Hi Phil: If you waited for her to get to that 49 mark you likly
did real good, that she may move up some and they get more cheaper
could happen, but right now the 49 is profit taking time for
traders , that they may wait to see if she moves up is likly,
but if she just hangs there or even starts down then the profit
takers will come, followed closely by the shorters.
I follow you with wanting the higher delta..but they counted on that
the PJ carried a fat premium. Think I said PI..ment to say PA was
best value. Keep in mind the TA still has her trendng up, but
in spite of that she can't hold 20% above 50 DMA for long before
a retrace..( at least not up ,to now ) and 49 is for the time being that high water profit taking mark. It's just reasonable with this as well as most a 20% gain above the 50 DMA..would add up to 140% a year and at that rate of climb the more active traders take
profits..not all stocks behave the same way..it's differnt types
of people who invest in differant stocks that causes no one rule
to apply, but rule of thumb..says 20% above 50 DMA..or 75% above
200 DMA will often cause profit taking to kick in, barring any
exceptional news. I'v seen a lot that would never make that
75% above 200 MDA too, and a few that exceeded it.
When the profit taking does kick in, you can look for her to
test the 50 MDA were ever it's at and depending on momentum
she may dip just below it, before up trend picks back up.
Good Luck with your puts, I'd sell them on the 50 DMA line,
if no bad news hits and she drops 2 below that it's time for
calls. My long term out look for her is down..and I think a
shock will come and she will one day break that 50 DMA and
keep going..so sooner or later I'll lose a set of calls, but
up till now had I put as much on calls when she was on the
low end as I did on puts I'd be much better off and the loss
of one set of calls would not amount to much..I always buy
out of the money to get more bang for the buck, except if
I'm trying for a dead cat bounce, then it's in the money.
As far as losing a set of calls goes I won't mind a lot,
as I'm hedged out in Jan98 with more puts, than I'll ever
buy in calls at any one time. One last thing if she does
drop below the 50 MDA..and you get calls don't do them in
Aprl, at least May.
Jim |
