Thursday, 28 July 2011

Groundhog Day?

Came across an excellent site:

...with an interesting post, Ominous Similarities.

Read the post yourself with the writers reasoning and analysis (and a ref to Jesse Livermore!!), but here is the teaser chart, 2011 on the left, 2007 on the right (click to enlarge).

Read the post but may I add he is a trader (for the uninitiated: SPY is the Exchange Traded Fund that tracks the SP500 NYSE Index; Long Puts, Debit Put Spreads and Theta are explained below quote):

In essence of full disclosure below is my current trading portfolio. Please note this is not investment advice.

I am currently short SPX via long SPY puts for both August and September and long SPY August debit put spreads. I did sell some SPY August puts today to offset the September puts I bought earlier in the week. The result my position size is the same but I was able to manage risk by shifting to a future expiration for about the same price. In other words I have the same capital at risk but have an additional month of theta.
Long Put
Bear Put Spreads

PS Theta is the enemy of naked option buyers (longs) as I am witnessing as Suncorp dawdles down to $7.50 from $8.50, where it was on 20th May when I bought my $7.70 strikes. $7.53 today almost there!!

PPS I suppose a 11.7% fall in 70 days to an bank/insurance company tied to the QLD property anvil is not totally dawdling. ;)

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