Options Trading Strategies

October 15, 2012

Market Strategies Newsletter

Covering High Return Balanced Investing Strategies To

Make Money In Up Or Down Markets

A Publication of Princeton Research, Inc. (www.PrincetonResearch.com)

Make Money In Up Or Down Markets.

 

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Options Trading Strategies

$10,000 Portfolio  Options Trading Account

New Trades for this week:

NOTE: This is a Sample Issue Only! 

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This week we had a loss of $1,496 to bring our YTD performance to $12,274.

 

Options Trading Strategies

Traders Comments

We thought that buying lower would yield us a nice bounce back gain, but stocks continued lower and we were stopped out of all positions (except LNG calls) using our 50% down rule.

The markets now look lower, but in order to be able to quantify the risks involved, I will have to either see a slight retracement in the S. & P. 500 to near the highs of Friday around 1438, or a high volume break lower that will yield a full-fledged correction to the 1388 range.

We are starting the week long just 5 LNG 11/15 calls and have an order to buy what is considered a “defensive issue, CLX 11/72.50 calls.  Any other new positions will be added via the free TEXTING service when we have confirmation of the trend.

CAM

Remember, these trades are based on your participation in the TEXTING SERVICE TO RECEIVE ALL UPDATES. Previous closed out trades not listed here may be seen in previous market letters.

For any questions please call 702 650 3000.

 

Market Laboratory – Weekly Changes

Prices are copied from Barron’s Weekly and Yahoo Finance and may be incorrect

M1…all money in hands of the public, Time Deposits Traveler’s Checks, Demand Deposits

M2 adds Savings and Money market Accounts both compared with the previous year.

 

INDEX OPTION TRADING

RECOMMENDATIONS

(Recommendations will be both listed in this letter and texted to members)

For those of you who do not buy puts to protect your portfolio, there are many ETF’s that are the inverse of the DOW. The symbols are DOG, SDS,TZA and RWM, whichgo up when the DOW, S&P 500 and Russell 2000 go down and down when they go up. The DZZ goes up double when gold goes down.

 

New Stock Option Recommendations

NOTE: This is a Sample Issue Only!

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Option Trading Strategeis

Overall Comments

We lost  $ 4,314 last week. Our gain for the year was reduced to a hypothetical $ 50,339.

We have two long options positions plus thirteen stock positions remaining:

The options call for a $ 2,500 investment unless otherwise started, while each stock position requires $ 5,000 unless specifically stated.

We are basing money management on a hypothetical $ 100,000.00 and are using $ 1,440 in the two options positions and $ 61,511 in the 16 stock positions for a total of $ 62,951.00 with $ 37,049.00 in cash.

These figures are approximate. We do not count commission costs and there may be errors.

Executions that have occurred at or near the open or close of trading sometimes vary from our actual numbers.  For example, when something opens down and it is through our price, we take the next trade whether it is an uptick or continues lower.  This sometimes results in a 50% trade that is slightly above or below the exact number…

 

Previous Week’s Recommendations and

Rules for the $ 100,000 trading Account

• All options count for about $ 2,500.00 for model portfolio calculations unless otherwise stated.
• When the option has doubled sell half the position.
• Stop Loss protection is either half or offered with each trade.
• The cost of the option is the asking price (or the price between the bid and ask, whichever is more realistic)
• The options will be followed until closed out.
• Option Symbols are stock symbol with expiration month and strike price
• Call  702 650 3000 for up to date information.

Note: Previous closed out stock and option positions can be found in previous Market Strategies newsletters.                                                                                                    

 

This Weeks’ Economic Numbers

and Media Data

Fundamentals

All Ten Dow Industrial Groups were lower led by Telecommunications, off 4.37%. Consumer Services fell 2.40%; Health Care 2.27%; Consumer Goods 2.03%; Industrials 2.00%; Basic Materials 1.87%; Financials 1.66%; Oil and Gas 1.46% and Utilities 0.90%.

Wells Fargo (WFC: 34.25, -0.93) slid 2.6% after reporting mixed earnings. WFC exceeded earnings expectations by one cent, while its revenues fell $200 million short of analyst estimates. Other major financials also showed weakness.

