I have been working up a trade in $MDLZ and as part of this process I have reviewed the Option chains out to January 2015. I had this setup labeled as breakout play but wanted to get a glimpse at what others may be thinking.

Here are a few of the Option chains with some notable action:

Uh oh.

Big footprints in June at the 28 Put strike. There are over 100,000 contracts sitting in Open Interest. Gulp. This makes me pause to rethink the breakout play strategy as I need to determine why traders are Bearish for June – and picked this strike.

I have noted the last breakout level with a Green line. As you can see, the nearest moving average to this $28 level is the 200 SMA (currently at 27.78). Worth noting that.

For now I am going to sit idle on finishing up a trade setup – to see how price handles a test of the rising 50 SMA (looks like a test very soon).

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• The key here is to buy the first Green volume bar after at least 4 Red volume bars in a row
• There are 4 signals on this chart
• It is likely that at least 2 would hit a trail stop if set under 3%
• The last signal was the big winner
• There may be a 5th setting up if today holds Red

On the flip side of this, there were several volume bar Sell signals as well (late Jan and early Mar that looked real good).

The post No sales, just buys using the volume bar setup in Salesforce.com appeared first on 1nvestor.

Today I thought I would highlight the reason of protection. I am currently long $CRZO (entry at 27.46) and I sold the June 27.5 Calls against the long stock on 5/20 for 1.76 giving me a range of 25.7 to 29.30 to work with.

A simple approach to providing protection to a long position. Today price is hovering near my entry and this short Call is now OTM (out of the money) so no risk of being called away now.

Some of the math:

Long stock at 27.46 & collected premium of 1.76 so this gets me the downside target of 25.7 that I need to manage. Being long at 27.46, short the strike at 27.5 plus the 1.76 gets me the capped target of 29.30 above.

The post No need to get crazy protecting a long position in Carrizo Oil appeared first on 1nvestor.

I had been monitoring one such trade setup in $SPPI — here is a current Daily chart:

As you can see in the chart above, the RSI had been drifting up as price drifted up towards the Green resistance line (the area where the Gap Fill starts). A rather clean set up especially after price broke up through the declining 50 SMA.

The 200 SMA is the 1st target with $11.75 being the Gap Fill target on this trade.

SMA = simple moving average

The post The Gap Fill play starring Spectrum Pharma appeared first on 1nvestor.

In the case of $EWW I sold the June 72 Straddle on 5/10/2013 collecting $4 in premium. This gave me protection down to $68 but capped my gain at $76.

This has been working ok but today I let the stock piece hit a stop at B/E (entry was 70.85). This means that I am now short the June 72 Strangle and the Call side is no longer covered.

The $70 price level looks vulnerable so I will monitor closely to make sure that it avoids going down too much further. Currently the June 72 Strangle is at a bid/ask of .61/2.55

The post The Go Both Ways play in Mexico appeared first on 1nvestor.

In reviewing several charts this morning, I noticed several stocks that had price banging its head (from below) on a down-trending (DT) line above. I like this setup because at some point it will break above this DT line and I want to play that move.

One such stock is $IO:

One thing to note here is this: once price does break above the DT line, there will be some formidable resistance next at the 50 & 200 SMA (simple moving average) at 6.50 & 6.65. Volume is trying to increase here so be ready for the imminent break.

Anticipate, but be patient.

The post The Downtrend Line starring ION Geophysical appeared first on 1nvestor.

Here is the Summary (I have added a G/L column which reflects price chance only from entry to current or booked gains – does not include Option piece gains/losses):

The post Position Updates – 05/17/2013 appeared first on 1nvestor.

Here is the Summary:

 Fab 5 Performance Info

• 31 with Complete status since inception (October 2011)
• Average gain of $11.93
• 40 with Not Complete status
• Average gain of $2.33

Candidates

• $APC
• $HSY
• $IOC
• $FISV
• $ROK
• $TSLA (just have to you know)
• $ACE
• $XOM (it was $85 in April, can it move $10 here or 40B in mkt cap?)

The post The Fab 5 update – 05/18/2013 appeared first on 1nvestor.

A look at the Daily chart:

There are several ways to start a trade here. One of the easier ways to play is to just go long stock and protect with a Put. Here is how it works:

• You go long the stock
• You buy a near-the-money Put to protect against any downside move
• One reason this may be tough here is that you only have the 22.50 & 25 strikes to work with.

Other trade ideas:

Risk Reversal

• A June 22.5/25 Risk Reversal
• Long the June 25 Call ($.30)
• Short the June 22.5 Put ($.25)
• This trade can be done for a $.05 debit at the moment
• Note: the June 20 Call has very large Open Interest so this makes me more bullish

Long Call

• Buy the June 25 Call for a $.30 debit

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As I have added managed accounts for clients in recent months, this process becomes even more important to ensure that I exit trades that may be tired – or I look for good spots to adjust existing positions.

I have made a lot of adjustments this week and here is what I have left to address:

Personal Accounts

• $DDD I am long stock and short the May 50 Call (earlier Blog post with more detail on this one). This is currently OTM so it has a chance to expire worthless, let me keep premium collected
• $OSTK I am short stock and long the May 25 Call so I need to get value from it this week or move to a June strike
• $TSLA I exited my short stock position earlier (hit a stop) so I am now left with a May 80/90 Risk Reversal. Current bid ask on this is: 1.40/1.40 lol
• All other positions have been moved to May 24 weekly or June (or beyond)

Earnings

There are no current earnings trades with May options

Fab 5

$ACT I am long stock with a May 115/105 Collar. Price is above 115 level so I need to decide if I will let it get called away or move to a June collar. Given it has already achieved the Complete status I will likely let this position get closed for me

Clients

• $ADBE I am long the June/May 40 Put Calendar. The May piece is to protect the short June piece so will leave until expiration
• $APO I am long stock with a short May 27.5 Call (Cov Call). I expect these to go poof, keep premium collected
• $ARUN I am short the May 17 Put. I am watching closely, but expect these to go poof, keep premium collected
• $BAC I am long stock and short the May 13 Call so I need to either let it get called or move to next week (or further out)
• $CBS I am short the May 49 Put. I expect these to go poof, keep premium collected
• $IMPV I am short the May 45 Call (part of Call Calendar). I expect these to go poof, keep premium collected
• $MPEL I am short the May 22 Put. I expect these to go poof, keep premium collected
• $SODA I am long stock & short the May 60/57.5 Strangle. Given the short Call is ITM I will need to address this by Friday or the stock will get called away
• $SYMC I am long stock and short the May 25 Call. I expect these to go poof, keep premium collected
• $SYNA I am short the May 37 Put (part of R/R CS). I expect these to go poof, keep premium collected

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