SURVIVING THE GAME
MARCH 5, 2009
2009 – 19

Today is why you need to “ get small “ as markets are moving against you. As recommended, you have had fewer and fewer positions, and less and less risk as the markets plummeted. This has enabled you to still be up almost 6% year to date as the world is crumbling. You now carry only three small positions with less than 3.5% of portfolio at risk.

What has happened should be the wake-up call to all investors and to those that preach that averaging down on a position is wise. It is one of the most destructive methods of trading or investing. Continuing to buy more and more of anything as it declines is counterproductive. You only add to positions when they are going in your favor.

Tomorrow morning is probably the most anticipated jobs report ever. Estimates are for up to 750,000 jobs lost and unemployment topping 8% in the USA. Given the action of the last week this could very well be the capitulation everyone has been waiting for. We may collapse or absolutely exploded tomorrow depending on the number and reaction to it. I have no idea what will happen but my guess is a lower open then a strong rally, possibly 500 points or more. There is no safe way to position yourself for that so just sit back and watch. Remember, my guess is no better than anyone else.

With markets being beaten down so badly and no rhyme or reason to market action, I have no choice but to step back and reassess the situation. The open positions are very small with very little risk so they can stay in place. I want to sell more straddles and buy equities and sell covered calls so as to collect the very high option premiums but I think it wise to just take a breath and watch, at least for a few days. There will always be another good time to get in. So, just sit back and enjoy the show tomorrow. Maybe it will be a non-event but my gut tells me something is going to happen.

FILLS:

Stopped out of SPY MAR and APR straddles this morning. See position summary for fills.

OPEN POSITIONS:

USO. Hanging in, hold. SU, same as USO, hold. CDN$ just floating around even. No large risk anywhere just hold all three positions.

NEW TRADES:

No new trades.

Options Guy
Editor
Surviving The Game
optionsguy@shaw.ca