Tuesday, July 27, 2010

UPDATE: EMS short via puts

UPDATE 27-JUL-10: Had to exit based on %R signals today. Exited for $8.50 each so nominal gain of about $100 minus vigs...this sucks because I had seen a much higher profit...Also on the daily it is facing resistance at the 13 EMA...one of my favorite indicators and a key resistance for this stock in the past.

Regardless I really have to consider just getting out of stuff when I see a big profit. I am considering this today with BVF (though I have sold one contract in each account today to take some profit).



16-JUL-10: So I took a setup today to the shortside that is quickly becoming my second favorite setup...something that retest's inside the bands but finds resistance at the 13 day EMA...

Hence the EMS setup today. I was actually contemplating for too long and missed a better entry price.

In any case, I used ATR based on Delta to figure out my position size and stop price. In this case, defined risk 1.5% of folio= $260... I divided by the 20 day current ATR of 1.59 * delta (85 in this case)...so $risk/ATR*Delta = # of contracts allowed.

Anyway, purchased the following for the taxable account:

2 contracts of September 55 puts for $8.00...

Stop is in place at $6.70

but could have got them for $7.70 earlier in the day...the price of hesitation...even though i wanted a short badly...the reason for my hesitation was that the fundies aren't bad at all, it is in a strong group, and earnings are around the corner...hogwash in the technical world...hopefully it will more than make up for the lost $60.

Charts below



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