Sunday, May 23, 2010

TZA as a quick trade: My strategy for this week

I was looking this morning at the Options for TZA. As many know here I had purchased Call Options for TZA for October 16th Expiration with a Strike Price of $9.00 for $0.58 and sold over 1/2 of them for a 236% profit last week. I still have 1/2 and their current closing value is $1.76. I expect the market to rise this week and I am looking at purchasing Oct. Put Options at a Strike price of $5.00 for $0.65 or cheaper, depending if on Monday if the Russell 2000 index drops. I may at that moment sell the other 1/2 of my Call Options and simultaneously buy the Puts.

I am also looking at the $6.00 Put Options for $1.12. I will keep these only until the Russell 2000 goes to about 700-710 in the week ahead. It closed at 649. A lot depends on the price action and the volatility in the market this week.

The thing I like about Options trades is that they settle in one day. The ones I sold on Thursday settled Friday so I can use the same money on Monday to buy more Options. Stocks on the other hand take 3 days to settle and when you want to use the same money you must buy on margin if the trade hasn't yet settled, or add new money in the form of cash, not check as there also is a delay in the use of the funds by at least a day or so. Of course if you have enough cash in your account you don't have to worry about those small nuisances. :)

Stay tuned.

Labels: , , ,


Post a Comment

<< Home

Technorati Profile