SRS was highlighted in
my July 6th Blog. At the time, it was trading at about 110. Today, nine days later, it is up 10%, trading around 121. My October 120 calls are up about 60%. All this while the market has been in a downward spiral. But that's what SRS was suggesting when it was breaking out in late June and early July.
Here is a current chart as of Tuesday morning, July 15th. No annotation is necessary. It doesn't take a rocket scientist to guess where SRS is headed. Nonetheless, if it starts to come back in, I will protect my gains. There will always be another idea for another day.
A
6 comments:
Allan,are you using options more and more?
Thanks,Ron
yep
Allan,besides the leverage,what do you like about options?
Thanks,Ron
Isn't leverage enough? SRS and DUG 3-month out options give me 6-1 and 5-1 leverage, respectively. But if you want more, options tie up less capital, have an absolute finite stop-loss automatically on each trade and mixed into a portfolio that also owns a lot of stock (not options) tends to bring up the overal percentage return on the entire account.
Allan
Can you please suggest on learning about trading using options? I know its very basic question but if one can start right from the begining with your advice, I am sure would be helpful in coming years.
Alan - taking a closer look at SRS and SKF right now and trying to decide which is better for a buy.
From a fundamental basis, I decided to gof or SKF over SRS. Not only did the risk/reward look better on the charts, but SRS is the inverse of a diversified real estate index. While residential housing is definitely a mess, I don't think the same can be said for residential or commercial rentals. So financials are likely a better short right now than a broad real estate index.
Just my 2 cents, in case you were looking at this one again.
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