Day Trading & Forex Forum

carleygarner

September 29th, 2008


Stocks crumble at the hands of Congress.


Fear and panic began to spread on Wall Street as Congress failed to pass the proposed rescue plan. According to sources, approximately 70-80% of the locals on the NYSE were expecting the plan to pass. The disappointment of the outcome was widespread and the wound to investor confidence was deep.



For those that watched the turmoil unfold (assuming that your computer didn't freeze from data overload) the site was nothing less than astonishing. S&P futures seemed to be dropping in increments of 5 to 10 handles and the Dow slipped 400 points in a matter of minutes. According to Chris Johnson, President of Johnson Research Group, "Clearly something needs to be done, and the market dropping 400 points in 10 minutes is telling you that." He added, "This isn't a market for the timid."



Personal incomes rose a better-than expected .5% but consumer spending fell to its lowest level in six months. However, there were few paying attention...Investors were too busy trying to preserve capital. Money immediately fled Wall Street and made its way toward the Treasury markets. As a result, the yield on the 3 month Treasury bill fell to an annual rate of far less than half of a percentage point.



Putting a number on the level of panic in the market, the CBOE's VIX (Volatility Index) peaked at over 45 in today's session. This was the highest reading since 2002 and shows that the capitulation that the "talking heads" have been warning about is finally here. The Dow suffered its biggest losing day in history,



For those that have the short put options recommended below, I hope that you also took our advice in placing the 1 by 2 ratio writes as an intrinsic hedge against the risk of market declines. Today, that piece of mind likely came in very handy.



Where to go from here? Timing is everything, but capital preservation is just as important. If you don't trust yourself to make rational decisions in this trading environment, don't enter the market. If fear and greed could be quantified, they would probably be running at unfathomable levels.



As depressing as the day has been I can't help but think that October will bring better days. If you are willing to face the consequences, it is a good time to be looking at put selling the premiums are unbelievably inflated allowing for distant strike prices but take my advice and use option spreads as an intrinsic hedge.





Please note: A mini S&P chart is used because it is better for charting purposes, but trade recommendations are based the full sized S&P unless otherwise noted.







S&P Futures and Options Trade Recommendations




**There is unlimited risk in naked option selling and futures trading





Position Trade





September 5 - Try selling the September 1160 put for $4 or better, it will take continued weakness to get filled.





September 9 - If you were trading the mini version, you should have been filled on this today. Those trading the full sized contract likely were not filled and should keep the order working in tomorrow's session. We are giving the market plenty of room to move, but this must be handled with care.



September 11 - I recommend placing an order to buy this option back for a $1 in premium, this would be a profit of $150 on each mini and $750 on each full sized before commissions and fees and assuming that you are able to get filled at the prices noted.



· This option traded at $1, but didn't go through it. You likely weren't filled, keep the order working on Monday but don't get greedy. If it costs a little more, take your profit and run.

· Hopefully you exited this trade on Friday, if so you may want to resell this option. If you are still holding on, look to exit on the next significant bounce. Preferably at $1.50 or less. Contact me for guidance.

· Clients were advised to roll this trade into the October options by buying back the Sept. 1160 put and selling the Oct. 1060. At the time this could have been done at a debit of $1.25. It is better to be safe than sorry!

· Place an order to buy back the 1060 put for $3.00, let's get this over with!



September 18 - If you prefer the big board, based on today's settlements it may be possible to buy the November 1160 put and sell 2 of the 1080's for near even money. Assuming an even money fill, this trade makes something from 1160 to 1000. The maximum profit of $20,000 occurs if the market is at 1080 at expiration, the risk is unlimited (equivalent to being long a futures) below 1000.





Please note: A mini-sized Dow chart is used because it is better for charting purposes, but trade recommendations are based the full sized Dow unless otherwise noted.





Dow Futures and Options Trade Recommendations


**There is unlimited risk in naked option selling and futures trading





Position Trade





September 5 - Sell the September Dow 10,600 puts for 50 or better. This can be done in the mini or the full sized. Call me for additional guidance.



· September 15 - This order should have been filled today. Look to buy this back for 10 or better! Don't get greedy, if we get a large bounce take a profit. There may be a chance to resell it.



· September 18 - Clients were advised to roll into the next option month by buying back the 106 puts and selling the 97 puts, at the time this could have been done for a debit of 2 ticks. We wanted out of this market's way!

· You should have an order to buy these back at 20.



September 18 - Take advantage of the volatility through ratio put spreads!! Premiums are "fat", you can buy an October Dow 10,700 put and sell 2 of the 10,200 puts for close to even money. Assuming an even money fill, this trade pays off something above 9,700!! The maximum profit is $5,000 on the full sized contract and $2,500 on a mini and occurs if the market is trading at 10,200 at expiration. The risk is unlimited below 9,700!





Please note: A mini-NASDAQ chart is used because it is better for charting purposes, trade recommendations will denote whether a mini or full sized contract should be used.







NASDAQ Futures and Options Trade Recommendations


**There is unlimited risk in naked option selling and futures trading



Swing Trade -



Flat



Position Trade



Flat







There is substantial risk of loss in trading futures and options.



Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

__________________
Carley Garner

Senior Market Analyst/Stocks & Commodities Columnist/Broker

carleygarner

September 30th, 2008

Dead cat bounce...but will it last?


Congress and President Bush insist that another version of the rescue bill will be on the table in a matter of days causing short covering in equities. While there may have been a moderate amount of bargain hunting in today's session, follow through buying was absent and by tomorrow the rally may be too. However, the immediate direction of the market is almost solely dependent on progress made in Washington.

Lawmakers scrambled to revise the "bail out bill", the late day boost in the equity indices was in large part reports that the SEC is working with FASM on revisions to fair value accounting. This could be potentially big in terms of banks and the way that they must account for their assets.

Talk of higher FDIC insurance limits also seemed to be looked at in positive light. Doing so could prevent the burden of some investors spreading their deposits among several banks and in turn prevent untimely withdrawals from institutions in which solvency is in question.

Sources are noting that approximately 70% of those on the floor believe that a rescue package will be passed shortly and are positioning themselves accordingly.

It was clear yesterday that the market was full of fear and panic and had really overdone itself. However, now that the dead cat bounce as come and gone many are wondering whether Congress will be able to save the markets from another probe at the lows regardless of a bill being passed or not. This very well could be part of the bottoming process, but there is no telling how much "pain" the markets will have to endure before confidence in the system is regained. I am still comfortable with distantly placed short puts, but it takes a substantial amount of risk tolerance to be exposed in this market.

If you are holding any of the short puts or put ratio spreads below, patience will be a virtue. The explosion in volatility has resulted in an exponential increase in premium values creating somewhat disappointing losses. However, from an intrinsic standpoint (where the futures price is in relation to the strike prices of the options) I believe that the trades are still promising. In fact, stand to be largely profitable assuming that the volatility decreases.


Please note: A mini S&P chart is used because it is better for charting purposes, but trade recommendations are based the full sized S&P unless otherwise noted.



S&P Futures and Options Trade Recommendations


**There is unlimited risk in naked option selling and futures trading


Position Trade -


September 5 - Try selling the September 1160 put for $4 or better, it will take continued weakness to get filled.


September 9 - If you were trading the mini version, you should have been filled on this today. Those trading the full sized contract likely were not filled and should keep the order working in tomorrow's session. We are giving the market plenty of room to move, but this must be handled with care.

September 11 - I recommend placing an order to buy this option back for a $1 in premium, this would be a profit of $150 on each mini and $750 on each full sized before commissions and fees and assuming that you are able to get filled at the prices noted.

• This option traded at $1, but didn't go through it. You likely weren't filled, keep the order working on Monday but don't get greedy. If it costs a little more, take your profit and run.
• Hopefully you exited this trade on Friday, if so you may want to resell this option. If you are still holding on, look to exit on the next significant bounce. Preferably at $1.50 or less. Contact me for guidance.
• Clients were advised to roll this trade into the October options by buying back the Sept. 1160 put and selling the Oct. 1060. At the time this could have been done at a debit of $1.25. It is better to be safe than sorry!
• Place an order to buy back the 1060 put for $3.00, let's get this over with!

September 18 - If you prefer the big board, based on today's settlements it may be possible to buy the November 1160 put and sell 2 of the 1080's for near even money. Assuming an even money fill, this trade makes something from 1160 to 1000. The maximum profit of $20,000 occurs if the market is at 1080 at expiration, the risk is unlimited (equivalent to being long a futures) below 1000.


Please note: A mini-sized Dow chart is used because it is better for charting purposes, but trade recommendations are based the full sized Dow unless otherwise noted.



Dow Futures and Options Trade Recommendations

**There is unlimited risk in naked option selling and futures trading


Position Trade -




September 5 - Sell the September Dow 10,600 puts for 50 or better. This can be done in the mini or the full sized. Call me for additional guidance.

• September 15 - This order should have been filled today. Look to buy this back for 10 or better! Don't get greedy, if we get a large bounce take a profit. There may be a chance to resell it.

• September 18 - Clients were advised to roll into the next option month by buying back the 106 puts and selling the 97 puts, at the time this could have been done for a debit of 2 ticks. We wanted out of this market's way!
• You should have an order to buy these back at 20.

September 18 - Take advantage of the volatility through ratio put spreads!! Premiums are "fat", you can buy an October Dow 10,700 put and sell 2 of the 10,200 puts for close to even money. Assuming an even money fill, this trade pays off something above 9,700!! The maximum profit is $5,000 on the full sized contract and $2,500 on a mini and occurs if the market is trading at 10,200 at expiration. The risk is unlimited below 9,700!


Please note: A mini-NASDAQ chart is used because it is better for charting purposes, trade recommendations will denote whether a mini or full sized contract should be used.



NASDAQ Futures and Options Trade Recommendations

**There is unlimited risk in naked option selling and futures trading

Swing Trade -

Flat



Position Trade -

Flat





There is substantial risk of loss in trading futures and options.


Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

__________________
Carley Garner

Senior Market Analyst/Stocks & Commodities Columnist/Broker

carleygarner

October 2nd, 2008



Chaotic Fundamentals = Chaotic Trade


Many on Wall Street are expecting the bailout package to be approved, but there is now widespread pessimism as to how helpful it may be. Some are suggesting that the plan was never enough to ward off a recession and others simply think that the time that has elapsed has allowed too much damage to progress.

