Portfolio Update and Option Pick

It has been almost a full week since my last post as I haven't had much to report. And, even now, all I have is an unremarkable portfolio update and an option pick. So let's get to it.

At this point, NG is still in contention to be called away from me and there is little chance of it not being called away as it is a full strike price ITM and 3 days until expiration. There is still a remote chance of NG going down, in the next couple days, but it is seriously unlikely. All good though as I am looking forward to having the capital freed up.

My Call on SLV has under-performed. I should have suspected this since I got in after the stock had already gaped up. This here is another learning experience from the school of hard knocks. Note to self: "Do not get in after gaps." The good news is that it hasn't turned down, yet, so I still haven't lost any significant capital. My stop-loss order is still in at 1.35 and the bid and ask are above that. Things are not looking promising for any profit's on this transaction so I suspect I will be stopped out with a small loss.

My option pick for tomorrow is on T. I discovered it as I clicked through my watch list and noticed three key things about it.

1. The price movement of the day is in the pattern that I like to call a Bullish Sun Rise. I call it this because it is almost like a Bullish Engulfing, except the open is actually at or slightly above the close of the previous day. However, its body would have engulfed the previous day had it opened slightly lower. Effectively the opposite of a Bearish Dark Cloud Cover.
2. The price is bouncing off of a trend line I drew on my chart almost a month ago.
3. The technical indicators I use, Stochastic and MACD, are both indicating that T is oversold and poised for a rebound.

As a result I am putting in a order for a Call on T. This call will follow the formula I have been using for the past few option orders I have been making. First, I take the high of the day and add 10% of the ATR to it so that I have a contingency price. (26.03+(.4986*.10)=26.08) Second, I find the difference of the contingency price and the close of the day. (26.08-25.90=.18) Next, I take the delta of my chosen option and multiply it by the difference I just found. (.5577*.18=0.10), and finally I add that product to the last price of my chosen option to determine my stop-entry and add 5 cents to that for my limit-entry. (1.25+.10=1.35 & 1.35+.05=1.40) .

So my order for T Call Options at a price range of 1.35 to 1.40 will be placed only if the last price for T is more than 26.08. I am anticipating a move of about $1 over the next 6 to 8 days. That is a potential profit of +40%. At that time, I believe I will sell and roll it into another position. It should also put me very close to breaking even. That is my opinion, you can take it or leave it.

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