More trades, More money, after Finals

Recently I haven't been able to actively trade as much due to a lot of other responsibilities. (Finals!). Once I finish up this semester I will have a week off and I want to come up with some really great trade ideas. I have been following current events and news daily so I have a lot of ideas. Given some time, I will research the best plays out there and post them here, along with my rationale for each trade.

This will tentatively start May 1st, 2008, just 6 more days!

Shorting Sub-Prime Credit Card Vendor CompuCredit

The Trade:

04/09/2008
+ 1 CCRT July 08 7.5 Put @ $1.43
-$143

04/10/2008
+1 CCRT July 08 7.5 Put @ $1.58
-$158

These two purchases average out to:

+2 CCRT July 08 7.5 Put @ 1.50
- $301

UNREALIZED PAPER PROFITS:
As of 04/24/2008

2 CCRT July 08 7.5 Put @ 1.65
+ $29 (9.63%)

I still have 85 days till expiration and I believe I will be able to lock some decent profits (+20%) in the near future.

I have plenty of time to claim a realized gain (3 Months). Currently my position is up, the contracts are selling for $1.65 as of (03.24.2008 Premarket). The stock is at 7.42, so I'm already in the money. I learned many things with this option, which I will be discussing. In addition, I believe that I should hold on to these contracts longer in order to lock up a realized gain because of the following:

1) CCRT is a player in the Sub-Prime lending fiasco. Their main business is distributing credit cards to Sub-Prime individuals. Their 52 week range is 38.57 - 7.02. That being said, 7.50 is not the lower bound, and I have left myself plenty of time to be well into the money. Currently the market is actually making some positive moves, but CCRT is still in a slump. With a BETA of 1.34, when the market hits a bearish dip (caused by some overreaction to earnings, news, oil prices, or simply 'cause traders are bored and can't find anything worthy to buy in the current marketplace), CCRT will tank even harder. This will be followed by more analyst downgrades, which will add to the downward momentum.

2) It was downgraded on February and March by Credit Suisse and Jeffries, respectively. Yet, the rating is still "Hold" and "Neutral" by both these firms. This tells me that they still haven't admitted that this stock was a huge dud and that they goofed up big time. Interesting to note that these downgrades changed their opinion from a "Buy" and "Outperform", after the stock went from some ~38 highs to ~7 lows within a year. I can't wait to see what these analysts think about this company, their insight is so valuable...

3) Although my original notion was correct, it is much harder getting large profits with this stock's option. Why? Major reason, I think, is that it has a 351 Million market cap, which puts it in the small cap category. Consequently, CCRT options aren't traded that heavily and have relatively low open interest (number of contracts actually on the market). This makes it a not so liquid option, thus causing the spread between the bid and the ask to be very high. For example, as the current stock price is 7.42, the July 08 7.50 Put Option has a Bid of 1.90 and an Ask of 1.65. That means that you are facing a 13.15% loss as soon as you purchase the option because of the spread. Also, the delta is very low, so it requires a large change in the stock price for a gain in the option price.

Finally, as I stated before I am waiting for a down day in the market where financial are hit hard. I believe this will cause CCRT, a sub-prime credit card company (wow, talk about the wrong business to be in right now), to reach new 52 week lows, cause a spike the volatility, hopefully gain open interest, and will be my selling point for my puts. The trend wasn't hard to find, it had just crossed its 50 day moving average early March.

I Can't Wait For This Month to be Over!

So....Let me recap what I have left to do this month.

My senior design final project demonstration and report.

My Embedded MCU Design project.

An 8-10 page paper on how the media treats stories differently, depending on whether the subject is an ally or enemy of America. Wow, what a controversial subject... not.

And then, of course, my one and only final.

Also, I won't be able to celebrate 4/20 this year due to unfortunate circumstances. It will be postponed to a later date. (4/22).

What is "The American Dream"?

What is the American Dream nowadays? It doesn't mean having a house with a two car garage, a white picket fence, two and a half kids, and a pet dog named spot anymore. So what does it mean?
Today - 2008 - What does the American Dream stand for?

Pam from the Office

I have to admit I have a thing for Pam (played by Jenna Fischer) from "The Office". I'm not the only person who has a crush on her either; I know this from all the other blog posts about the same topic on the internets. It's not a sick celebrity obsession type thing, more like a little crush on her character. She always plays it so cool, and has a great sense of humor. Also, I'm positive that the producers use make up to make her look less hot than she actually is - you know to make her more appealing to the middle-of-the-road broads.

What sucks about "The Office" and Pam is that it leads you to believe that there are chicks like that in the "real world" office. The truth is there are NO people like that working in the office. Instead of being a quirky atmosphere filled with jokes and sarcasm, my experience in the "real world" office consists of hours of UN-productivity and forcing myself to fake-laugh at co-workers lame jokes. Yes, the truth is the real office scene is more like "Office Space", and is able to suck your soul everyday at work.

