My trading system is fairly automated now and I am only taking trades generated from my system. That makes blog posting rather dull.

My system said buy WMT at …. Who wants to read that ?

Until my system can also write comments, I don’t think I will be blogging about my system trades. It takes a lot of emotion out of trading which is a good thing.

I run my system, it spits out trades, and stop losses, and I place the orders. The AAPL vertical was my last non system trade. Now they are all system trades.

I am starting to trade more in the public view. I think I will move more to just blogging about options in general, and leave my stock/option picks to another website that shall remain nameless for now.

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One of my trades Corning ( GLW ) , just went wiggy on me. I have a calendar spread on, and the IV of the long option just jumped. Don’t know why, but it has a large skew. “The larger the skew, the larger the move”. I don’t want to be around for the move.

The skew developed while I was sleeping, so I didn’t see it. I did not expect a skew to develop that large that quickly. Now, skew is in my favor, which is why I made money, since I entered the position when the skew was much flatter. If the skew had gone against me, my rules would have me close the trade.

I will run a spreadsheet over the weekend to get a better idea of the pricing. That is the second reason I love the weekend. I have time to upgrade my software.

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This is the first month I am trading my complete system. Every trade , everyday. I must say it is a little bit nerve racking.

I am selling Theta so things can move slow. Near expiration, things move faster, but now, it is that “manage your portfolio” time. I have to watch my positions like a dirt farmer.

You really understand the need for risk & portfolio management, when running money. I cannot understand the blowup of Amaranth Advisors. How could Amaranth not have those systems in place, boggles the mind.

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My favorite commentary was here

The deal looks like a loser. Palm gets to add $400 million in debt, gets no new strategic partner, and adds a few people who have as their claim to fame being fomer managers at Apple.

This deal is a loser. Just because you worked at AAPL doesn’t mean you are Steve Jobs. Now if Steve Jobs was on the board……. But really, can Jon Rubinstein, Apple’s former head of hardware save PALM ? I think not. I cannot see any value to this thing.

If you are long, a 50% one time dividend is nice.

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I cannot find any information on why the move. Nada. Whatever it is, someone expects it to happen soon, expiration is 14 days away. Looking at the spread, it seems the demand is opening the spread. The only thing I can think of is that institutional investors are showing considerable interest and “staking out positions in a thin stock. Even a small hedge fund buying a couple hundred contracts would have pushed up the IV. But even then, wouldn’t you try to load up on the JUL calls? ( Except even less volume in the July’s )

What ever the reason, the weekend is here and theta will take some value out of the front month, which is good for me. I don’t think there is much I can do, NAL options are thin and I do not think I can unwind my position, I am just going to let them expire.

Blah

~squid

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I had spread limit orders, which I think you should always do. Execution, execution, execution. I lost 0.03 on half PUT calendars, and I made 0.9 on the other half, for a net of +0.06. So I got out of that, and I learned a lesson.

For once, I made money when I had to learn a lesson. What I learned was, don’t over pay, you need to preserve capital.

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Last Tuesday the stock moved up on speculation that there was going to be a buyoutin part because Chief Financial Officer Andrew Brown cancelled a planned presentation at the J.P. Morgan Chase technology , later that day, Palm issued a statement about the change of plans, that Brown, who has back problems, yada, yada, yada.

I am underwater right now and theta over a long weekend won’t save me. The volume was zero in the 15 puts, so I didn’t want to get into a thinly traded option, knowing how hard it is to get out. I didn’t follow my own rules ….. Double calendars work best in a low-volatility environment and Double diagonals work in both low- and high-volatility environments. I think I might roll it into a double diagonal if I can.

They reported Q3 FY07 results last Tuesday, so I do not expect any surprises. This is a long weekend , so everything is closed so I think it is all good.

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So in to PALM, I put on a double calendar. The stock has mainly stayed in a range of 16 to 17.5 for the last 6 weeks or so. Got a 6 point IV advantage, and they cost me about 0.40. The bid ask spread was 0.20 – 0.50, I put in an order at 0.40 and was filled almost immediatly. I need to be a little more stingy on my spreads. My target it 0.55 per spread to sell.

Also an INTC call calendar. the puts did not have an IV advantage. INTC was at 23, but it has fallen. And that is what has boosted the IV a little. As when ever trading INTC, it never really moves. It is a big friggin boat. the spread was 0.42 ~ 0.47, I got in at 0.45, right in the middle. My profit target is 0.63.

As for risk, I am positive Theta of course. Delta is positive on both stocks, more than I would like, but still good. I do have negative position Gamma, but I do not expect these stocks to move very much.

I did manage to put on a small position in NAL. I got in at 0.40. Once again a profit target of 0.55. I waited on that trade about 1 1/2 hours. I think someone was trying to get out of a position in a thinly traded option. The bid went from 0.15 to 0.35 in a couple of minutes, and the ask went back to 0.50. I was stingy on that one, and left the day order in for the price I wanted. NAL had a good earning report that pushed it up. I do not see more upside.

I do admit, sometimes when I decide to pull the trigger, I don’t like to wait. But I am getting better at it, putting in a day order and waiting for the market to come to me. If it doesn’t come, there are always other trades.

PALM UPYRW + UPYSW Limit 0.50
PALM UPYFW + UPYGW Limit 0.60
INTC NQGX – NQFX Limit 0.64

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So here are some stats on the series 65

Time : 3 hours.
Fee : $120.
Sponsorship needed : No.
Pass rate needed : 68.5%.
Calculator / Scratch Paper : No, may be provided.
Where : Prometric Test Centers

And the study notes are here Series 65 Exam

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