher.
So, the VIX is back down to the 50s. This is a good thing, for the market. I posted this comment near the end of the trading session today:
HappyTrading October 13, 2008 12:53 PM
still charging up! wow!! momentum should carry through tomorrow morning. Then, we might get a violent swing. If the market is strong, it could go back up late tomorrow. I was looking for VIX to be under 60, and, it is. I think the bounce will hold. Tomorrow morning should be volatile.”
The important thing for the market tomorrow is not to fall back too much. After a huge up day like this, we should see profit-taking. (That’s why we locked in our profits today!) Typically, after the capitulation, the market could have a bounce that lasts for a few days, although it is difficult to say in our present environment, especially after a record day like this one. We’ll play things patiently tomorrow and see what the market does.
Good night and HappyTrading! ™