Sold 6 CM 10OCT Put 74.00 @ 6.60 Mark $70.70, +8.0%

The market seem ready to crack but it is not. So I am taking profit on my CIBC short here on a weaker volumn retest of the \$70.50 support (Figure 1). I bought 3 puts contracts four weeks ago at \$5.00 when CM was trading at \$74.02. Then I [added 3 more contracts with the same strike price and expiry for \$5.65][] when CM was trading at \$72.30. The average cost was \$5.35. Thus, profit is \$750 - (\$12.95 + \$3.00) x 2 = \$718.10 = 8.0% of total account.

[caption id="" align="aligncenter" width="570" caption="CIBC (CM.TO) intraday"][][][/caption]

This is the last of my positions. I have no more outstanding position in any market. CM.TO looks to be on the brink of a collapse. I may be making a mistake here by offloading my shorts before the fireworks. However, as I was saying, the market is still hanging on. Furthermore, there's a positive divergence for CM.TO as shown on Figure 2 according to the oscillator at the top of the chart. So I am taking profit now to reduce my risk as this position is relatively big for my small RRSP trading account.

[caption id="" align="aligncenter" width="570" caption="CIBC (CM.TO) daily chart"][]1[/caption]

[added 3 more contracts with the same strike price and expiry for \$5.65]: http://www.quantisan.com/bought-3-cm-10oct-puts-74-00-5-65-mark-72-30/

Posted 08 June 2010 in stocks.

Bought 3 CM 10OCT Puts 74.00 @ 5.65, Mark 72.30

I am doubling my CIBC (CM.TO) short on test of \$72.50 resistance about half an hour before the close. \$72.50 is the 50% retracement level on that big dive in beginning of May. See Figure 1. Moreover, \$72.50 is the bottom of a congestion zone in middle of May.

[caption id="" align="aligncenter" width="570" caption="CIBC (CM.TO)"][][][/caption]

The trading volumes in CM.TO and the TSX index are weak. So I am betting that the market won't follow through with this upward move. Mental stop is \$73.00 and \$74.00 as hard stop.

Posted 02 June 2010 in stocks.

Bought 3 CM.TO 10Oct Puts @ 5.00, Mark $74.02

I've been watching CIBC (CM.TO) for a few months now. CM finally presented a shorting opportunity that I took today. Figure 1 speaks for itself. Furthermore, the lackluster rally in EUR/USD after the ECB's vouch for confidence is encouraging for the bears.

[caption id="" align="aligncenter" width="570" caption="CIBC (CM.TO)"][][][/caption]

\$74.00 - \$74.50 is a strong resistance for CM. There are three scenarios in which this trade can play out. CM can go up, go down, or move sideway. If CM move upward, I will watch the push above \$74.50. My current exit stop is at \$75.00 (about \$1 on the premium). However, as this is an options position. There is a time decay factor working against me. As such, I will decrease my exit stop by \$1.00 on the share price every month to compensate. For example, by mid-June, my exit stop is \$74.00 on the underlying share price of CM. If CM move downward, I will move my stop to breakeven if it breaks below \$72. If CM move sideway, I will give it a month's time. If CM just consolidates around \$74, I will exit by late June for a loss of \$1 (\$300 total) on the premium. My targets are \$70, \$68, and \$65 as shown on Figure 1. I will tighten my stop passing each support level. My ideal loss is \$300 at most. That represents 3.4% of my total account on this trade.

Posted 12 May 2010 in stocks.

Option Value Analysis on CIBC (CM.TO) April 2010 Expiration

Warning: Top/bottom picking is a dangerous art. I don't intend to trade on this information myself. I did this out of pure curiosity. The Canadian banks are an interesting phenomenon. Are they just hiding dirt under the rug or are they really as good as our government say? Mish Global Economic Trend Analysis posted a bearish view on California v. Ontario. Furthermore, The Baseline Scenario discussed [why the strength of our banks is an illusion created by our government][]. As such, on both a technical and fundamental viewpoint, share prices of our financial sector is way overbought. Of which, CIBC (CM.TO) seem particularly screwed as its stock price hasn't been able to join in the unreal rally of late. That sentiment seem to be confirmed with an option pain valuation as I described before. Max pain for CM.TO for April expiration is pegged at \$72. Not surprisingly, \$72 marks a long term support as shown in Figure 2 (blue line). A break below \$72 could summon \$65. The data also show that there is a large open interest for put options at the \$72 strike. Are they sold as covered puts or something else? That I cannot tell. However, \$72 will definitely be an important level for CM.TO in the near future. Nevertheless, as the options market is small in Canada, I wouldn't put much weight on options valuation for Canadian stocks. The value of open interest options on April CM.TO is merely about the size of a single day's of equity traded. P.S. March's max pain was \$68 one week prior to expiration. But CM.TO closed above \$75 on March expiration. That wasn't even close.

[caption id="" align="aligncenter" width="570" caption="CIBC (CM.TO) option valuation"][][][/caption]

[caption id="" align="aligncenter" width="570" caption="CIBC (CM.TO)"][]1[/caption]

[why the strength of our banks is an illusion created by our government]: http://baselinescenario.com/2010/03/25/the-canadian-banking-fallacy/

Posted 31 March 2010 in stocks.