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rjm77me
rjm77me vip
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rjm77me's Blog : Buy some down side protection for next 10 days for potential market reversal

Date February 10, 2012    Comments Comments (6)    Rate this post Recommend This Post (45)   
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Market may reverse or it may not 


The best way is to buy a broad based protection using index options or my fav IWM March 80 puts


Yesterday I bought those calls around $1.50 and today sold them for $2.10 - went as high as 2.21. closed at 2.01


I kept a few for Monday. I will buy back if the market goes up or add even if the market takes a down side turn.


If your 401K or IRA does not allow - then choices are limited to


A - Reduce the holding and go to partial cash - last 30 days brought decent gain - Risk you may loose some of market upside - that is the balancing act one has to do.


B. If you are in various fund = then review the risk associated with each fund and their performance during market reversal


IT IS NOT TIME TO PANIC - JUST SPEND FEW HOURS DURING THE WEEK END TO DO HOME AND MAKE A PLAN


Believe me I have made all those mistakes my self - turning away from looking at statement when the market is going in the wrong diection or take no corrective action


For a better tomorrow - spend time to review and do not leave to some one else to do all the heavy lifting for you

Tags : IWM   MARKET DIRECTION  

6 Comment(s):

Author rjm77me     Date February 10, 2012 19:21  Edited: February 10, 2012 by rjm77me Abuse this post Report Abuse
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Retire rich or poor is all up to you - Have a plan
Few hours a week helps if you are going to be active stock investor
Bi weekly reviews otherwise if your investments are in various fund and talk to financial planner every two months - if you use one
Author MightyMo     Date February 10, 2012 23:03 Abuse this post Report Abuse
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This is something that the local iconic troll and many others do not understand. The other day, owning BAC, I brought some hedge insurance, buying BAC Mar17 puts 6 strike for 4 pennies per contract... dirt cheap insurance in case of a black swan occurring.
Author JoeJustJoe     Date February 11, 2012 10:26 Abuse this post Report Abuse
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Trust me, on yer BAC trade you will be thanking me for advising you to bet opposite to whut you wuz actually spewin *-) Noooow, ifn you cud only git the discipline to bet opposite ov what you are spewing "religiously" ...you "might" have a shot agin me...but I SIRIously doubt it :-) 3J
Author rjm77me     Date February 13, 2012 14:09 Abuse this post Report Abuse
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ADDED FEW IWM 80 PUTS as hedge - had sold on FRIDAY
Author rjm77me     Date February 14, 2012 23:41 Abuse this post Report Abuse
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The dean of options strategists, Oppenheimer & Co.'s Michael Schwartz, is telling clients to use options to reduce stock market risk.

"The trend is always an investor's friend, but powerful surges higher suggest the market has advanced too far, too fast, and is poised for a short-term retreat," Schwartz said.

The expected retreat should be treated like an event-driven trading opportunity - not the end of the bullish trend.

While it makes sense to use calls to cost-effectively exploit bullish opportunities, it also makes sense to use bearish puts to position for what many investors think will be a short-term stock market retreat.

On that front, investors should consider buying put options on the iShares Russell 2000 (IWM) exchange-traded fund that expire on Friday. These February 81 "weeklies" cost about 50 cents when the ETF was at 81.69. The options are called weeklies because they expire each Friday.

I prefer next months PUT and prefer to trade for 15 cents to 50 cents on day to day - buy some on up day and off load on weakness. This way one avoids time decay. I prefer to buy on up days - some sort of correction is going to happen - I do not mind these options go to zero as long as the market rallies big time - then one wins with a long portfolio any way
Being 80% right is OK by me
Author rjm77me     Date February 16, 2012 10:32 Abuse this post Report Abuse
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Bought IWM puts again - had sold yesterday
buy VXX calls too
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