Options Trading Strategies

  Market Strategies Newsletter

November 19, 2012

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Balanced Investing Strategies To

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

 

Options Trading Strategies

$10,000 Options Trading Account

New Options Trades for this week:

 

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Options Trading Strategies Comments

This week we had gains of $145

bringing our YTD performance to a respectable

$10,528, just over 105%.

There are many important issues at play that are causing cross-currents in the markets. Petreus, Benghazi, Syria, Israel and Egypt as well as a wealth of other global issues continue to pull at the markets in both directions. While I hear from all of the “talking heads” that we have broken moving averages and the major support levels, if we just switch from daily to weekly charts we find that while the dailys look bad, the weekly charts show penetration, but then rally up to close at or near highs and in some cases up on the week.  I believe that the oversold condition of the market since falling (SP-500)$85 since election day and 120 points since the week or so before that should give us a tradable rally.

The Dow numbers from the same time-frame is 820 from election day and just over 1100 points since 10/18.

While the Fiscal Cliff remains a major obstacle for corporate planning, and the looming changes in dividend and capital gains confuse investors, when the market starts to rally we have no shortage of buyers to participate.

We had several positions that required a sell-off to buy calls, and we were filled in MCD, SJM, and SIG.  As a result, we finished the week with purchases that we filled right near the area MAJOR support.

If the rally from Friday continues we have positions that will produce gains with little risk

……CAM

Market Strategies Market Sentiment

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

 

New Stock Recommendations

Market Strategies $100,000 Trading Portfolio

Each stock is allocated a theoretical $ 5,000 share of the portfolio unless otherwise indicated.

 

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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.

Options Trading and

Overall Market Strategies Comments

We gained $ 290.00 last week.

Our gain for the year was

increased to a hypothetical $ 44,609.

We have four long options positions plus seventeen stock positions remaining.

The Stock table includes seventeen positions.

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 $ 3,600 in the  four options positions and $ 66,910  in the 17 stock positions a total of   $ 70,510.00 with $ 29,490.00 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

Portfoilio 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

 

Note: Previous closed out stock and option positions can be found in previous market letters in the VIP Subscribers Members Area.

 

This Weeks’ Economic Numbers and

Media Data

Market Strategies Trading Fundamentals

All ten Dow Industrial groups were lower led by Basic Materials, off 3.15%. Technology lost 2.42%; Industrials lost 2.01%; Telecommunications dropped 1.94%; Financials 1.48%; Oil and Gas lost 1.34%, but was somewhat buoyed by Mid-East hostilities. Consumer Services fell 1.23%; Utilities 1.09%; Health Care 0.63% and Consumer Services 0.45%.

Looking at the financial sector, the SPDR Financial Select Sector ETF (XLF 15.28, – 0.22) fell just 1.4% making a nice recovery.  Even though the proxy ETF traded ahead of the broader market, major financials were mixed. JPMorgan Chase (JPM: $ 39.53, -1.09 ) lost 2.7% but rallied nicely Friday after reaching a settlement with the Securities and Exchange Commission regarding Bear Stearns and JPMorgan residential mortgage-backed securities. As part of the settlement, JPMorgan will pay approximately $297 million in penalties. Credit Suisse (CS: $ 21.94, -0.66)  lost 2.9% was also named in the settlement and will pay approximately $120 million in fines. Looking at other majors, Citigroup (C: $ 34.98, -0.95) slid 2.6% while Wells Fargo (WFC: $ 31.94, -0.41) and U.S. Bank ( USB: $ 31.55 )outperformed with a smaller loss of 1.3%.

The Transports were week but appeared to have found support. Union Pacific ( UNP: $ 117.56 ) off 2.2%; JB Hunt ( JBHT: $ 59.32 ) + 1.1%; Southwest Airlines ( LUV: $ 8.93 ) off 1.4% and Ryder Systems ( R: $ 44.92) off 2.1% look like buys.

 

Market Strategies Economic Data

Economic numbers were terrible: The week began with retail Sales down 0.3%, mostly due to poor auto sales. Then, as might have been expected as a result of Hurricane Sandy, initial Employment Claims rose to the highest level 439K with Continuing Claims 3,334K, well above the previous weeks.

Both Empire and Philadelphia Fed reports were deleterious down 5.2% and 10.7% respectively.

Industrial Production was off 0.4% and Capacity Utilization fell to 77.8% down 0.5% from 78.3% last month.

Hurricane Sandy was estimated to have reduced total output by nearly one percentage point, according to the Federal Reserve. The overall economy is not as bad as the numbers would indicate.  Still, they aren’t entirely great either. Excluding storm-related effects, manufacturing output was basically unchanged from September.

Mining output increased 1.5% after a 0.9% increase in September. The extraction of crude oil, the Federal Reserve said, rose significantly in both months. The output of Utilities declined 0.1% after being unchanged in September

 

Technical Information

Support Levels S&P 500      1340;1344

Resistance S&P 500            1379;1388

 

Support Levels DOW         12520;2660

Resistance DOW               12854;13940

 

Support Levels QQQ            6210;6280

Resistance QQQ                  6480;6550

 

Support Levels Nasdaq       2830;2880

Resistance Nasdaq             2940;3040

 

CYCLES

Strong tendency for stocks to rally into Thanksgiving. Bonds may go lower and Gold higher. Days before Thanksgiving call for  going long Stocks and gold, short bonds until after the first few days of December.

 

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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 40,000 shares of TXGE. Princeton is paid $ 1,500 per month from RMS Medical Products.

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