Recent days have been strung with disappointing economic data but in a strange way, this may actually be constructive for the markets going into mid-October. The markets tend to do a good job of pricing in the "worst" and with turmoil in the credit markets and what seems to be the beginning of a recession underway it is likely that the bears are already positioned in the markets and the weak bulls have been frightened out. October is known for being the "bear killer" according to the Stock Trader's Almanac and 2008 has entered the month as a prime candidate.

Our sources on the combined CME/CBOT floor remain bearish, but note that the markets may have some upside potential going into the election. I lean to the upside in the intermediate term but the direction of the markets from now into next week is quite frankly a crap shoot. I live in Vegas; there is no need to roll the dice in the markets so I won't attempt to pretend as if I know what is going to unfold.

My models are suggesting that we at or near long term support levels in the S&P, however, confidence in my models has diminished along with the market's confidence in the system. Nonetheless, the 1120 and 1100 pose strong support in the broad based index and barring any Congressional or non-farm payroll surprises it should hold. Likewise, there seems to be a floor in the Dow near 10,420 and the NASDAQ near 1500. Would I put my chips on the table? Probably not...if you are already in or must get in, play this with options and spreads such as those previously recommended on this newsletter (below). However, regardless the strategy used the stakes are high.


Please note: A mini S&P chart is used because it is better for charting purposes, but trade recommendations are based the full sized S&P unless otherwise noted.



S&P Futures and Options Trade Recommendations


**There is unlimited risk in naked option selling and futures trading


Position Trade -


September 5 - Try selling the September 1160 put for $4 or better, it will take continued weakness to get filled.


September 9 - If you were trading the mini version, you should have been filled on this today. Those trading the full sized contract likely were not filled and should keep the order working in tomorrow's session. We are giving the market plenty of room to move, but this must be handled with care.

September 11 - I recommend placing an order to buy this option back for a $1 in premium, this would be a profit of $150 on each mini and $750 on each full sized before commissions and fees and assuming that you are able to get filled at the prices noted.

• This option traded at $1, but didn't go through it. You likely weren't filled, keep the order working on Monday but don't get greedy. If it costs a little more, take your profit and run.
• Hopefully you exited this trade on Friday, if so you may want to resell this option. If you are still holding on, look to exit on the next significant bounce. Preferably at $1.50 or less. Contact me for guidance.
• Clients were advised to roll this trade into the October options by buying back the Sept. 1160 put and selling the Oct. 1060. At the time this could have been done at a debit of $1.25. It is better to be safe than sorry!
• Place an order to buy back the 1060 put for $3.00, let's get this over with!

September 18 - If you prefer the big board, based on today's settlements it may be possible to buy the November 1160 put and sell 2 of the 1080's for near even money. Assuming an even money fill, this trade makes something from 1160 to 1000. The maximum profit of $20,000 occurs if the market is at 1080 at expiration, the risk is unlimited (equivalent to being long a futures) below 1000.


Please note: A mini-sized Dow chart is used because it is better for charting purposes, but trade recommendations are based the full sized Dow unless otherwise noted.


Dow Futures and Options Trade Recommendations

**There is unlimited risk in naked option selling and futures trading


Position Trade -




September 5 - Sell the September Dow 10,600 puts for 50 or better. This can be done in the mini or the full sized. Call me for additional guidance.

• September 15 - This order should have been filled today. Look to buy this back for 10 or better! Don't get greedy, if we get a large bounce take a profit. There may be a chance to resell it.

• September 18 - Clients were advised to roll into the next option month by buying back the 106 puts and selling the 97 puts, at the time this could have been done for a debit of 2 ticks. We wanted out of this market's way!
• You should have an order to buy these back at 20.

September 18 - Take advantage of the volatility through ratio put spreads!! Premiums are "fat", you can buy an October Dow 10,700 put and sell 2 of the 10,200 puts for close to even money. Assuming an even money fill, this trade pays off something above 9,700!! The maximum profit is $5,000 on the full sized contract and $2,500 on a mini and occurs if the market is trading at 10,200 at expiration. The risk is unlimited below 9,700!


Please note: A mini-NASDAQ chart is used because it is better for charting purposes, trade recommendations will denote whether a mini or full sized contract should be used.



NASDAQ Futures and Options Trade Recommendations

**There is unlimited risk in naked option selling and futures trading

Swing Trade -

Flat


Position Trade -

Flat







There is substantial risk of loss in trading futures and options.


Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

__________________
Carley Garner

Senior Market Analyst/Stocks & Commodities Columnist/Broker

carleygarner

October 3rd, 2008


Congress rules the roost


The equity markets deflected a bullet shot by the nonfarm payroll data but that was only the beginning. The rest of the day was spent speculating on the outcome of the Congressional bail-out vote. Despite yesterdays panic plunge traders seemed to be a bit more optimistic in Friday's session, although much of the buying can likely be attributed to shorts covering their positions. Sadly, at this point I think that any green on the screen is welcomed regardless of the motives behind it.

