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.

[caption id="" align="aligncenter" width="570" caption="Manulife Financial (MFC.TO)"][][][/caption]

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).

[caption id="" align="aligncenter" width="570" caption="Manulife Financial (MFC.TO)"][][][/caption]

Short Cruide Oil 82.80 via HOD.TO @ 9.03, Stop 8.80

Update the day after: Stopped out at \$8.81 for a loss of \$64.90 = 0.7% of account. I'm giving this short oil play another try. See the topping COT (CFTC: Commitments of Traders) lagging open interest data (bottom of Fig. 1). I waited for a breakdown in the hourly chart (Fig. 2) to make my entry into this short. The market has been coiling up for the entire month of October. Something big is about to happen sooner or later. Perhaps the U.S. midterm election tomorrow can finally move this market? Stop is at 8.80. Risk is (\$9.03 - \$8.80) * 250 = \$57.50 + \$9.90 commission = \$67.40 = 0.68% of account. Position size is still small with this lack of market volume.

[caption id="" align="aligncenter" width="570" caption="Crude Oil"][][][/caption]

[caption id="" align="aligncenter" width="570" caption="Crude Oil, hourly chart"][]1[/caption]

Sold 300 HOD.TO @ 9.12, Loss -0.6%

Update: Crude is making a dive. This might be the move that I waited but got stopped out. I shorted crude oil on Friday afternoon below the 82 resistance. It was an undocumented trade. Now I am closing at a loss. It's a slap on the hand for breaking my own trading rules. Oil broke above 82 over the weekend. Fortunately, the opening gap was filled before noon and I took the opportunity to cover my short. I was down 1% at the open. Good thing I didn't panic and waited patiently (with a hard stop just below the opening low) for a more rational exit. My planned stop was \$9.15, the opening low was \$8.87, and I covered at \$9.12. Just a tad under my plan but a lot higher than the low so far. Figure 1 is a chart of U.S. Oil Fund (USO) at the time of my exit. I traded the Horizons BetaPro Oil Bear Plus ETF (HOD.TO) as a vehicle for shorting crude oil. The chart of USO is a better proxy of crude oil prices as it's a few magnitudes higher volume (i.e. more popular) than HOD.TO. From the looks of it, I will stay on the sideline until at least the midterm election in the United States next week. Loss for this trade is (\$9.12 - \$9.29) * 300 = -\$51 - \$9.90 commission = -\$60.90 = -0.6%.

[caption id="" align="aligncenter" width="570" caption="U.S. Oil Fund (USO)"][][][/caption]

Posted 25 October 2010 in stocks.

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