SURVIVING THE GAME

JANUARY 15, 2009

2009 - 3

Hello from not so sunny Mexico. Markets have decided down is better than up.

Model portfolio stopped out on DIA JAN 86/86 this morning at $509. Bought puts at $505 and calls at $4. Flat in Jan DIA now. Nice gain on that position.

You need to adjust some other positions.

Buy back 20 DIA FEB 90 puts
Sell 20 DIA FEB 85 calls and puts.
Place stop to buy back 20 DIA FEB 90 calls at $200 each
Move stops for Feb to 7300 and 9700

Buy back 20 DIA MAR 89 puts
Sell 20 each DIA MAR 84 calls and puts
Place stop to buy back 20 DIA MAR 89 calls at $350
Move stops for Mar to 6900 and 9900

Buy back 30 DIA JUN 92 puts
Sell 30 each DIA JUN 87 calls and puts
Place stop to buy back 30 DIA JUN 92 calls at $500
Move stops for Jun to 6700 and 10700

Buy back 30 DIA SEP 92 puts
Sell 30 each DIA SEP 87 calls and puts
Place stop to buy back 30 DIA SEP 92 calls at $650
Move stops for Sep to 6400 and 11000

These trades simply adjust straddles down to make portfolio more neutral. The leftover calls will be stopped out or bought back cheaper later.

Leave other positions as is.

Time to get a bit long at these prices.
Normally you would want to be about 50% invested net long. So, to start the process you will get long 1/3 of that. You are committing 15% of capital to long equities. Yer are going to use ETF's instead of individual stocks . Split it 2/3 US market and 1/3 Cdn market.

Buy 300 SPY in US This costs approx $25000 $US. Buy 800 XIU in Toronto. This costs approx $10000 $CDN. You must buy in 100 shares blocks.

You will be selling covered calls against these position shortly.

Options Guy
Editor
Surviving The Game
optionsguy@shaw.ca