Okay, enough about Pam and "The Office".... More to come soon.

"Coffee is the great incentivizer in the office" - Michael Scott (Season 1 Episode 1)

Quick Cash with GE Calls

The Trade:

03/28/2008
+ 2 GE May 08 38 CALL @ $0.89
-$178

04/01/2008
-2 GE May 08 38 Call @ $1.48
+$296

Total Profit: $118 (66%) 4 Days



Why?

I was doing some reading about GE and its performance in the market. Fundamentally the company is sound and Fool has some great information on them. There were a lot of technical indicators that GE was poised for a bullish move. I would go over them but I would just be regurgitating what I read on Trading Goddess. After doing some more research I decided to open a position which would capitalize on any short term upside move by GE. I did this by buying naked calls, near the money, and about 2 months to expiration (allowing me plenty of time to be right or dump my position and cut losses). I also did this on a down day, to capitalize from the lower call prices. Like life, timing is everything with options.

Today, the start of the second quarter, resulted in a nice rally for the markets. Hopefully this isn't some kind of cruel April Fool's joke, and the markets will be able to continue this trend. Yesterday, my position was at a 0.5% loss. I had set the stop loss at 8% so I waiting patiently either to cut my losses or capture some gain. The market rally today helped GE rally 3% and my contracts were up 66% (the awesome effect of leverage).

The stock has passed my strike price ($38/share), and I still have a whole month to go before the May expiration. Yet, I sold of the position because you never know what is going to happen in these markets. It is best to be disciplined and take realized gains rather than watch it turn into losses. I'm happy collecting 66% in 4 days and moving on to the next pick rather than brood over "what-if" situations.

Lesson: Make a pick based off strong fundamental and technical indicators. Looking at the chart, when the share price crossed the 50 day moving average, and created the double cup, the bullish elements were clear. Also, if I had more conviction I would actually short GE today by buying some near term, in the money, puts. Stick to the game plan. Get in, get out, either with gains or a capped loss.

State of Trance Episode 300

Video Above: Fly to Colors(Signalrunners Remix)-Markus Schulz

01. Intro
02. Sarah McLachlan - Fear (Hybrid Sumtin Remix)
03. Dave Gahan - Dirty Sticky Floors (Junkie XL Remix)
04. Jose Amnesia feat. Jennifer Rene - Louder
05. BT - Mercury and Solace (BT 12″ Mastermix)
06. Holden and Thompson - Nothing (93 Returning Mix)
07. Nathan Fake - Outhouse (Main Mix)
08. Markus Schulz pres. Elevation - Clear Blue w/ Andy Moor vs. Orkidea - YearZero (Accapella)
09. Cass and Slide - Perception
10. Salt Tank - Eugina (Marcel Woods Remix)
11. Three Drives - Sunset On Ibiza
12. L.S.G. - Netherworld (Vinyl Cut)
13. Robert Gitelman - Children Of The Sun
14. Tranquility Base - Razorfish (Above and Beyond Progressive Mix)
15. Jan Johnston - Calling Your Name (The Thrillseekers Vocal Mix)
16. Sarah McLachlan - Fallen (Gabriel and Dresden Anti-Gravity Mix)
17. Bossanova - Stonecold (Agnelli and Nelson Remix)
18. Solar Factor - Urban Shakedown
19. Fictivision vs. Phynn - Escape (Fictivision Mix)
20. Above and Beyond feat. Zoδ Zohnston - No One On Earth (Gabriel and Dresden Club Mix)
21. Aria - Dido (Armin Van Buuren’s Universal Religion Remix)
22. Rank 1 - Such Is Life
23. Kansai - Remember This Night
24. Vincent de Moor - Fly Away (Cosmic Gate Remix)
25. DJ Ton T.B. - Dream Machine
26. Marco V - Loops and Tings Relooped (Marco V’s Original Mix)
27. Marco V - Tolerance
28. Push - Strange World (2000 Remake)
29. Paul Oakenfold - Southern Sun (Tiδsto Remix)

2nd hour
Menno De Jong Guest Mix
01. Menno de Jong - Nolthando (Original Intro Mix) [Intuition Rec.]
02. ID - ID [Intuition Rec.]

Marcel Woods Guest Mix
01. Marcel Woods - ID
02. Solee - Impressed
03. M.I.D.O.R. - Intellectual

Sean Tyas Guest Mix
01. Sean Tyas pres. Logistic - One More Night Out
02. Vincent De Moor - Fly Away (Sean Tyas Remix)

Aly and Fila Guest Mix
01. Andy Prinz - Quiet of Mind (Aly and Fila Remix)
02. Mark Eteson and Jon Prior - Dynamic Stability (Aly and Fila Remix)
03. Aly and Fila pres. A and F Project - Uraeus (Frase Remix)

I fucking love this session. Great Armin Van Buren mix.