Portfolio Update: Worst Week Ever.

Usually I take a breather after making one bad mistake, but not this time. Oh no! This time I make two more mistakes in a row. So here is how it went down.

After last weeks 26% loss on 5 QQQQ 20110122 $54.00 puts, I try to leverage a win in the opposite direction by BTO 10 QQQQ 20110122 $55.00 calls on December 13, 2010. That didn't work out as planned and I end up with a  20% loss on December 15, 2010.

But the bad news doesn't end there. Instead of learning my lesson, and seeing that a very tight sideways trend is forming, I try to leverage yet another win back in the bearish direction on the heels of my calls being STC. I entered a position of 10 QQQQ 20110122 $53.00 puts on December 15, 2010 just to be stopped out again today, December 17, 2010 for a loss of 32.5%. Why so much? I didn't set my stop until after I saw that today wasn't going to be a bearish day.

The only saving grace is that I didn't put all of my available capital to work all at the same time. It was pretty much half in both directions. So I averaged down my loss to only 25.6% total for the week. Would have been much better if I had set my stop by calculating against the high of December 15th like I was suppose to. Then I would only of had about a 17% loss for the week.

So here is the plan. If I do get back into the index it will only be after it breaks out of this trading range by a percentage of its ATR. I am thinking something like 10 or 20 percent. That is my opinion, you can take it or leave it. Disclaimer: See bottom of page. http://investorsopinion.blogspot.com/

ATR - Average True Range / Average Trading Range
BTO - buy-to-open / bought-to-open
QQQQ - PowerShares QQQ Trust ETF
STC - sell-to-close / sold-to-close

Portfolio Update: In And Down, But Not Yet Out.

So picture this; I saw that the QQQQ was going to gap up so instead of setting my entry point right away, I waited for the market to open and watched the initial behavior. Low and behold, QQQQ pulled back to the previous day's close before moving back up again. So once I saw one 5 minute interval of positive trading I set my buy order for 10 of the QQQQ 20110122 $55.00 calls. As a protection I set a stop for 20% of my entry price and one time during the day increased it as the option rose into the profitable range.

The good news is that I saved myself a little on the initial principle. The bad news is that the NASDAQ, of which QQQQ is based on, could not push much higher than it's open, and systemically fell apart in the last hour of trading. What I have now is a highly leveraged position with a $80 paper loss, that is on the verge of becoming a slightly higher and realized loss unless tomorrow is something all positive. That is my opinion, you can take it or leave it. Disclaimer: See bottom of page. http://investorsopinion.blogspot.com

QQQQ - PowerShares QQQ Trust ETF

Portfolio Update: Flat Markets Bad For Long Options

Well, I was just stopped out of the position I BTO on Wednesday. My position of 5 QQQQ 20110122 $54.00 puts stopped out at $1.18 for a 25.7% loss. It is my belief that I gave the drop in price on Tuesday way too much credit. I really should have took into consideration that the price of QQQQ still closed higher than the previous day's close. That being understood now, I believe that it is important not get in until after there is a confirmation day, and not get in on what you think will be a confirmation day.

My forecast for QQQQ is that if it does break above $54.52, I should probably make the 'trend my friend.' That is my opinion, you can take it or leave it. Disclaimer: See bottom of page. http://investorsopinion.blogspot.com

BTO - buy-to-open / bought-to-open
QQQQ - PowerShares QQQ Trust

Portfolio Update: In And Out, Then In Again.

Today was dissatisfying. For starters I entered into a position with an earlier expiration than I wanted to get into. Fortunately, it was relatively profitable for $7. Then once I got out of that position I got into the position I intended on entering. The position was for 5 of the QQQQ 20110122 $54.00 puts.

At first the position was profitable for what could have been about $43 net. But 5% wasn't good enough for me, so I continued to hold it for my 10% target. That didn't happen and now my position is down about 12% after taking into consideration commissions.

After analyzing the price movement of the past three days, I think there is a 60% chance that if tomorrow is a down day for QQQQ, that I could see a profit of 50% or more for my put position. The good news is that there are 2 more days left in this week. That is my opinion, you can take it or leave it. Disclaimer: See bottom of page. http://investorsopinion.blogspot.com/

QQQQ - PowerShares QQQ Trust