I am still not sure how to read the FOMC 50 basis points federal funds rate cut.  Is our encomy that bad? 

Oh well, let's see how long this rally will continue... I am stay on the sideline for now and getting ready to short the market.

Meantime, let me share this clip with you....  This is where I came from... Taiwan.  enjoy...

NFLD hit my stop-lose @ $2.00 today and so, my trade trigger bought it back @ $2.00.  Now, let’s review the trade.

I shorted it @ $1.85 as I speculate that it will continue its way south but instead going south, it bounced, headed north and broke thru $2.00 per share.  As I have my stop-loss set @ $2.00, I follow my trading plan and bought it back @ $2.00.  So, by the time I got out of the position, I have the total realized lost of $810.75. 

I bought high (@2.00) and sold low (@1.85).  In this trade, I sold it before I have the stock, then I just bough it back to cover.

Some of my friends emailed me about LuckySpeculator.com and told me that jump right into options trading in day1 was a bit too fast for them and that they can't real follow what and how was I trading.  They also asked me to explain what "long" and "short" mean #$%*@#@ (Are you kidding me? )  well, so in light of this, I am going to slow down, just trade stock at this point and explain what short and long mean.

Simple put: long = buy and short = sell.

Long is easy to understand, as we are at buy side as consumer most of time, it's not difficult to understand why we want buy something we don't have and maybe sell it at a later time.

However, short can be a bit confusing.  so, let's use today's trade as an example:

I shorted 5405 shares of NFLD @ $1.85/share today, it means I sold 5405 shares of NFLD.  So now, you may ask me how can I go short on something I don't have?  Well, the answer to your question is: I don't have it yet doesn't mean I won't have it in the future...  so my question to you is in which direction do you think I am speculating NFLD will go?

And if you still don't get it, go STFW !

short 5405 shares of NFLD @ $1.85/share

been watching this stock for months now, the company's only product isn't going any where.

Target $1.60
Stop lose @ $2.00

The name of this website is LuckySpeculator.com and in my previous blog, Why Do I Feel Lucky All The Time..., I kind of went thru my view on the term, lucky.  And today while I was doing some reading on futures trading, I came across what I think is a great defintion of the word, speculator, and here is what it says:

"Commodity speculators get blamed for many of the economic ills that befall humanity.  Speculators cause runaway high prices and prices so low that agricultural prodcuers cannot survive...." blah blah blah and then it point out: "Most of these accusations arise from a lack of understanding", very well said and here comes my favor part: "A futures market without speculators would be like a country auction without bidders - and would work just about as well.  In most markets, speculators are many times more numerous than any other participants.  It is the speculators who create a liquid market.", wow!  The term speculator can't be defined any better than that!

So now, let's remember: It is the speculators who create a liquid market!

$$$$$$$$ 

~$80 per barrel of the US benchmark light sweet crude!

The raise of crude is in parallel of the raise of other commodities and as prices increase, there are traders who come and cause upward momentum in the prices of other commodities.   And as China has become a major factor in commodities prices as she has shown that is not able to satisfied its own growth demand.  From producer, China becomes a conumer and this suggests that there could be a boon to US and other commodities producers.

I will keep my eyes on the agricultural sector 

$$$$$$$$$$$$

Well, I followed my trading plan very strictly and didn’t trade on the days I didn’t feel like to and today I traded out of all of my remaining open positions: BABT.X & BANS.X not because I feel like to trade but because these they hit my target!  So, I had to close them.

So, let’s review how I did:

I opened BABT.X & BANS.X positions back on 9/5/2007:

Long 100 BABT.X @ $5.50
Short 100 BANS.X @ $6.20

I closed it with today’s market price by short 100 BABT.X @ $7.00 and by long 100 BANS.X @ $5.20.  So, my realized gains from these two trades are $25,000!

($7.00 - $5.50) * 100 * 100 = $15,000
($6.20 - $5.20) * 100 * 100 = $10,000

Now add the $25,000 gains to my available cash of $29,100, my total available cash is now $54,100.  So far, the ROI is 116% within the last 6 trading days.  Well, not bad at all.  

Now, let’s review what I did in the past 6 days…  if you recall, I construct two bull fences, one for CIENA option and one for Boeing option.  So what is “bull fences” strategy?  Well, I hope you have googled it already and if not, come back tomorrow or so, I will write a paragraph or two on this simple option strategy.

$$$$$$$$$$$

EUQDI.X & EUQPF.X hit my target and I closed EUQDI.X @ $3.27 and EUQPF.X @ $1.95

 So by closing these positions, I now have a total realized gain of $4,100!

So, here are my current open positions after day 2:

Long 100 BABT.X @ $5.50
Short 100 BANS.X @ $6.20
Long 50 EUQDI.X @ $2.85
Short 50 EUQPF.X @ $2.35

And following is the first P&L after mark to today market closing price:

BABT.X option closed @ $6.00 has unrealized gain of $5,000
BANS.X option closed @ $6.20 no change
EUQDI.X option closed @ $2.90 has unrealized gain of $250
EUQPF.X option closed @ $1.95 has unrealized gain of $2,000

A total unrealized gain of $7,250.

I'm doing well.  Let's see what tomorrow brings!

Long 100 contracts BABT.X (BA Feb 08 $100 call) @ 5.50.  The total cost of this call is $55,000

Short 100 contracts BANS.X (BA Feb 08 $95 put) @ 6.20.  The total premium collected from this put is $62,000

the total cost of construct this bull fence is -$7,000 which means I made $7,000.

My avaiable cash is now $29,500 and I have 4 open positions.

Long 50 EUQDI.X & Short 50 EUQPF.X

Here goes the long waited first trade!

This strategy is known as the bull fence strategy.  I use this strategy as I speculate the price of CIEN is heading north!

Long 50 EUQDI.X (CIEN Apr08 $45 call) @ 2.85
The total cost for this call is: $14,250

Short 50 EUQPF.X (CIEN Apr08 $30 put) @ 2.35
Total premium collected from this put is: $11,750

The total cost of construct this bull fence is $2,500

So, my available cash at the end of this trade is $22,500

p. –s. for the sake of accounting purpose for this paper trading phase, I will not be worrying about any commission fee associated with trading.

Oh, here is my secret options trading strategies cheat sheet that I started to use when first traded options, it's worth sharing, click on it to see it in its original size.  Enjoy

I made this cheat sheet up myself :-)