Portfolio Update: Recap of the Past Few Days

In my last post I recorded that I had been pushed into all cash my my selections. Since then, I have been in and out of a few option plays. The results have been interesting. Let me recap.

On October 27th, I entered into five options. I BTO a $35Jan10 Put for AXP $2.80, a $75Jan10 Put on CVX, a $50Jan10 Call on FPL, $72.50Jan10 Put on V, and a $29Jan10 Put on WFC. Total invested was a little over $1,640.

Within the next two days, my confidence was totally shaken. AXP continued sideways, retracing it's movements, each day. CVX bounced off a trend line I thought it was breaking below. FPL continued to get even more oversold. V rallied against me. WFC declined for my benefit but then took it back.

The following day, October 30th, I chose to swap out my options. I replaced my $75Jan10 Put on CVX with a $80Jan10 Call and I swapped my $29Jan10 Put on WFC for a $29Jan10 Call. I chose only to swap those because their secondary indicators on both daily and weekly intervals supported upward potential more.

I didn't change my position on FPL because the secondary indicators continued to indicate an oversold condition and the history of FPL is that it is more likely to bounce and rally for a while during the winter. I also left AXP alone because it's momentum indicators have been trending sideways on the weekly indicator with no effort toward the upside. It seems more likely to drop sooner than rally for big gains. My reason for leaving my Put on V in place has to do with it being in a channel with large swing potential. In fact, I am only still in it today because it pulled back hard today instead of breaking out.

In addition to the CVX and WFC Puts I swapped out for Calls, I also BTO a $16Jan10 Call on SLV as well as a $41Jan10 Call on USO. Neither of these did particularly well today. However, my reasons for getting involved in them is simple. They are indices on the value of hard assets. They both are currently being oversold according to their momentum indicators on the daily interval. USO is very near a steep trend line and SLV is at the bottom trend line of a channel. In fact, for both, the movements of the past three days are three legs of a "W" pattern which reinforces the potential of these positions. If next week begins like this week ended, then a change of opinion would be practical.

In regards to today's pull back. The Dow pulled back to the lower trend line of it's channel. Unless it breaks below and stays under this trend line next week, I believe it will rally up to 10,500. The same is my opinion for the NASDAQ, S&P and Russel. However, the latter three all closed right on, or slightly below, the trend line. This adds to the possibility that it could remain at these levels or drop further before gaining back. If next week begins with a repeat of today, I may swap out or cash out my contrary positions. That is my opinion, you can take it or leave it.

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