[caption id="attachment_788" align="aligncenter" width="500" caption="ABB"][/caption]
[caption id="attachment_789" align="aligncenter" width="500" caption="S&P intraday"][/caption]
I covered my last short put. Bought ABB Nov 12.5 put for \$1.95 (bid: \$1.8, ask \$2.05 at the time). I shorted this ABB put at \$1.70. As I've opined yesterday, things don't look good on the market. Despite my earlier optimism for a bear rally, the market obviously haven't followed through. The reality is that there's a good possibility of another market crash at this critical support level. Thus, I have exited today on signs of weakness.
On the broad market, the S&P failed to push through the morning when I made this trade. Figure 2 shows a double top at 865 with corresponding double top in the TICK (neutral read) and lower Advance-Decline line (bearish read).
Another point is that ABB today merely filled the down gap, and this second retest of 865 on S&P only led to a lower low with lower volume. In terms of intraday move, this is very bearish.
So rather than sit tight and hope for the best, I unloaded this last short put as planned to reduce my downside risk.
I still have plenty of long calls in ABB and others if we do rally from here. I am still very bullish on ABB from its fundamental and signs of big block accumulations recently. Just that with only 3 more days until options expiration, I can't risk having the shares put to me now that I'm low on cash from all the greedy calls buying in the last few days.
: http://traderpau.files.wordpress.com/2008/11/2008-11-18-abb.png : http://traderpau.files.wordpress.com/2008/11/2008-11-18-spxintra.png