SURVIVING THE GAME
JANUARY 23, 2009
2009 – 6A

Model portfolio bought back remaining DIA MAR 100 calls at $10 each. Flat in those now.

Bought 1000 SU at $18.90, sold 10 SU JAN 2010 $20 calls at $520 each. Net long at $13.70, stop at $14.00. This trade worked out really well, oil started rising right after you got in. SU closed at $19.50 and the option closed at $570. Let’s see if the oil Gods are good to you on this trade.

Adjust stops on DIA FEB 85 straddle to exit at $900. This assures a profit on this trade even if markets continue to decline.

I’m going to walk through the DIA FEB options position to try and make it a little more clear.

Initially sold the FEB 90 straddle at $1310 on Dec 17th. Five days later after the market declined you purchased the FEB 102 calls at $27 each. These act as insurance against a huge rally. Now net $1283 for straddle. Market then rallied into the first part of this year. The market has since sold off sharply. On Jan 15th, you adjusted position by buying back the FEB 89 puts for $945 each and selling the FEB 85 straddle for $917. You kept the short FEB 89 calls which were at approx $150 each and placed a stop to get out of them at $200 each if we rallied. The market has since continued to slide and you are now near the lows of the year. I continued to lower the stop on the FEB 89 calls until this morning when they were bought back for $20 each. The 89 straddle was initially sold for $1310, the 89 put was bot for $945 and the 89 call for $20. This resulted in a net gain of $345 per straddle. The 85 straddle that was sold on Jan 15th for $917 each closed today at $698 each showing an open gain of $219 per straddle. The FEB 102 call bot as insurance for $27 closed at $5 and is basically a write-off. I have now placed an exit stop on FEB 85 straddle at $900. This will be triggered by a further decline of 200 points or more in the DOW. If not hit, I will continue to tighten the stop until we get to expiry ( Feb. 20th ) or stop is hit.

Hopefully that makes that trade a bit more clear. The DIA positions in MAR, JUN and SEPT follow the same theme.

ECA, USO and other trades doing fine. Leave stops as indicated and we’ll see what happens in the months to come.

Still contemplating what calls to sell against our long SPY and XIU positions.

We’ve had a few more join our little newsletter. Welcome aboard. Thanks to those who attended the seminar Wed eve. I am always open for further discussion with anyone looking to execute these trades or just to chat about options, strategy etc.

Options Guy
Editor
Surviving The Game

optionsguy@shaw.ca