The U.S. economy lost 159,000 jobs last month, but data released in prior months was revised higher. On a net basis the numbers seemed to be in-line with expectations. However, the spotlight was stolen by news by news of Wells Fargo looking to acquire Wachovia for $15 billion despite earlier discussions with Citigroup. Citi is now demanding that Wachovia call the deal off due to claims that their agreement is legally binding. The willingness of capitalism to finally rear its head without government intervention may have put a temporary floor in equities.

All eyes, including those standing on the trading floors, were glued on the television as Congressional votes were tallied. The Déjà Vu was quite eerie but the outcome was thankfully much more welcomed by Wall Street than Monday's fiasco. Hopefully we (Main Street) will sleep better this weekend. This bill won't work any miracles but hopefully it will stop the bleeding.

Monday will be much more telling as to the overall opinion of the bill passing especially after witnessing the "buy the rumor sell the fact" trade that occured post bail-out. However, I am still leaning toward the upside in the near-term. In yesterday's report I mentioned support in the S&P at 1120, 10,420 in the Dow and 1500 in the NASDAQ all of which were pretty close to today's lows. This doesn't necessarily mean that the market is out of the woods, but it does lead me to believe that a bounce to 1200 in the S&P is a real possibility. Likewise, momentum may take the Dow to 11,030 and the NASDAQ to 1670.


Please note: A mini S&P chart is used because it is better for charting purposes, but trade recommendations are based the full sized S&P unless otherwise noted.



S&P Futures and Options Trade Recommendations


**There is unlimited risk in naked option selling and futures trading


Position Trade -


September 5 - Try selling the September 1160 put for $4 or better, it will take continued weakness to get filled.


September 9 - If you were trading the mini version, you should have been filled on this today. Those trading the full sized contract likely were not filled and should keep the order working in tomorrow's session. We are giving the market plenty of room to move, but this must be handled with care.

September 11 - I recommend placing an order to buy this option back for a $1 in premium, this would be a profit of $150 on each mini and $750 on each full sized before commissions and fees and assuming that you are able to get filled at the prices noted.

• This option traded at $1, but didn't go through it. You likely weren't filled, keep the order working on Monday but don't get greedy. If it costs a little more, take your profit and run.
• Hopefully you exited this trade on Friday, if so you may want to resell this option. If you are still holding on, look to exit on the next significant bounce. Preferably at $1.50 or less. Contact me for guidance.
• Clients were advised to roll this trade into the October options by buying back the Sept. 1160 put and selling the Oct. 1060. At the time this could have been done at a debit of $1.25. It is better to be safe than sorry!
• Place an order to buy back the 1060 put for $3.00, let's get this over with!

September 18 - If you prefer the big board, based on today's settlements it may be possible to buy the November 1160 put and sell 2 of the 1080's for near even money. Assuming an even money fill, this trade makes something from 1160 to 1000. The maximum profit of $20,000 occurs if the market is at 1080 at expiration, the risk is unlimited (equivalent to being long a futures) below 1000.


Please note: A mini-sized Dow chart is used because it is better for charting purposes, but trade recommendations are based the full sized Dow unless otherwise noted.


Dow Futures and Options Trade Recommendations

**There is unlimited risk in naked option selling and futures trading


Position Trade -


September 5 - Sell the September Dow 10,600 puts for 50 or better. This can be done in the mini or the full sized. Call me for additional guidance.

• September 15 - This order should have been filled today. Look to buy this back for 10 or better! Don't get greedy, if we get a large bounce take a profit. There may be a chance to resell it.

• September 18 - Clients were advised to roll into the next option month by buying back the 106 puts and selling the 97 puts, at the time this could have been done for a debit of 2 ticks. We wanted out of this market's way!
• You should have an order to buy these back at 20.

September 18 - Take advantage of the volatility through ratio put spreads!! Premiums are "fat", you can buy an October Dow 10,700 put and sell 2 of the 10,200 puts for close to even money. Assuming an even money fill, this trade pays off something above 9,700!! The maximum profit is $5,000 on the full sized contract and $2,500 on a mini and occurs if the market is trading at 10,200 at expiration. The risk is unlimited below 9,700!


Please note: A mini-NASDAQ chart is used because it is better for charting purposes, trade recommendations will denote whether a mini or full sized contract should be used.



NASDAQ Futures and Options Trade Recommendations


**There is unlimited risk in naked option selling and futures trading

Swing Trade -

Flat

Position Trade -

Flat






There is substantial risk of loss in trading futures and options.


Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

__________________
Carley Garner

Senior Market Analyst/Stocks & Commodities Columnist/Broker

carleygarner

October 6th, 2008


Investors hit the panic button.


It was one of the most detrimental trading days on Wall Street in years. Selling pressure in the equity markets has surpassed what many models and fundamental measures indicate is reality. However, unfortunately when valuations are tied to human emotion logic can be overlooked.

The selling is said to be largely in part to the realization that the government rescue plan wasn't the overnight sensation that some were hoping for. Others note that today's selling wasn't hedge fund related but rather driven by retail investors that simply weren't happy with the bottom line of their brokerage statements which were likely recently received.

According to Ryan Detrick, senior technical strategist at Schaeffer's Investment Research, "The fact is people are scared and the only thing they're doing is selling." He added, "Investors are cleaning out portfolios and getting rid of everything because nothing seems to be working." According to sources, at one point during the day the selling was so extreme that only 67 stocks rose on the NYSE and 3,155 dropped.

