Tag Archives: Put Spreads

Wednesday and out for the weekend

Options expiration this week and it’s a long weekend here in France for the Ascencion. There was only one thing to do, get to cash. My May put spreads worked perfectly this month. I say perfectly, but I’m not sure if I managed the exits well. I had a large amount of 139 puts with a delta of nearly 1 and a fair amount of 135 and 134 puts. With only 2 1/2 days until expiration, these were obviously more volatile. It’s something I have to work on. What’s the best exit strategy in this case?

Cash is a position…

Ford January Expiration Trade Idea

I’ve recently had flashbacks of the popular press reassuring the popular investor that multinationals were less risky because large percentages of their profits come from overseas. I’m attributing these flashbacks not to an illegal substance but to the weakening Euro.

So I starting thinking again about Ford $F and those percentages.

Disclaimer: Ford is one of those stocks that I personally just like to own. For no other reason than supporting an un-bailed American company. Somehow, I see it as supporting American exports, workers and the general economy. For what that’s worth…

Here are the “operating highlights”  from Ford’s 2010 financial report:

Ford Worldwide Sales

Ford Europe represents 28% of Ford’s total sales (over 55% of Ford’s sales are outside North America).

Now the Operational Results:

Ford Operational ResultsThis 182 number strikes me as odd given that it should represent 28% of the sales volume. Are they suffering on european margins? Or I don’t understand, which is probable.

In any case, now for the revenue:

Ford Revenue 2010

 

24% of Ford’s automotive revenue comes from Europe. Lets just stick with the 24% number for fun and have a look at the Euro since January 2010. Ironically the Euro today is exactly where it was 1 year ago but  I’m sure my flashbacks date back to May.

Euro Dollar 1 Year Chart

Now for that $29.5 billion in revenue from Europe… What will happen to that revenue if the Euro continues it’s downward spiral and Europe’s demand falls of a cliff ?

I’d say 24% of Ford’s revenue is at significant risk.

I’m looking at January puts or January spreads for the possibility that $F retests it’s lows of 9.

Ford 6 Month Chart

 

Lindsay Lohan

Lindsay, George, Gilad Rotation

Lindsay LohanLindsay Lohan, George Clooney and Gilad Shalit all have one thing in common. Not one of them could care less that Germany has lowered expectations for the EU Summit.

That happens to be what took the air out of the bull’s balloon this morning. I saw the release before the markets opened and sat on the news. I sat, and sat, until well it was just too late.  So I didn’t do anything.

In all honesty, shorting the S&P Futures was the first thing that crossed my mind, but I didn’t do it. For readers of this blog, you know I’m already in some SPY 120/117 put spreads, I added some more 120 this morning. So it’s not that bad, but the mistake was not shorting the futures. Atleast for a day trade. The market’s been rallying it was the perfect excuse for the recent bulls to take profits and well I saw the weakness early. I even suspected it would run through the close. Well, well.

I’m not regretting that I missed a trade, I’m noting the fact. This blog is here so that at some future date when I’m eating lunch with Lindsay, George and maybe Gilad, I can say; “You know LiLo while you were worrying about getting sent to jail, and Gilad, you were worrying about getting out, I was missing a good trade! Buddy, I can’t imagine the USA trading France 1000 prisoners for me! George, you were preparing a new top-model slash girlfriend slash teaser for the press, and I was distracted with fantasies of role-reversal: Politicians trading places with Jahova’s Witnesses.”

The stories we’ll tell.

In any case, I missed a good trade this morning.

The PPI numbers come out tomorrow. It’ll be a replay of today if the numbers are bad, though probably drift up if the numbers are good.

On verra demain.

SPY Rollup

Sitting in this range is making it hard to find setups that I like.

I rolled up some SPY 117/110 Bear Spreads to 120/117. I don’t believe so much in this rally. If it’s real the shorts should be covered here, and we’ll blow through the 120 resistance by EOD (on volume?), but if it’s not we’ll pull back again at least to 115 and my initial 117/110 spread will  go the way of, ‘phew’.

SPY October 10th, 2011

What makes me doubt the optimism?

  1. Gold ( GC_F ), it’s trading too much like the market… It should be falling if the risk trades were flowing back into equities.
  2. Europe is filling the airwaves with marketing spin, Slovakia is copying the republican freshmen, and Greece just won’t go away.
  3. The run up yesterday on such light volume.

I can simply count on the fact that it’ll probably surprise me…