Thursday, March 25, 2010

Clues to the sell off

Today was an interesting day and can be viewed in 2 parts. The morning saw continued strength in the market. Many leading tech companies show great strength. QCOM AMZN GOOG PCLN all stuck out. I heard many market talking heads speaking about the "melt up" market environment. I will not often try to fade a trending market however, I will try to listen to the market for clues that the momentum might be waning. Today, I noticed that LVS and WYNN were relatively weak in the morning. These stocks have been on fire as of late so the change in character caused me to be a bit cautious. Next, the TLT's were weak and after the poor 7 year auction I thought that investor might use the rise in interest rates as an excuse to take some profits. I positioned my self long IWM LVS WYNN and FAS puts to name a few. I was able to make some nice profits into the close as I started to cover when the s&p futures went negative on the day.

After each trading day I will focus and remind myself that the next trading day I will get back to center court and be ready for what the market tells me.

If you are interested in learning more about my style of trading or you are looking for some more formal coaching or teaching, please email me at

Have a good night.

This morning there was a news story that a director from BioMarion Phamaceutical Inc. (BMRN) had decided to step down because the CEO of the company had received a take over offer and did not disclose it the board. The stock gapped higher on the open. I bought the April 25 calls for $1.00 based on the idea that more news might hit the tape including a potential take over price.(around 9:45 est on chart) The stock based for most of the morning until the headline hit a popular audio news service.(around 11:45 est on chart below) Right after that news hit the volatility in the april 25 calls exploded. I had the perfect opportunity to ring the register in my position. Note on the chart that the stock price did not move that much however the volatility in the options exploded. I had to decide how to handle the trade. I sold some of the calls at $1.75 and then I sold the April 30 calls for .70. This changed the position from a long call position to a long vertical spread. I am now long an April 25 30 call spread for free. I can now sit in the position for a couple weeks with no downside risk. If there is a follow up news story that causes the stock to go up I will profit nicely.

I would be happy to talk to any who is interested in learning more about this trade or how I approach the market in general. Contact me at

Wednesday, March 24, 2010

The options marketplace continues to evolve as the exchanges change their rules and fee structures on what appears to be a daily basis. The latest development is the new designation of professional customer. Option traders or groups who average 390 unique option orders on any exchange will be classified as a professional customer. The exchanges are attempting to increase their revenue by charging active traders a fee for each trade executed. If you are wondering how this will affect you or how it effects the market as a whole, email us at and sign up for a free consultation.

Trading RM LLC consults, teaches, and adds new traders to our prop trading group on an ongoing basis. For more information about our services please email us at

Tuesday, March 23, 2010

Option Expiration Week

Last week was option expiration which is usually the most volatile week of the month. In addition, we had the March futures going off the board which increases the volatility of the overall market. Unfortunately, the market did not have any huge moves. We had a tight range in the market with the S&P cash having a 28 pt range on the week. The thing that was interesting about last week is that a few underlying stocks had huge moves. At Trading RM we were able to capitalize on a few of these stocks(QCOM, GE, NTRI) last week as our subscribers to TRM Real-Time witnessed firsthand. Granted we had our share of losing trades but if you stuck to proper money management techniques the winners were 5 times your losing trades.

Please feel free to e-mail us at info@tradingrm for a one week free-trial of TRM Real-Time where you can get these trades real-time. This monthly service is 49.99 per month. Trading RM also offers coaching, training and mentoring.