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      05-12-2006, 06:18 PM   #1
ScBlacksunshine
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Have you withness the bloodbath on the market this last two days?

Man, can't believe the freaking 140pts and 120pts drop for Dow Jones this past two days...the amount of money I lost, could've put it to good use and get myself a nice set of HRE How did all you guys fare?

P.S. I have a bad feeling the house of pain is just starting
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      05-12-2006, 06:38 PM   #2
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yeah, the last 2 days have not been fun!!

it's all about long term but it does feel better to have made money at the end of the day than to have lost.

my stocks have dipped about 4% in the last 3 days
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      05-12-2006, 07:01 PM   #3
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I lost quiet a bit in the last two days too..........
and it'll probably take a week or two if the market is good to get it back.

i'm not worry........
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      05-12-2006, 07:56 PM   #4
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I don't mean to rub it in, but I made a killing. I was buying DIA puts after the Dow crossed 11500, and backed up the truck, er, e90 for the two days it was 11600 and over.

Triple digit returns in less than two weeks is sweet.
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      05-15-2006, 11:20 AM   #5
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Looks like the bloodbath continues today...damn...starting to look like the start of a market crash...
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      05-15-2006, 11:28 AM   #6
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i probably woulda dumped everything when i heard they were raising interest rates. but then again, i only buy depreciating assests which is why i dont own stock yet. so dont take my advice.
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      05-15-2006, 11:51 AM   #7
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Quote:
Originally Posted by RedStripe
I don't mean to rub it in, but I made a killing. I was buying DIA puts after the Dow crossed 11500, and backed up the truck, er, e90 for the two days it was 11600 and over.

Triple digit returns in less than two weeks is sweet.
What service do you use for option trading?

Forgive my ignorance, but with a put, wouldn't you be backing up the truck after the Dow dropped below your ~11500 strike, rather than at it's peak?
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      05-15-2006, 12:22 PM   #8
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Quote:
Originally Posted by cpcollin
What service do you use for option trading?

Forgive my ignorance, but with a put, wouldn't you be backing up the truck after the Dow dropped below your ~11500 strike, rather than at it's peak?
I bought puts on the SPY on Tuesday. I haven't been involved in the stock market for 2 years now, but I just could resist. I bought 135 and 140 SPY puts expiring on Dec 07. I plan on holding them a while.

I execute using Commerce Bank.
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      05-15-2006, 12:45 PM   #9
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Quote:
Originally Posted by cpcollin
What service do you use for option trading?

Forgive my ignorance, but with a put, wouldn't you be backing up the truck after the Dow dropped below your ~11500 strike, rather than at it's peak?
I use TDAmeritrade, but all the online brokers can do options trading, though you will have to probably fill out some consent paperwork to begin trading options if you didn't specify it when you opened up your account. TDAmeritrade is $10.99 per trade plus $0.75 per contract.

Anyways, to answer your question, the put is the option to sell at a specific price, so when I'm buying puts, I want to buy as the underlying asset is going up so as I'll be paying less for the put option. So as the DJIA was going up from 11,500 to 11,6XX, I was acquiring DIA options (DIA's are the ETF's that track the DJIA) with strike prices at 115. And after the DJIA crossed 11,600 I started buying the DIA puts with strikes at 116 (because now they were out of the money, thus cheaper).

And when the DJIA drops below where it was when I bought the DIA put, I'll be in the black.

So in plain English, the higher the DJIA climbs, the lower the price of DIA options at every strike price becomes. And since I'm betting the DJIA falls (that's why I'm buying puts because I'm assuming the DJIA is over-valued), I'll be making money when the DJIA drops - which will also mean the DIA puts at every strike price will get more expensive. Thus, you want to buy PUT OPTIONS when the underlying asset is high and going up so that your can sell as the underlying asset drops in value and the puts rise in value.
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      05-15-2006, 12:50 PM   #10
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Quote:
Originally Posted by gluck75
I bought puts on the SPY on Tuesday. I haven't been involved in the stock market for 2 years now, but I just could resist. I bought 135 and 140 SPY puts expiring on Dec 07. I plan on holding them a while.

