With all the uncertainty continuing into 2009 and the CBOE VIX Volatility Index climbing back above 40, you may want to consider using limited risk options as an investment vehicle. With this strategy you can manage your risk, set profit targets, and have time to see a market move in your favor... regardless if you are an option buyer or seller. If you survived 2008 and are interested in taking on a calculated risk take a look below. If I can recommend anything the last place you want to be is losing sleep with your investments. Don't let one day or one month of trading make or break you. Have a plan. Good luck and good trading.
*look for our commentators every Monday and Thursday on CNBC Morning Call 8:30ET*
Michael Maniatis
Market Strategist
Lasalle Futures Group
888-325-9300
mmaniatis@lasallefuturesgroup.com http://www.timemeansmoney.com/
TRADE IDEAS for today through next week
Take a look at buying march2009 corn480calls at 5cents or better
I like buying 10out of the money calls in crude with 30days or so until expo. I'd pay up for them and look for a 4-5 bounce next week and offset.
Buying march09 126puts in the 30year bond options, selling 134calls and buying the 136calls in the march bond options at a full handle or $1000 per spread.
*Advanced options trade of the week.
On wednesday jan. 7th I bought jan 980/1000 call spreads in the S&P. at a premium of 1.4
I also sold on the same day the feb 980/1000call spreads in the S&P at a premium of 5.0
Total premium collected on the trade was 3.6x 250/point=$900 less comm/fees.
Methold behind the Madness
On Wednesday we saw a pretty nasty ADP Employment Report and the March S&P futures were down some 20points on the day. We also saw the VIX climb back above 40. Both of these gave me a negative tone to the market through today's Jobs Report, which was also pretty nasty. I expected to see a close below 900 and a possible continued follow through to the high 850's. In buying the front month Jan spread with 9 days left until expiration, this afforded me protection on the trade in the event I am wrong and we saw the bulls continue in command, I could take the profit on the jan and roll the febs higher and again take in premium. If we moved sideways to lower I am benefiting from the time decay. If you understand that options are a wasting asset, and that receiving 3.6 on a month-month spread(ala calendar credit spread) was a gift, than you can see why I am so excited about the trade. Conveniently, this strategy will allow you several options after intiating the position. Again, trade with a plan. If you would like to learn more about this and other option trades you can reach me by telephone, email, or visit my website http://www.timemeansmoney.com/
There is no guarantee for successful trading and you can lose money. Futures and options trading involves substantial risk of loss and is not suitable for all investors or traders. Past results are not indicative of futures results. An investor could potentially lose more than originally invested. I would recommend working with a specialist in any investment you are pursuing. Charts courtesy of barchart.com