Domestic markets were plagued by global issues (as if we didn't have enough problems of our own). Some speculations are calling for even worse credit conditions in Europe, which is even more difficult to treat due to a lack of centralized government.

Traders are making it clear that they would like to see a global rate cut, and policy makers may be listening. France suggested an emergency G8 meeting sparking a recovery from the day's lows.

I will be the first to admit when I am wrong in my analysis, and the previous couple of weeks have proven to be a glaring example of mis-speculation. Friday's newsletter was written before the close and turned out to be inaccurate by the time they were actually emailed and posted. Adding salt to the wounds, the support levels that I had pointed out, turned out to be only the beginning in terms of the market's overall downside target. Based on communications with others in the industry, there is widespread devastation in trading accounts. Although shorts likely had a great day, many of them could have been chopped out in the volatility before the drop and may have missed the pay day that they had been searching for.

If you are holding the short options and option spreads below, I believe that there is a good chance that come expiration things will look much better. The one by two spreads are a great way to hedge price risk but they can backfire if volatility spikes and that is exactly what we saw today. Capitulation trade has forced the VIX to levels near 60 and the highest that I can remember and possibly date back to the tech bubble days. As time value erodes, assuming that volatility implodes the short option values will drop at a surprising speed. If and when this occurs, what now looks like a scary proposition could easily turn into something much more fruitful. With that said, the stakes have never been higher, if you can't take the heat get out of the kitchen. Call me if you need help getting out of these!!

Please note: A mini S&P chart is used because it is better for charting purposes, but trade recommendations are based the full sized S&P unless otherwise noted.



S&P Futures and Options Trade Recommendations


**There is unlimited risk in naked option selling and futures trading


Position Trade -


September 5 - Try selling the September 1160 put for $4 or better, it will take continued weakness to get filled.


September 9 - If you were trading the mini version, you should have been filled on this today. Those trading the full sized contract likely were not filled and should keep the order working in tomorrow's session. We are giving the market plenty of room to move, but this must be handled with care.

September 11 - I recommend placing an order to buy this option back for a $1 in premium, this would be a profit of $150 on each mini and $750 on each full sized before commissions and fees and assuming that you are able to get filled at the prices noted.

• This option traded at $1, but didn't go through it. You likely weren't filled, keep the order working on Monday but don't get greedy. If it costs a little more, take your profit and run.
• Hopefully you exited this trade on Friday, if so you may want to resell this option. If you are still holding on, look to exit on the next significant bounce. Preferably at $1.50 or less. Contact me for guidance.
• Clients were advised to roll this trade into the October options by buying back the Sept. 1160 put and selling the Oct. 1060. At the time this could have been done at a debit of $1.25. It is better to be safe than sorry!
• Place an order to buy back the 1060 put for $3.00, let's get this over with!

September 18 - If you prefer the big board, based on today's settlements it may be possible to buy the November 1160 put and sell 2 of the 1080's for near even money. Assuming an even money fill, this trade makes something from 1160 to 1000. The maximum profit of $20,000 occurs if the market is at 1080 at expiration, the risk is unlimited (equivalent to being long a futures) below 1000.


Please note: A mini-sized Dow chart is used because it is better for charting purposes, but trade recommendations are based the full sized Dow unless otherwise noted.


Dow Futures and Options Trade Recommendations

**There is unlimited risk in naked option selling and futures trading


Position Trade -




September 5 - Sell the September Dow 10,600 puts for 50 or better. This can be done in the mini or the full sized. Call me for additional guidance.

• September 15 - This order should have been filled today. Look to buy this back for 10 or better! Don't get greedy, if we get a large bounce take a profit. There may be a chance to resell it.

• September 18 - Clients were advised to roll into the next option month by buying back the 106 puts and selling the 97 puts, at the time this could have been done for a debit of 2 ticks. We wanted out of this market's way!
• You should have an order to buy these back at 20.

September 18 - Take advantage of the volatility through ratio put spreads!! Premiums are "fat", you can buy an October Dow 10,700 put and sell 2 of the 10,200 puts for close to even money. Assuming an even money fill, this trade pays off something above 9,700!! The maximum profit is $5,000 on the full sized contract and $2,500 on a mini and occurs if the market is trading at 10,200 at expiration. The risk is unlimited below 9,700!


Please note: A mini-NASDAQ chart is used because it is better for charting purposes, trade recommendations will denote whether a mini or full sized contract should be used.



NASDAQ Futures and Options Trade Recommendations

**There is unlimited risk in naked option selling and futures trading

Swing Trade -

Flat

Position Trade -

Flat






There is substantial risk of loss in trading futures and options.


Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

__________________
Carley Garner

Senior Market Analyst/Stocks & Commodities Columnist/Broker

carleygarner

October 7th, 2008


Calmer trade but similar result; can earnings save the market?



The volatility was subdued on Wall Street relative to yesterday's fiasco. However, the ending result was very similar. Stock indices across the board traded decisively lower. I can sense that the bulls are getting tired and the last shred of confidence has been stripped from the markets. In the past these have been signs of a near-term bottom, but we have never had the fundamental distress in the marketplace that we are seeing now.

