Covered 4 MFC 11JAN Puts 14.00.MX @ 0.45, Mark 14.80, Loss -2.3%

The S&P500 is filling its gap from that big up move on November 4. EUR/USD is bouncing off a long term support around 1.3600. Thus I’m covering my short in Manulife Financial (MFC.TO) before the weekend. This position turned out horribly.

I’ve been waiting for MFC.TO to print 14.50, just above its 38.6% Fibonacci retracement level at 14.40 on the recent spike. But 14.80 doesn’t seem to budge even today with all that bearishness floating around. Intraday volume is also decreasing on every new test of this intraday support. So I’m throwing in the towel here.

Loss is ($0.45 – $0.93) * 4 * 100 = -$192 – $27.90 = -$219.90 = -2.3% of account.

Manulife Financial (MFC.TO)

Bought 4 MFC 11JAN Put 14.00 @ 0.93, Mark 13.97

It’s been a while, my old friend–Manulife Financial (MFC.TO). Now, die!

Stop is stock closing price above 14.30, today’s high. Risk is about ($14.30 – $13.97) * 4 * 100 = $132 + $27.90 = $159.90 = 1.6% of account. Note that calculation is not accounting for option theta (time decay).

Manulife Financial (MFC.TO)

Sold 4 MFC 11JAN Puts 14.00 @ 1.74, Mark 12.96, Loss 0.1%

S&P500 managed to bounce back from below 1130 support. It is confirmed by EUR/USD’s rise and treasury’s gap down (TLT) today. I’m not going to argue with the market. So I am ditching my short for Manulife Financial (MFC.TO) while it is still testing its 13.00 resistance at the open.

12.60 is the 50% Fibonacci retracement level for MFC. It made a textbook perfect bounce on it (Fig. 1). Also, it’s Friday today, so I’d rather not have the time decay eat more out of my premium by holding over the weekend.

Loss for this trade is ($1.74 – $1.70) * 100 * 4 = $16 – $27.90 = -$11.90 = -0.10%.

Now that I am out of my short position, watch the market tank without me on board.

Update: MFC and the market managed an impressive rally today. MFC closed at 13.15. I am glad that I followed my own strategy. I guess I do make good timing once in a blue moon.

Manulife Financial (MFC.TO)

Bought 4 MFC Jan 2010 Puts 14.00 @ 1.70, Mark $13.25

I am shorting again. This time on Manulife Financial (MFC.TO) with a January 2011 put at 14 strike price. MFC is trading at $13.25 at time of entry.

Recent series of prop desk closings isn’t going to bode well for the market, particularly for the banks as they need to recuperate those easy income. On top of it, the lack of push from the bulls this week as S&P test 1110 resistance doesn’t look promising either. Yet, this could very well be a bear trap.

In any case, I am taking a bearish bet via shorting MFC. Figure 1 shows a chart of MFC. It is depressed and it is struggling. Moreover, MFC keeps announcing billions of dollars worth of share offerings lately. I like it.

There is a distinct possibility of a bear raid if MFC can break this $13.50 resistance level. The gap above $15 is just staring at me.

Hard stop is at $1.00 premium. Worst case risk for this trade is thus ($1.70 – $1.00) * 4 * 100 = 280 + $27.90 commission = $307.90 = 3.2%. However, I’d be very cautious if MFC closes above $13.50.

Manulife Financial (MFC.TO)

Bought 3 PAA.TO 10DEC Puts 25.00 @ $2.27, Mark $24.75

US Dollar looks oversold (Figure 1). Of the few commodities that I follow, silver looks to be weakest (Figure 2). Thus, I look for a short based on silver. I chose Pan America Silver Corp. (PAA.TO) because it looks to be the weakest of the silver miners (Figure 3).

In particular, referring to Figure 3, I highlighted the current price moves versus six months ago. The price movements in the two boxes look similar. Thus I am looking for a big dive in PAA soon with these puts options.

I entered today as PAA is testing its $24.80 resistance. Next resistances are $25.00 (the gap) and $25.15 (38% Fib level in the July dive). As such, there are a couple of safety cushions in case this doesn’t work out.

My mental stop is $1.30 on the premium. Through time decay (around October if we trade sideway from now), price appreciation, and mostly a combination of these two factors. I figured I have about a month’s time to find out if it can break the $25.15 level.

Risk is thus ($2.27 – $1.30) * 100 * 3 = $291 + $25.90 commission = $316.90 = 3.3%. Once again, that’s higher than what I’d recommend. But that’s just the worst case scenario.

We should know soon enough if silver can break lower as it is trading against a descending trendline as shown in Figure 2.

U.S. Dollar Index

Silver

Pan America Silver Corp. (PAA.TO)