The Market Listened

The market listened to Floyd. It hit it's bottom and for no good reason :) began the climb up. All calls we held were profitable. THREE for THREE in one day! Here's some examples:

1, -OXBHD OEX.X AUG 2009 420.0000 CALL was bought as low as 9.60, and on average at 10.80, last week and hit highs of 14.10

2. -OXBHT OEX.X AUG 2009 400.0000 CALL was bought at 22.50, and sold to highs of 27.00

3. -OXBHI OEX.X AUG 2009 445.0000 CALL was our recommendation today, under $2.00, and traders only got in at 2.13 or better, selling to highs of 3.62 by midday.

We consider all three of these trades profitable. What a great start to the week.

And by 3.45 p.m. the profits had increased even more, when the Dow hit 8365 right at our 8376 top that is strong resistance.

Many new trial subscribers we know struggle to under our daily alert. Letters today from subscribers might help us understand. I've included comments from seasoned Level 2 and Level 3 traders, and new subscribers:


-"Floyd, I recalculated the Dow three times and held out the August 400 call for max profits. I saw the count, and watched futures, and knew what was on the economic agenda.

I even knew to watch the market at 11.30 a.m. and 1.30 p.m. around economic calendars, and I had set buys and sells. For your information, I've made $41,000 trading OEX options in the past three month and I would recommend your Level 3 service to anyone. I paper traded three months, and studied the manual. I wanted to be the perfect student. You're an incredible trader, Floyd, and you've taught me a lot." JW, Kansas City


Floyd, nice play on he Aug420call, in at 10.80, out at 13.10, and did a good 20% on the 400 Call. Right to your Dow projections, brother. I've also been day trading for .50 increments all of last Thursday and Friday.

-JWK, South Bend, Indiana

And some questions from subscribers:

I’m a trial member and I had a quick question: Can I day trade these option contracts... for example purchase 1 contract in the morning and sell that same contract in the afternoon? or does one have to allow the option price to settle for one day to realize the gain in price"

-Floyd- Yes, this is what day trading is. You can sell in minutes. The SEC mandates that traders that show consistent trades to the same options may be considered pattern day traders (we are) and will require a $25,000 balance in your trading account


From Trader MP, NJ: Good afternoon my friend...

Sold my calls at the 8250 area...R2 from the alert...looks like I may have jumped the gun with selling...but what can you do...gotta take the profits when I can correct?

When you write: At 8376 to 8400 is a strong resistance, and we'll watch volatility, earnings, and volume for what could be a reversal to 8050 area,

What exactly are you looking for before issuing puts? How much volume is HIGH and what number is LOW? What numbers do you look for? Do you ever watch $TICK? I read somewhere that $TICK is a good indicator for volume...And what about the VIX? What number indicates FEAR?

Floyd: Three things: 1. The mood of that day. If euphoria ran, or it was a hesitant rise. I watch only the Dow and the OEX, and the options I am trading.

Floyd: I posted a great article on trading the Tick and on Vix at www.bluechiptoptions.com

Lots of new blogs at

http://bluechipoptions.blogspot.com/

"The Monday before July expiry the Dow has been up five years in a row."
How important or significant are stats like this? I guess today makes it six years in a row huh?

Floyd: I use historical data often and find that the "psychology" fascinating. When I list this kind of thing, pay attention.


We are seeing a great deal of "carve outs" at larger companies, as they "divest"non core assets. These are big words. What it means is: "they are getting rid of the shit they should not have bought to begin with," and the financials may look better short term, but they are "cash flowing" out. When carve outs occur the market is affected, in both fear and greed, and as they slow it will affect the market.

Part of why so many economists and talking heads think the third quarter will breakout stocks again is because "carve outs" will be large in this quarter. Examples are Bristol Myers, in recent months, when it spun off Mead Johnson Nutrition. Mead had a nice 35% gain on its' IPO during the carve out, Bristol gained, and in the long run both could lose. The bad news for stocks is that markets often fall after carve outs, also known as false financial games to make slowing production look good.

Be watchful. A good market will move slowly and steadily up, on increasing volume. We are a market barely above last October's lows, after yet again a bubble rise. And Goldman Sachs has record profits.

And Sarah Palin is writing a book, and may be losing her hair from the stress.

Enjoy the show.