Nonetheless, markets will be markets. Prices don't go straight up or straight down. Therefore, the shorts will eventually be caught off guard by a short squeeze. Judging by the size of the drop and the high numbers of short speculators in the market, if and when the covering begins the rally may be surprisingly swift and large.

If you are a bear, congratulations but be cautious at these levels. If you are a bull, you may be at the brink of throwing in the towel and I can't blame you. However, the domestic markets have been in similarly dismal situations before and each and every time stocks have managed a recovery, unfortunately this may take some time.

As a futures trader you likely have a much shorter time horizon and are interested in what will transpire in the coming days. Unfortunately without a crystal ball there is no way to predict what will happen tomorrow or the next day. What I can say is that there are an unprecedented number of buy stops lining the upside and if they are triggered could force the indices much higher without the help of actual buying by fresh longs.

The longs are being forced to sell their positions and this is adding pressure to the markets. The problem is that many retail traders are facing margin and lack of capitalization and riding out the downturn in anticipation of a corrective bounce may not be possible. I have seen this before, and will likely see it again. The markets have a tendency to flush out the bulls before it is capable of making progress to the upside. It gets harder and harder to watch each time but the outcome is almost always the same.

If you are holding the short options and option spreads below, I believe that there is a good chance that come expiration things will look much better. The one by two spreads are a great way to hedge price risk but they can backfire if volatility spikes and that is exactly what we are seeing. Capitulation trade has forced the VIX to levels near 60 and the highest that I can remember and possibly date back to the tech bubble days. As time value erodes, assuming that volatility implodes the short option values will drop at a surprising speed. If and when this occurs, what now looks like a scary proposition could easily turn into something much more fruitful. With that said, the stakes have never been higher, if you can't take the heat get out of the kitchen. Call me if you need help getting out of these!!

Please note: A mini S&P chart is used because it is better for charting purposes, but trade recommendations are based the full sized S&P unless otherwise noted.



S&P Futures and Options Trade Recommendations


**There is unlimited risk in naked option selling and futures trading


Position Trade -


September 5 - Try selling the September 1160 put for $4 or better, it will take continued weakness to get filled. (See adjustments below)


September 9 - If you were trading the mini version, you should have been filled on this today. Those trading the full sized contract likely were not filled and should keep the order working in tomorrow's session. We are giving the market plenty of room to move, but this must be handled with care.

September 11 - I recommend placing an order to buy this option back for a $1 in premium, this would be a profit of $150 on each mini and $750 on each full sized before commissions and fees and assuming that you are able to get filled at the prices noted.

• This option traded at $1, but didn't go through it. You likely weren't filled, keep the order working on Monday but don't get greedy. If it costs a little more, take your profit and run.
• Hopefully you exited this trade on Friday, if so you may want to resell this option. If you are still holding on, look to exit on the next significant bounce. Preferably at $1.50 or less. Contact me for guidance.
• Clients were advised to roll this trade into the October options by buying back the Sept. 1160 put and selling the Oct. 1060. At the time this could have been done at a debit of $1.25. It is better to be safe than sorry!
• Place an order to buy back the 1060 put for $3.00, let's get this over with!

September 18 - If you prefer the big board, based on today's settlements it may be possible to buy the November 1160 put and sell 2 of the 1080's for near even money. Assuming an even money fill, this trade makes something from 1160 to 1000. The maximum profit of $20,000 occurs if the market is at 1080 at expiration, the risk is unlimited (equivalent to being long a futures) below 1000.


Please note: A mini-sized Dow chart is used because it is better for charting purposes, but trade recommendations are based the full sized Dow unless otherwise noted.


Dow Futures and Options Trade Recommendations

**There is unlimited risk in naked option selling and futures trading


Position Trade -




September 5 - Sell the September Dow 10,600 puts for 50 or better. This can be done in the mini or the full sized. Call me for additional guidance (see adjustments below).

• September 15 - This order should have been filled today. Look to buy this back for 10 or better! Don't get greedy, if we get a large bounce take a profit. There may be a chance to resell it.

• September 18 - Clients were advised to roll into the next option month by buying back the 106 puts and selling the 97 puts, at the time this could have been done for a debit of 2 ticks. We wanted out of this market's way!
• You should have an order to buy these back at 20.

September 18 - Take advantage of the volatility through ratio put spreads!! Premiums are "fat", you can buy an October Dow 10,700 put and sell 2 of the 10,200 puts for close to even money. Assuming an even money fill, this trade pays off something above 9,700!! The maximum profit is $5,000 on the full sized contract and $2,500 on a mini and occurs if the market is trading at 10,200 at expiration. The risk is unlimited below 9,700!


Please note: A mini-NASDAQ chart is used because it is better for charting purposes, trade recommendations will denote whether a mini or full sized contract should be used.



NASDAQ Futures and Options Trade Recommendations

**There is unlimited risk in naked option selling and futures trading

Swing Trade -

Flat

Position Trade -

Flat







There is substantial risk of loss in trading futures and options.


Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

__________________
Carley Garner

Senior Market Analyst/Stocks & Commodities Columnist/Broker

carleygarner

October 8th, 2008


Global rate cut delivered, lackluster rally.



