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Strategies & Market Trends : Galapagos Islands -- Ignore unavailable to you. Want to Upgrade?

To: Jorj X Mckie who wrote (13297)	11/16/2002 10:26:31 AM
From: c.horn	Read Replies (1) \| Respond to of 57110

I need your input.. I'm going to start a trading account for one of my nephews and start him out with about 2 thousand in it. What online broker do you suggest would be the best for a small account like that? I was looking at scott trade, you only need 500 to start an account there. Any ideas? TIA. your bud C

To: Jorj X Mckie who wrote (13297)	11/16/2002 11:31:02 AM
From: TimeToMakeTheInvs	Read Replies (1) \| Respond to of 57110

check out chart #7 at this link, shows some of the longer term trend lines very nicely - stockcharts.com tim

To: Jorj X Mckie who wrote (13297)	11/16/2002 4:36:21 PM
From: mishedlo	Read Replies (1) \| Respond to of 57110

One Trade Just One. That's all it took. My reply to the following post to me: In hind sight just going short in January and staying that way would have been a fantastic trade. I knew it was a top I just didn't expect stuff to go straight down all year, which we more or less did. ======================================================================= In January the QQQ was 40. You probably could have bought the QQQ ITM 50 leap put for something like $13. Walk away. Who cares whether it was straight line down or not. In march it rallied from 32 to 38. If you could somehow been hedged long on that ramp fantastic. But that was the big last gasp. Otherwise just sitting tight would still have been fine. We were about as far under max pain as we got in march in terms of QQQ points. But for the sake of argument you forgot to get out of the way and are still short and did not get out of the way of this ramp job either. That 50 put that you paid $13 for would be worth $24 right now. That assumes also that you did not get out of the way of any of the major rallies or sell at extreme at $20. That $13 put was worth $30 at the September low. $13 to $30 is not a bad trade. 1 trade for the entire year. Looks so so simple now. Now Imaging hedging that or getting out of the way of a couple of the rallies. $13 to perhaps $35. Better yet if one just held and bought short term QQQ calls on the basis of Max Pain every month. That strategy of just sitting in the big position but hedging with short term calls every month as appropriate for max pain, probably would have yielded $13 to $40 or $45 or even higher. Even still, I come back to one trade and doing nothing netted a near triple if one got out near extremes in Sept. Now, where do we go from here. Everyone has been calling for S&P 600. In what timeframe? Even if it is not 600 but a test of the bottom at 700 you have a chance to earn nearly 50% by executing a single trade. Buying Deep ITM spx Puts. Your risk is perhaps (10% or so if we go sideways for a year). Of course you will lose 50% if we go up 100 points and stay there all the way to June 2004. You lose it all if we go up 200 points and stay there all the way to Jun 2004. But one has to deal with probabilities. It would seem to me that putting 1/3 in now, and adding 1/3 on every move of 50 points against you would also seem to be a reasonable strategy AS AN INVESTMENT. If one is POSITIVE we are headed to 600 (and correct within the 1.5 year timeframe), one should actually welcome the chance to increase the puts on the next 2 50 point moves up(each time buying something ITM by about 200 points or so). In this strategy I suppose If you added 1/3 on a 50 point move against you. As soon as you got those 50 points back(you would take that 1/3 off the table). I am dealing with an investment strategy here, but it would be one aligned with the overall trend, unless one really thinks that overall trend is up. I guess if one believed that, one could do the same thing with calls. The strategy I am discussing seems quite appropriate for an IRA for investment purposes. But I hazard a guess, such a strategy did have(for the last 2 years) and will continue to have better performance than most traders are achieving trying to trade every wiggle. Right now I look at the Jun 1100 2004 ITM SPX PUT. Cost $220. At SPX 600 that will be worth $500. If one managed to avoid a rally or two or hedge long at extremes in sentiment then one could do better. Well here we are, A chance to make a single trade and walk away. Will the spoos drop 100-200 points sometime between now and June 2004? (Note, one can work out similar trades with the Naz or DOW). Is this an IT top or are we waiting for 950-1000? The risk in waiting is that if we drop 50-60 points first do you still want in on the play? The risk in plunging now is we rally 50-60 points first. If nothing else, 1/3 Spoos LEAP puts would provide a lot of downside protection against long positions (if one was biased long at this point). Again, I am discussing an INVESTMENT strategy here as opposed to a trading strategy or short term options speculations. This is a very conservative play (If one really believes the overall trend is down) and one does not put more that 1/3 in the play. The adding in thirds is far more risky and requires conviction as well as being correct. Thoughts? M