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Strategies & Market Trends : Ride the Tiger with CD
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To: sporky who wrote (208062)12/20/2011 7:52:17 PM
From: stuffbug  Read Replies (3) of 312709
 
CD,

I understand that you got started by trading tech stocks.

RIM looks like a good speculation here. Last time it traded below today's close was the second week of January, 2004. So, anyone who bought RIM in the last 7 years and 50 weeks and is still holding is underwater.

Here's how I would play this Beer & Wine trade.

Buy one or two lots every 25 or 50 cents down. Then blow it all out on the first spike rally. There is guaranteed to be at least a 25% rally from whatever low is made between now and the end of the year (U.S. taxpayers can claim losses for trades made up until the last trading day of the year). I think the low will be in by next Tuesday (last day for tax-loss selling of U.S. equities for Canadian taxpayers).

For comparison, RIM rallied 50% from the August lows (equivalent to about seven ATRs). As of today, a 7 ATR move would be more than 6 bucks. On a percentage basis, RIM's volatility is about the same as it was in August.
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