The global market "meltdown" continued in overnight trade regardless of actual market fundamentals, technically oversold conditions and seasonally supportive tendencies. This "no end in sight" decline has worn on the bulls. Earnings season has been swept under the rug in light of much bigger and better news stories, but it may be the market's last hope at a recovery...even if it is temporary.

We are all well aware of the carnage and have likely taken on a whole new outlook on the markets and in trading in general. Luckily, what we are seeing is an event that has historically only occurred about once a decade. That doesn't make either of us feel better about it today, but it does remind us that trading is about patterns and markets are about cycles. Just as the bear cycle has consumed our economy there will be days of exuberance and excess at some point in the future.

Traders and investors can learn a lot by history if they are capable of stepping out of the current environment and looking at things objectively (this is much easier said than done).

According to the Stock Trader's Almanac, October is known as the jinx month due to crashes in 1929, 1987 and the 554 point drop in the Dow on October 27, 1997. The market also suffered large losses during the October's of 1978 and 1979 and don't forget about Friday the 13th in 1989. I guess we should have seen this coming...

However, October has also been dubbed the "Bear Killer" by the Stock Trader's Almanac. The month of October has bred reversals in the following post World War II markets: 1946,1957,1960,1962,1966,1974,1987,1990,1998, 2001 and 2002.

October is also given credit for the end of the "worst six months of the market" and has been the best performing month for both the Dow and the S&P in the past 10 years.

Based on historical standards, October is a great time to be a stock buyer. However, buyers must have confidence in the system and as of today that is something that seems to be holding the markets back.
The markets and its participants are trading on emotion rather than logic and this always complicates things. However, history doesn't lie and it tends to repeat itself. Let's see what happens.....I see support in the S&P near 969 and resistance near 1025. Likewise, resistance in the Dow should be found at 9,663 and support near 9,218. The NASDAQ must get above and hold 1395, while support lies at 1332 and 1289.

Please note: A mini S&P chart is used because it is better for charting purposes, but trade recommendations are based the full sized S&P unless otherwise noted.



S&P Futures and Options Trade Recommendations


**There is unlimited risk in naked option selling and futures trading


Position Trade -


September 5 - Try selling the September 1160 put for $4 or better, it will take continued weakness to get filled. (See adjustments below)


September 9 - If you were trading the mini version, you should have been filled on this today. Those trading the full sized contract likely were not filled and should keep the order working in tomorrow's session. We are giving the market plenty of room to move, but this must be handled with care.

September 11 - I recommend placing an order to buy this option back for a $1 in premium, this would be a profit of $150 on each mini and $750 on each full sized before commissions and fees and assuming that you are able to get filled at the prices noted.

• This option traded at $1, but didn't go through it. You likely weren't filled, keep the order working on Monday but don't get greedy. If it costs a little more, take your profit and run.
• Hopefully you exited this trade on Friday, if so you may want to resell this option. If you are still holding on, look to exit on the next significant bounce. Preferably at $1.50 or less. Contact me for guidance.
• Clients were advised to roll this trade into the October options by buying back the Sept. 1160 put and selling the Oct. 1060. At the time this could have been done at a debit of $1.25. It is better to be safe than sorry!
• Place an order to buy back the 1060 put for $3.00, let's get this over with!

September 18 - If you prefer the big board, based on today's settlements it may be possible to buy the November 1160 put and sell 2 of the 1080's for near even money. Assuming an even money fill, this trade makes something from 1160 to 1000. The maximum profit of $20,000 occurs if the market is at 1080 at expiration, the risk is unlimited (equivalent to being long a futures) below 1000.


Please note: A mini-sized Dow chart is used because it is better for charting purposes, but trade recommendations are based the full sized Dow unless otherwise noted.



Dow Futures and Options Trade Recommendations

**There is unlimited risk in naked option selling and futures trading


Position Trade -




September 5 - Sell the September Dow 10,600 puts for 50 or better. This can be done in the mini or the full sized. Call me for additional guidance (see adjustments below).

• September 15 - This order should have been filled today. Look to buy this back for 10 or better! Don't get greedy, if we get a large bounce take a profit. There may be a chance to resell it.

• September 18 - Clients were advised to roll into the next option month by buying back the 106 puts and selling the 97 puts, at the time this could have been done for a debit of 2 ticks. We wanted out of this market's way!
• You should have an order to buy these back at 20.

September 18 - Take advantage of the volatility through ratio put spreads!! Premiums are "fat", you can buy an October Dow 10,700 put and sell 2 of the 10,200 puts for close to even money. Assuming an even money fill, this trade pays off something above 9,700!! The maximum profit is $5,000 on the full sized contract and $2,500 on a mini and occurs if the market is trading at 10,200 at expiration. The risk is unlimited below 9,700!


Please note: A mini-NASDAQ chart is used because it is better for charting purposes, trade recommendations will denote whether a mini or full sized contract should be used.



NASDAQ Futures and Options Trade Recommendations

**There is unlimited risk in naked option selling and futures trading

Swing Trade -

Flat

Position Trade -

Flat






There is substantial risk of loss in trading futures and options.


Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

__________________
Carley Garner

Senior Market Analyst/Stocks & Commodities Columnist/Broker

carleygarner

October 9th, 2008


7 days and counting...


