Wednesday's Finalists

DLR with a bull signal and RS with a bear were the finalists among the five survivors of early rounds of analysis under consideration today. Two survivors aren't in play today because they broke out in response to earnings in one case and going ex-divided in the other. See "Wednesday's Prospects" for details.

CDW and PCYC failed confirmation by falling back within their 20-day pride channels, and bear-signal TK showed contrary momentum to the upside.

Of the two finalists, neither will work for the sort of trade that I'm focusing on these days: Vertical option spreads sold for a credit and expiring within a few weeks.

That sort of trade requires high implied volatility relative to the trend, and DLR's is low.

RS has high volatility, but it publishes earnings on Feb. 19, providing a far better opportunity for profit, and it is in my best interest to wait rather than trading now.

One symbol, C, met my criteria for a volatility play keyed to an earnings announcement.

A scheduling conflict this morning had me scrambling, so I broke with my normal practice, analyzing the night before and trading five minutes after the opening bell. Thereafter, I bolted for the door and ran down the chilly predawn streets of Portland, Oregon shouting "SELL! SELL! SELL!" at the top of my lungs as though I were channeling Jim Cramer.

C's price had plummeted at the open, forcing me to reconfigure the trade very quickly. I have just now finished reworking the analysis to conform with what I actually did. See "BAC, C: Volatility plays".

-- Tim Bovee, Portland, Oregon, Jan. 14, 2015

References

My shorter-term trading rules can be read here. My longer-term trading rules can be read here. And the classic Turtle Trading rules on which my rules are based can be read here. My volatility trading rules can be read here.


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Disclaimer

Tim Bovee, Private Trader tracks the analysis and 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 decisions for his or her own account, and take responsibility for the consequences.

License



All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.