August 23, 2011

I know I haven't posted for four months. That's partly because I've been so busy at work and because I've switched all of my trading to options and I've been doing lots of trades. 90% of my money was in cash until last week. I put that 90% in the Yacktman mutual fund $YACKX during this dip in the market. I'll try to post my best ideas that I'm trading and keep the scoreboard updated.

If you're not familiar with options, if you buy a call option you want the stock to go up. If you buy a put option you want the stock to go down.

Today I bought some $100 September call options on Green Mountain Coffee $GMCR. The charts below tell the story as to why I did this. The SPY is showing support recently around 112. I'm hoping that this support stays strong and we can start another rally. If you compare the SPY chart to GMCR, the S&P has fallen well below its 200 day SMA. GMCR on the other hand has barely dipped below its 50 day SMA. This, to me, represents a strong stock. If you look at the charts of most stocks today, they are below their 200 day SMA. I bought this option at $1.91. 3 weeks ago when the stock was at its peak of $111.42 this same option peaked at $14.05. If GMCR hits $111.00 before Sept. 17 I will be up several times what I paid for it. As I write this it's already up to $2.98 and I'm up 50%. That's why I do options now. I can risk much less and make more.



On August 9 I bought a September $35 put option on Travelzoo $TZOO. It was trading around $44 when I bought it. If you look at the chart it fell off a cliff and dropped 30% when it announced earnings. When it dropped well below its 200 day SMA there was blood in the water. That's why I'm basically shorting this stock. It's also good to have some puts like this in your portfolio just in case the market tanks.



I have other call options on LULU and put options on IMAX and NFLX.
I was actually up 10% in Jody's IRA before I put her money in the YACKX fund. I bought it at $16.95 in all 3 accounts so they've all dropped 5% accordingly as it's now at $16.14. It should be up a little tomorrow and I'm in it long term.

Jody's Roth IRA 3.5%
Ryan's Roth IRA -12.78%
10% Fund -3.03%
S&P -10.64%