Sunday, August 3

What did we do on Friday?

Short answer -- nothing.  We decided not to change anything, just to see what would happen in the market.  On the stocks we're watching, there was some mixed results, but overall seemed like a down day.

Our position in GLD (call vertical) closed out, and we bought it back at our trail stop.  So, market went down; GLD went up and hit our trail.  We still closed out profitable though, because of that trail stop.  It seems that, for us, managing our trades by watching our stop rules and adjusting as appropriate is good.

What are we doing for tomorrow?

We're still looking at each potential stock and taking it one at a time.  Nick did the initial research, and I'm reviewing and we're sharing thoughts and ideas. 

YHOO -- potential Iron Condor (Selling the September expiration) with 40/41 on call sides.  Initially, Nick looked at the 33/32 Put side, and it does fit in our rules.  However, it looks like 33 is a solid support line that is regularly approached, for example on 7/18/14; 6/26/14; and 5/16/14 just going back 3 months.  I suggested we look at the 32/31 put side, and that does fit our rules.  Less risky, so less return, but seems like it will fit with the intermediate term trend.  It's a wide spread on the condors, so we're banking on time for this one.  Position entered as a sale to open, and we'll see what happens.

QQQ -- Looking at the call option with the 96.63/97.63 vertical.  Selling to open, so we're bearish on this position.  We do have the iron condor working also, so this will show up as a split position again.  

Nick suggested putting a condition on the order, so that the stock price itself would have to hit 93.84 per share before our option order goes into effect.  We're debating whether that is needed.  The condition will help us in that the stock will have continued to decline.  However, since the price already broke through the 30-day simple moving average (which can be a support), do we really need the condition?  

Looking at the actual candle for Friday's trading itself, it looks like there might be enough bullish investors to keep this underlying from going too much lower, barring anything crazy going on which impacts the market.  (That might not be such a hard bar...something's bound to happen.)  But anyway, that might mean that 94 will actually become another support level.  Perhaps that condition IS necessary.  At the very least, it will help eliminate a potential losing trade if this underlying does turn positive and more bullish again.  

Verdict -- entering position with condition that stock hit 93.84 or lower before being placed in the vertical trade.

GLD --  hmmm....  Potential call vertical on this trade.  We're considering the 127/128 position.  Nick sees a bear flag pattern happening over the last few days.  I can see it as well, once he showed it to me.  Fits our rules, though the part I'm not sure of is the relationship with to overall market.  In theory, this should be an inverse relationship with the market overall.  Assuming this downward trend of the last 2 days continues, the price of the underlying GLD should increase, therefore making this position fall more toward the loss side.  However, the definite short term trend here is down.  So I do believe we will go with Nick's original recommendation and see what happens.  

IWM -- seems to be continuing the downward trend.  We're looking at selling the 114/115 call vertical, banking on the continuation of that down trend.  All our rules fit, so that's what we're entering.

MU -- Going with Nick's recommendation on this one as well.  Selling the call vertical at 33/34.  Looks like this might be starting to do a bear flag decline.  Fingers crossed.

So we've got 4 potential trades to go through tomorrow.  Let's see what happens!

Have a wonderful rest of your Sunday nights all!