Wednesday, March 28, 2012

$CF April trade set up

4/16 UPDATE:
On 4/12 I published a "trade conviction" post describing 3 trades where my conviction made me money. Here is an example where the lack of conviction cost me money. My lack of conviction caused me to shy away from an entry point into another April credit put spread in $CF on a day it tumbled.
I even sounded smart a la Dennis Gartman, I said I didn't want to catch the CF falling knife as it has a 2inch handle and a ten inch blade. Hindsight I should have done it.
Having said that, given the same situation I would probably pass on the trade once more.

4/10 UPDATE: If we get another run down tomorrow i may get to get in for a quick/small credit put spread or maybe an iron condor. I don't want to put a position in may until after earns. i have not had much luck betting on earnings especially w/fast runners like $CF.
Possible entry levels as of today's numbers:
Credit put spread 165/60: 87% it will expire worthless for max profit; lower pad 8% decline
Credit call spread 195/200: 89% it will expire worthless for max profit; upper pad 9% run
total credit abt .75 do it 10 or 15x and collect $700/1000
Reward to risk is lower than what i like but will make a car payment or a go-kart race.

$CF down $6 today 3/28. This is one stock that I almost never try to catch as a falling knife. I will wait another day before I go long it.
Tomorrow I will revisit level where I can sell Credit Put Spread in the area of April 165. It seems to have defended the 168 twice recently. But again it all depends on tomorrow's price action. My last trade (sold apr credit put spread was 100% successful and netted me $848.36 in about 10 days.
I would rather miss a rebound then try to catch a falling knife and grab a handfull of its sharp blade!

Btw, if you like these posts spread the word+ folo @racernic. Also peruse rest of my posts including the sides to help finance the java (if you know what I mean ;-). I do these post for free and have no subscription pitches etc.


As with any trade there are risks but in this case the I am very comfortable with the dollars at risk. I always try to know and manage my risk; I ask 'what will I lose if the crap hit the fan in the worst possible way.' If I know the answer to this and am ok with it then I should be ok.

THIS IS NOT A RECOMMENDATION OF ANY KIND. I ONLY INVEST MONEY I CAN AFFORD TO LOSE.

$AAPL $AMZN $bidu $SPX $NDX $RUT $C $GS $wynn $SPY $GOOG