I execute using Commerce Bank.

Dec '07??? wow, that's a long time... actually they are technically called leaps. You must have paid a good premium for that length of time. Anyways, I'm not one to give investment advice, but I would cash out of those puts before the end of the summer if I was the one who had them.
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      05-15-2006, 01:02 PM   #11
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Quote:
Originally Posted by RedStripe
Anyways, to answer your question, the put is the option to sell at a specific price, so when I'm buying puts, I want to buy as the underlying asset is going up so as I'll be paying less for the put option. So as the DJIA was going up from 11,500 to 11,6XX, I was acquiring DIA options (DIA's are the ETF's that track the DJIA) with strike prices at 115. And after the DJIA crossed 11,600 I started buying the DIA puts with strikes at 116 (because now they were out of the money, thus less cheaper).

And when the DJIA drops below where it was when I bought the DIA put, I'll be in the black.
Thanks for the clarification. Sounds like you doubled down on the cheaper puts - nice move.

Another question - when you exercise your options, do you have to actually have the shares of DIA to sell to the writer of the put, or does the TDAmeritrade handle that for you behind the scenes?
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      05-15-2006, 01:10 PM   #12
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damn, it IS still going on!! wtf? is it just because of the interest rates? nasdaq is incredibly low. and dow, after almost hitting an all-time high is now going down the drain like insane.
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      05-15-2006, 01:13 PM   #13
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Mainly inflation fears, weakness in the dollar.
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      05-15-2006, 01:41 PM   #14
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I dont know why you guys are crying, you only loose money if you pull out, unless there are day traders here.

Stocks are long term investments

relax
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      05-15-2006, 02:18 PM   #15
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Yeah defintely a commondity bloodbath today, PCU down freaking 7% and I do realize stock is long term, but unfortunately I have to take out some money soon since my E90 will be here next week....oh well, at this point it's more like how long can this go? :mad:
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      05-15-2006, 02:38 PM   #16
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Quote:
Originally Posted by ScBlacksunshine
Yeah defintely a commondity bloodbath today, PCU down freaking 7% and I do realize stock is long term, but unfortunately I have to take out some money soon since my E90 will be here next week....oh well, at this point it's more like how long can this go? :mad:

Do you follow PCU? When did you start tracking them? I put in a limit order at $93, but the markets have really rallied in this late afternoon.
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      05-15-2006, 02:49 PM   #17
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Quote:
Originally Posted by RedStripe
Do you follow PCU? When did you start tracking them? I put in a limit order at $93, but the markets have really rallied in this late afternoon.

You might still get your limit in by the end of day, today's a bloodbath for all commondity stock. I really fear this isn't the end neither. I bought at $103 and on long position I still think it'll go up a bit higher, but I bought it because of the dividend play, and given my 2 weeks time frame, I am afraid I'll lose my shirt over this one...maybe it's really time to think about driving a Hyundai

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      05-15-2006, 03:14 PM   #18
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Quote:
Originally Posted by RedStripe
Dec '07??? wow, that's a long time... actually they are technically called leaps. You must have paid a good premium for that length of time. Anyways, I'm not one to give investment advice, but I would cash out of those puts before the end of the summer if I was the one who had them.
I use a real simple formula to determine if the puts were cheap. When I bought the puts I paid 8.40 for the dec 135's. The spiders were trading about 131. That's four points "in the money". Which means, they had a time vale of 4.40(8.40-4) each. 4 bucks for 19 months? That sounded cheap to me, so I bought them.
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      05-17-2006, 10:15 AM   #19
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Today is another "ouch" day.
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      05-17-2006, 10:19 AM   #20
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don't remind me.
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      05-17-2006, 10:26 AM   #21
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Symbol Last Change
Dow ........................11,264.28 ......-155.61 (1.36%)
Nasdaq ....................2,201.24 ........-27.88 (1.25%)
S&P 500 ..................1,277.21 ........-14.87 (1.15%)
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      05-17-2006, 11:12 AM   #22
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it just dropped 150 points this morning...
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