Bought +1 BC 100 OCT 09 12.5 PUT @1.95, mark 10.81

By Paul | Published: September 25, 2009

Here’s one last try in shorting Brunswick Corp.  BC gapped open about 50 cents this morning  on an analyst upgrade.  It subsequently tested $11.00 with about 5 times first 30-minute volume.  It has since been in a trading range.

Why is this significant?  Observing Figure 1, we can see that $10.85 is the 62% Fibonacci level of the entire drop from Sept 19, 2008.  Practically exactly a year ago.  Secondly, this huge volume at open is good as it typically signal retail/pubic euphoria.  Combining the two, huge volume retail push + test a long term resistance = shorting opportunity!

In the near term, BC is also testing a resitance as shown in Figure 2.  Finally the stars may be aligned for a short in BC.  I have tried many times and failed miserably in the past several weeks.  But after analysing my trades and re-evaluating my method, this setup offers a very good chance.  So let’s see how it goes.

Entry: $10.81

Stop: $11.00 by end of next week.

Target: $9.00, the next Fibonacci level.

Reward / Risk = $155 / $45 = 3.4.  (These values are obtained by estimating the premium of this option at expiry using the Bjerksund-Stensland approximation.)

Brunswick Corp

Brunswick Corp

Brunswick Corp (30-minute)

Brunswick Corp (30-minute)

Share|

Related posts:

  1. Bought +15 BC 100 SEP 09 7.5 PUT @.39, Mark 9.12
  2. Sold -1 BC 100 OCT 09 12.5 PUT @1.45, mark 11.27
  3. Expired 15 BC 100 SEP 09 7.5 put, mark 9.78
  4. Bought +2 RTH 100 AUG 09 85 PUT @4.00 Mark 81.96
  5. Bought +2 RTH 100 AUG 09 85 PUT @3.30 Mark 82.91
This entry was posted in Stocks and tagged BC, entry, fibonacci, options, short. Bookmark the permalink. Post a comment or leave a trackback: Trackback URL.

Post a Comment

Your email is never published nor shared.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>