12:10pm (EST) We have been talking about the market’s direction a lot lately because it is important to remember when trading options. We say that because if you are in a bullish position and are buying call options then you want the market or stock to go up. Same on the bearish side. When the market is going down, you want to buy put options. Of course, this isn’t an exact science and we buy call options in bear markets and put options in bull markets because stocks can go up when the market is tanking or go down when the market is rallying. If you will notice, pull up our track record from 2008 and 2009. We list all of our winning and losing trades and we don’t hide them. We do this for a reason. Our MAIN goal is to teach you how to look for trades and to understand how the market works. We try to keep our approach simple and yes, we have been working on a trading manual, but our priority is to keep you informed on the market and possible trades that have an opportunity to build your wealth. Having said that, for 2009, we have profiled over 200 trades and right now we are showing about 50 losers. Most of the losers are “grouped” together and it shows how the market can effect your trades if you are buying calls in a bear market or puts in a bull market. What it also shows is that the market is in transition but you have to keep trading. If you are good at option trading and you have a set of rules you stick by then chances are you are going to make some money doing this gig. You keep a track record because it keeps you honest and it also shows you what the market is doing. Right now, we are still enjoying a success rate of over 75% on our trades but the market gets tough when it is in transition. We have done well in this current climate but realize that some positions are going to get whipsawed or stopped out for no good reason. Imax (IMAX, $10.10, down $0.30) is a recent example of a good trade that was stopped out due to market conditions. We had profiled a trade back in August and were up 75% on some March call options before they got stopped out yesterday for a 11% profit. Yes, we could have cashed out for a bigger return and we told subscribers our thoughts when the stock was over $11 but sometimes the market takes you out of the position. The bottom line is we still showed a profit but we weren’t ignorant to what the market is doing to the position. We mentioned the Dow trying to hold the 10,000 level and more recently the 9,900 level. We also had a short-term target of 10,300-10,400. Remember, we have been calling this market rally since March and in July when the Dow was under 9,000 we were calling for Dow 10,000 before anyone even had a clue. In August we said September and October might not be that bad. It is still hard to believe we have almost made it through the month of October without some kind of correction though as it is notorious for some of the greatest market corrections of all time. Now that we are at these levels, the market has been searching for the next leg and we have a feeling it could be down. We are not pure bull or pure bear so we don’t care if the market goes lower. In fact, if we are headed for a major correction then we would be excited. That may sound bad but all we want is volatility and market direction. We know we have been long winded today but we have been getting a lot of emails on who we are and what we are all about. Which is a good thing. We want our service to be the best service out there when it comes to option trading but we also want to educate you. To quote a famous Chinese proverb…Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime. Well, that is our goal is… In economic news today… The Commerce Department reported new home sales fell 3.6% to a seasonally adjusted annual rate of 402,000 from a downwardly revised 417,000 in August. Wall Street had expected a number of 440,000. It was the first decline since March as sales were down nearly 8% in September from a year ago. As you might imagine, the Home Building stocks are getting crushed today…KB Home (KBH, $14.31, down $0.80), Lennar (LEN, $12.70, down $0.95), Pulte Homes (PHM, $9.17, down $0.40), Ryland Group (RYL, $19.30, down $0.75) and Toll Brothers (TOL, $17.20, down $0.74) are all getting spanked… Elsewhere, have you noticed the drop in Research in Motion (RIMM, $60.88, down $2.87) over the last week? The stock was at $67 last Thursday and has been struggling ever since the company released earnings. On September 25th, shares fell from $83 to just under $69 after the report and has spent much of October struggling with the mid-$60’s. The chart is getting interesting… Apollo Group (APOL, $61.27, down $11.70) is getting hammered and we hope you enjoyed this morning’s article and the whole poker thing. BTW, our favorite poker player is Sammy Farha who we hear trades options… Anyway, we profile an option trade on Apollo in the Members Area. The sector is likely to report good earnings which could have an adverse effect on Apollo but we think there is a chance to grab some of the huge pot that is on the table. Current Subscribers, check the Members Area now for the update.]]>
