Monday, April 26, 2010

Closed EEM bear put spread

I've closed my bear put spread position in EEM. Although the parabolic sar remains in bear phase, another indicator, Person's Proprietary Signal, turned bullish late Friday.

The macd, although still in bear territory, is moving up toward the zero line. And the stochastic, in neutral territory, is in a bull configuration as it moves up toward oversold.

The spread, which was to expire May 21, was structured as long the $44-strike put, and short the $43-strike put.

I entered the position an April 13 for a 49¢ debit. Today's closure was a 48¢ credit. So, overall, it was a 2% loss.

The stock was trading at $43.29 when I closed, down a penny from where it was when I opened.

This was a position where I broke my rules by entering. The average directional index at the point of entry was 22, which is marginal. Just goes to show that no good comes of breaking trading rules. Let that be a lesson to me.

Disclaimer
Tim Bovee, Private Trader tracks the trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.


No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.


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This signal will be followed in the daily Watchlist, which is posted beginning around 2:45 p.m. Eastern. Look for it at www.timbovee.com.

Abbreviations:
psar - Parabolic Stop and Reverse
adx - Average Directional Index
pps - Person's Proprietary Signal
ma20 - 20-day moving average
macd - Moving Average Convergence-Divergence
mfi - Money Flow Index
sto - Fast Stochastic


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