Today was the seventh day of carnage and turning the tide doesn't seem to be an easy task. Despite a Treasury market that seemed to sell off on optimism over progress in the credit market, analysts are blaming much of today's weakness on a lack of progress.

Stock investors aren't happy with the actions taken by the Fed and other policy makers, they want results. Unfortunately, it is going to take time for the effects of recent moves to impact the economy and the credit markets.

Most economists agree that we are in a recession, but most also agree that with proactive government policy the possibility of the "Great Depression II" is slim. Nonetheless, investors are scared and until we can get confidence back in the system the financial markets will suffer. The Fed has taken drastic measures to correct the fundamental damage that has occurred to the economy but restoring market psychology will be a daunting task.

Trading in today's session started out much tamer than that of recent days, but ultimately qualified as another volatile day. The S&P futures traded in a 40 point range, while the Dow covered about 170 points in morning and afternoon trade but news of GM weakness caused another wave of liquidation.

"Until we kind of stabilize I think you're going to see these gyrations for quite some time," stated Stephen Carl, principal and head of equity trading at The Williams Capital Group. "We're stuck in a morass and I think it's going to take quite some time to come out of it."

All eyes are on the weekend G7 meeting which is aimed at staving off the global economic crisis. According to sources, the Treasury department is looking to directly inject capital into U.S. banks by the end of October. Despite rate cuts by central banks around the world, investors are hoping that global politicians will be able to effectively cooperate during and after the G7. Even if officials aren't able to pull themselves together for the greater good, they had better portray that image...otherwise more misery could be ahead.

Now is the time to buy lottery tickets! Buy the October S&P 500 1050 calls for $6 in premium or less (you could have gotten filled today for closer to $5). You may also like the November 1180 calls for about the same amount.

We don't have any clients in the trades below, but are showing them for the sake of transparency. If you are involved in any of these markets or trades and would like advice or help, please contact us.

Please note: A mini S&P chart is used because it is better for charting purposes, but trade recommendations are based the full sized S&P unless otherwise noted.



S&P Futures and Options Trade Recommendations


**There is unlimited risk in naked option selling and futures trading


Position Trade -


September 5 - Try selling the September 1160 put for $4 or better, it will take continued weakness to get filled. (See adjustments below)


September 9 - If you were trading the mini version, you should have been filled on this today. Those trading the full sized contract likely were not filled and should keep the order working in tomorrow's session. We are giving the market plenty of room to move, but this must be handled with care.

September 11 - I recommend placing an order to buy this option back for a $1 in premium, this would be a profit of $150 on each mini and $750 on each full sized before commissions and fees and assuming that you are able to get filled at the prices noted.

• This option traded at $1, but didn't go through it. You likely weren't filled, keep the order working on Monday but don't get greedy. If it costs a little more, take your profit and run.
• Hopefully you exited this trade on Friday, if so you may want to resell this option. If you are still holding on, look to exit on the next significant bounce. Preferably at $1.50 or less. Contact me for guidance.
• Clients were advised to roll this trade into the October options by buying back the Sept. 1160 put and selling the Oct. 1060. At the time this could have been done at a debit of $1.25. It is better to be safe than sorry!
• Place an order to buy back the 1060 put for $3.00, let's get this over with!

September 18 - If you prefer the big board, based on today's settlements it may be possible to buy the November 1160 put and sell 2 of the 1080's for near even money. Assuming an even money fill, this trade makes something from 1160 to 1000. The maximum profit of $20,000 occurs if the market is at 1080 at expiration, the risk is unlimited (equivalent to being long a futures) below 1000.


Please note: A mini-sized Dow chart is used because it is better for charting purposes, but trade recommendations are based the full sized Dow unless otherwise noted.



Dow Futures and Options Trade Recommendations

**There is unlimited risk in naked option selling and futures trading


Position Trade -




September 5 - Sell the September Dow 10,600 puts for 50 or better. This can be done in the mini or the full sized. Call me for additional guidance (see adjustments below).

• September 15 - This order should have been filled today. Look to buy this back for 10 or better! Don't get greedy, if we get a large bounce take a profit. There may be a chance to resell it.

• September 18 - Clients were advised to roll into the next option month by buying back the 106 puts and selling the 97 puts, at the time this could have been done for a debit of 2 ticks. We wanted out of this market's way!
• You should have an order to buy these back at 20.

September 18 - Take advantage of the volatility through ratio put spreads!! Premiums are "fat", you can buy an October Dow 10,700 put and sell 2 of the 10,200 puts for close to even money. Assuming an even money fill, this trade pays off something above 9,700!! The maximum profit is $5,000 on the full sized contract and $2,500 on a mini and occurs if the market is trading at 10,200 at expiration. The risk is unlimited below 9,700!


Please note: A mini-NASDAQ chart is used because it is better for charting purposes, trade recommendations will denote whether a mini or full sized contract should be used.



NASDAQ Futures and Options Trade Recommendations

**There is unlimited risk in naked option selling and futures trading

Swing Trade -

Flat

Position Trade -

Flat







There is substantial risk of loss in trading futures and options.


Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

__________________
Carley Garner

Senior Market Analyst/Stocks & Commodities Columnist/Broker