Sold -1 BC 100 OCT 09 12.5 PUT @1.45, mark 11.27

Brunswick Corp. (BC) stayed above \$11.00 as we began the week. I placed a stop at Friday's high before the open today to be executed at 10:30am. When I got back at lunch, I found that my stop was triggered as soon as it was sent. Luckily, it was also at the time when BC retraced the open's gain slightly. So it was a good price to be out since BC has closed above \$12 today (Figure 1). This trade was entered last Friday before noon at 1.95, when BC was trading at 10.81. This represents a loss of \$65. For this particular trade, I adhered to my exit strategy (even though it was a loss), so that's good. For the entry, I could have waited later on in the day on Friday to see how the market performs as we approached the end of the week. If I had done that, the reward/risk would have been better. But I think I would have entered short anyway since the sign were pointing downward when BC hung back to around \$11 at the close after breaking above \$11.20 intraday on good volume. And the fact hat the market was consolidating too. Looking at the long term, BC has retraced all its loss since the dive last year. For the market, S&P500 has etched higher today too but is still about 10 points below last week's all-year high. The volume for the overall market is noticeably lighter too. So this uptrend can possibly continue up as not many is riding this move. We shall see how this goes. As can be seen from Figure 2, BC at \$12 has some resistance above to \$13. For the lower end of the range, we have \$9.60. A break below \$9.60 would signal a stop of this recent bull train's momentum.

[caption id="" align="aligncenter" width="580" caption="Brunswick Corp"][Brunswick Corp]Brunswick Corp[/caption] [caption id="" align="aligncenter" width="580" caption="Brunswick Corp. 2-year chart"][Brunswick Corp. 2-year chart]Brunswick Corp. 2-year chart[/caption]

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

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.)

[caption id="" align="aligncenter" width="580" caption="Brunswick Corp"][Brunswick Corp]Brunswick Corp[/caption] [caption id="" align="aligncenter" width="580" caption="Brunswick Corp (30-minute)"][Brunswick Corp (30-minute)]Brunswick Corp (30-minute)[/caption]

Expired 15 BC 100 SEP 09 7.5 put, mark 9.78

My fifteen Brunswick Corp (BC) September puts expired on Friday. I entered this at \$0.39 back in mid-August. This position is worth \$0 now. That is a total loss of \$585 + \$15 commission. Long story short, here are some mistakes I made with this trade, in decreasing order of significance:

  1. Shorting when the trend is obviously up.
  2. Not adhering to my stop.
  3. Low liquidity asset.
  4. High commission.

Well, as I've said earlier, I will be focusing on developing my trading tools and strategies for the next few months. I have just placed my first paper trade using a new strategy in the forex market. [caption id="attachment_1801" align="aligncenter" width="500" caption="Brunswick Corp"][Brunswick Corp][][/caption]

[Brunswick Corp]: http://traderpau.files.wordpress.com/2009/09/2009-09-19-bc.png

Bought +15 BC 100 SEP 09 7.5 PUT @.39, Mark 9.12

It doesn't look like that the market will correct any time soon. The pre and post FOMC action today merely produced a few points of move on the S&P500. However, with the S&P500 making a marginally new high, the high risk sectors (i.e. financial XLF and real estate IYR) are still off their highs by much. Furthermore, the junk bonds (JNK) is failing to lift too. This is a good sign that the junk of the market aren't being bidded for. This is definitely a negative divergence. However, things aren't always that easy. From that lack of participation either way, we'll likely move within a range for a while. So my COF short is in threat of expiring. The move for me now is to unload both COF and my hedge in PG long before expiration next week. I bought Brunswick Corp (BC) for September's expiration because some meaningful move is likely, particularly considering the scenario BC is in now. Looking at Figure 2, BC has tested a solid long term resistance about \$10. It has tanked more than 4% today while the market is up about 1% and marked a new intraday high. And in case you haven't noticed, BC has been going through wild cycles of ups and downs. Those patterns are looking darn nice if this is indeed the top for BC. We can expect BC to be breaking below \$6 if history plays itself out once again. Furthermore, the intraday push to resistance at 9.25 has failed miserably in the late day (Figure 3). That was when I decided to enter this position. Entry: \$9.12 Stop: \$9.70 Target: \$6.00 Reward / Risk = 3.12 / 0.58 = 5.4 > 5 Note: Because these are farther out options, my risk is definitely higher than this simple calculation depicts because of the time decay. I will need to figure out a simple way of better assessing my risk other than using Black-Scholes manually. P.S.: Forget to mention that I picked up this tip for BC from Cara Community. [caption id="attachment_1690" align="aligncenter" width="500" caption="Brunswick Corp"][Brunswick Corp][][/caption] [caption id="attachment_1691" align="aligncenter" width="500" caption="Brunswick Corp"][Brunswick
Corp][][/caption] [caption id="attachment_1692" align="aligncenter" width="500" caption="Brunswick Corp"][Brunswick Corp][][/caption]

[Brunswick Corp]: http://traderpau.files.wordpress.com/2009/08/2009-08-12-bc.png [Brunswick Corp]: http://traderpau.files.wordpress.com/2009/08/2009-08-12-bc_prop.png [Brunswick Corp]: http://traderpau.files.wordpress.com/2009/08/2009-08-12-bc_short.png

Posted 12 August 2009 in stocks.