Chris; RE:" Other Options "
>I would be interested in hearing how 'the dudes' diversify
their portfolios. My myopic tech. Focus may haunt me in a meltdown
even with international exposure...
...hey - there's STOPS on options too, dude (^_^)
Well, we've been chatting about the Drug Sector - DRG.X
- most of us have something there. The components are as follows :
MktCap %-60d %-20d %-50w
14.8 MRK + 6 - 8 + 33
13.7 PFE +33 +17 +115
10.5 BMY +11 - 2 + 57
9.9 JNJ + 7 - 3 + 19
7.7 LLY - 1 + 3 + 52
6.3 AHP + 5 + 5 + 33
5.9 SGP +13 - 1 + 95
5.8 ABT + 6 - 3 + 19
4.9 WLA +29 + 9 + 77
2.3 PNU +18 + 3 + 35
1.6 AMGN +16 - 6 - 5
1.5 BAX + 6 -10 + 15
SBH
GLX
...the 60-day performance (I just quickly used SI's comparo-charto) is
approximately since the blow-off on 12-JAN to the present. The 20-day
performance shows what happened since the MM's took profits in weeks
2~4 MARCH, before earnings. The bold ones have the best sustained growth.
( perhaps you can see why King LEAP JĀrgen was after PFE today ;-)
Look at the weekly charts on the top three: almost linear.
This is what LEAPS are all about - amplifying growth.
When you want to amplify waves, just use 2-4 month PUTs &CALLs,
IMHO - LEAPS are for Amplifying Growth Trends.
The nice thing about turtles like plain old NYSE stocks is that
when you use options on 'em, and catch them crossing an option
boundary, they really amplify capital gains!
Berney's MRK is an interesting chart for T/A. Simplify the
picture by just converting it into a line chart of closing
prices. That formation up there at the top is called a Head &
Shoulders - the "neckline" is sloping upwards. The rule for H&S is
that, once the neckline is broken, the downward move is about equal to
the distance from the neck to the top of the head. I got
the neck at ~125 and the head at ~132 = 7 points. It should fall to
125 - 7 = 118, which is what it did.
Now it will either bounce up and try to kiss its old UpTrend line, or
slide down its new, short-term DownTrend line to ~114. With options,
playing MRK's fall would have been $$$ (mucho dinero en el banco).
Look at HWP's chart - it's a sine wave man - between 60-61 and
64-65 strike option boundary railroad tracks. What good are
LEAPS ? I bought 10 HWPHM Aug 65 CALLs when it was 60-61, and I'll
dump the cash equivalent of my initial investment when it gets to
64-65, leaving 2-4 contracts (the profit) open in case it goes up
( I like playing with their money ;-) I'll either put a STOP
on 'em or just hang onto them, and if HWP goes back down to 61, roll
'em over further out.
After getting burned on a narrowly-focused TechStock portfolio last
year, Chris (and I had "diversified" into MSFT INTC AMAT DELL CSCO
QNTM - all the Tech Sectors) I stopped caring about the underlying,
and started to see stocks as simply vehicles to leverage.
-Steve |
