Tuesday, April 5, 2011

4/5 Trades

From today's Top Prospects, I opened a position on DNDN, as a May bull put spread, short the $37 and long the $32 puts.

The other prospects had technical problems.

NFLX, with a price over $240 and high volatility, was more expensive as a percentage of trading resources than my sizing rules allow.

I thought the RCL chart lacked conviction. The price has bounced off of the lower boundary of the 55-day price channel four times since March. A solid drop on Wednesday would change my mind, but otherwise, I won't take the trade.

TM was another sizing problem -- the available spreads worked out to about one and a half times a trading unit, so my exposure would either be way too low or way too high.

MA is the same thing as NFLX -- a price above $230 and high volatility make it too expensive.

COST just had a bad risk/reward ratio on the spread, which derives from the implied volatility. I may look again, but I didn't much like the balance.

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