Tuesday, July 15, 2008

SRS - update

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.

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6 comments:

met61 said...

Allan,are you using options more and more?
Thanks,Ron

Allan said...

yep

met61 said...

Allan,besides the leverage,what do you like about options?
Thanks,Ron

Allan said...

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.

Sam said...

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.

Anonymous said...

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.