Bank of America (BAC 9.12, -0.22) and Morgan Stanley (MS 17.31, -0.55) slipped 2.4% and 3.1%, respectively. Consumer staple stocks were the top performers of the session. Within the space, Dean Foods (DF 14.94, +0.29) added 2.0% after Stifel Nicolaus upgraded the stock to ‘buy’ from ‘hold’ with an $18 price target.

Cigarette stocks also showing strength among defensive staple stocks. Philip Morris (PM 91.70, +0.86) and Altria (MO 33.12, +0.41) saw respective gains of 1.0% and 1.3%.

Elsewhere in the space, Monster Beverage (MNST 57.08, +2.64) advanced 4.9% in a rebound from recent weakness.

 

Economic Data

The main economic report last week was the Beige Book October 10^th, which showed gradual improvement in the overall economy. Housing was strong, manufacturing and spending mixed.

Noting strength in housing across all 12 Fed districts, the Fed’s “beige book” report reinforced a slew of recent data suggesting the housing market’s recovery is beginning to pick up steam.

The report, which is based on anecdotes from business contacts and economists across the nation, noted that existing home sales had strengthened in all 12 districts, while selling prices rose or held steady.

“Residential real estate showed widespread improvement since the last report,” the beige book observed.

The Fed Beige Book survey is released two weeks ahead of each policy meeting. Information is gathered by each of the Fed’s 12 regional banks.

On the following day, the August Trade Deficit was released showing a deficit of $ 44.2B. It was up from the $ 42.5B in July and also above expectations of a negative $ 43.8B. The goods deficit widened to $ 59.3B in August up from $ 57.8 in July. The Service surplus fell to $ 15.1B from $ 15.4B. The lower trade number is a deduction from GDP.

Initial Unemployment Claims for the week ended 10/06 were 339K vs 375K expected and 369K the previous week.

Michigan Sentiment rose to 83.1 well above expectations of 78.5 and the previous release of 78.3.

Technical Information

Support Levels: S&P 500     1415:1422

Resistance S&P 500     1440; 1454

 

Support Levels: DOW        13290 13320

Resistance DOW        13,418; 13,440

 

Support Levels:  QQQ           6550; 6610

Resistance QQQ           6780; 6850

 

Support Levels:   Nasdaq      2975; 3025

Resistance Nasdaq       3080; 3130

          

CYCLES

October Volatility

Market action over the past few days has reinforced the existence and usefulness of market cycles and seasonality. Average monthly percent changes and the record of up and down months does not illustrate the true nature of October.

So to compare the market’s behavior in October to other months… bull market tops; bear market bottoms; number of top 50 daily gains and losses; biggest daily, weekly and monthly DJIA percent gains and losses; and monthly ranges — October is the clear winner.

To further underscore October’s volatile nature we have included a chart of the Market Volatility Index (VIX) and the VIX seasonal Trend. VIX is historically highest in October.

NOTE: This is a Sample Issue Only!

 

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THE COMPLETE VIP MEMBERS ONLY

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Rule 17 B Attestations:

Princeton has approximately 2,581,578 shares of AIVN both free and restricted and represents them for I.R.. Princeton also has about 60,000 shares of TXGE. Princeton is paid $ 2500 per month from Lucas Energy.

When there is no movement in penny stocks, even though there is no or very small losses, we will liquidate when money is needed for other opportunities.

Pursuant to the provisions of Rule 206 (4) of the Investment Advisers Act of 1940, readers should recognize that not all recommendations made in the future will be profitable or will equal the performance of any recommendations referred to in this Email issue. Princeton may buy or sell its free-trading shares in companies it represents at any time.

CONTACT

Please Direct All Inquiries To:

Mike King

Princeton Research

3887 Pacific Street, Las Vegas, Nevada 89121

 

Phone: (702) 650-3000

 

Fax: (702) 697-8944

 

mike@princetonresearch.com

 

Visit: www.princetonresearch.com

Options Trading Strategies