Bull or Bust

a bull's view

February 2, 2016

Hello everyone! I hope the market is treating you well. First, some non-market related news:

Website Redesign Coming Soon!

We will be redesigning this site over the coming weeks / months in an effort to make it look more contemporary and less 1984. However, I loved the 80’s and see nothing wrong with 1984. Regardless, the site looks rough and I understand this so I have contracted our web guru to take care of it. He is fantastic and you may learn more by visiting www.confitdesign.com.

Web Domain Name Change

The original domain name for this site was jamesrday.com and it has served me well for this purpose to-date. However, due to the fact I am reactivating my Real Estate License and needed a personal website I have decided to use jamesrday.com for Real Estate related matters and bullorbust.com for trading and market related information. I credit James at Confit for this idea. Please make a note of this. Again, the new trading / market related website address will be www.bullorbust.com.

Now for today’s market and trading news!

If you take some time and look back at previous posts you will see where I strongly suggested buying Starbucks (SBUX) anywhere in the $56-$57 range. Shortly after writing that post it indeed traded in that range and it was a perfect buying opportunity. Starbucks is now trading at $60.69 as of close today which equates to a 6.47% gain before commissions. Not too bad and please remember that’s at close today…a very bad day. It was trading well above $61 just yesterday and profits could have been taken. Remember, in the current market conditions you take profits when you can. Several days of good will always equal at least one day of bad. If you’re trading options this means 20-30% gain is always better than 3.5%. I have a story about this below.

Starbucks at $61 is dangerous currently. It’s a 50/50 shot as to the direction it takes from this point. If you’re in it and like the company then ride it out. I believe strongly this is a $65 stock. If you’re waiting for the next entry point (like me) then I suggest anything below $60. Based on the sentence above my exit would be anything above $65 if you’re trading. If you’re investing (completely different strategy) and it hits $65 I would keep it for the long-term.

NETFLIX – Love it or hate it, but don’t own it. Trade it.

Because this site is dedicated to the reality of trading and not the bullshit you see and hear on tv I will share my sad story from yesterday. Currently, due to the tax man, I am hoarding cash so I have less than 25k in my TD Ameritrade account. What does this mean? Why is this important? Because you cannot buy and sell or sell and buy the same stock or option within the same trading session more than four (4) times in five (5) days or they will literally halt your trading for 90 days. This SUCKS! It used to be 5 / 5 by the way, but the notice I received last Friday said 4 / 5. Even worse! Stupid rules…

So my point is I have to watch very carefully what I’m buying, why and how long I intend on holding. For example (getting to the stupid part from yesterday): Upon market open when Netflix was hovering around $91 a share I noticed A) it was going to be a good day for trading and B) Netflix was going to have a good day as well. I could feel it. Therefore, I purchased a single option for the MAR 18 2016 95 CALL @ $6.30 for a total of $630. No big deal just trying to make a quick buck and knew I would sell it today (within 24 hours). I had a feeling the first day of the month was going to be good.

It was.

Netflix shot up over $97 a share and my single option went from $6.30 to $8.02 gaining 27.3% before I could blink and I even purchased late when the underlying was around $94!! But wait! I can’t sell it! I’m up 27%, but if I sell it I will get tagged a day trader (yet again) and risk losing my trading ability. Well crap…I have to wait. Now, anyone who trades knows that time, in most cases, is your enemy and I knew this. I suffered all day watching Netflix go back down. I was furious.

This morning as the market opened I was cleared to sell and thankfully Netflix remained up for a short period of time. I sold at $6.75 and cleared 3.59% AFTER commission. This sucked, but at least I remained in the black especially given the fact Netflix is now close to $91 again and that same option is hovering around $5.05.

The moral of the story? Take your profits when you can and don’t be afraid to reset knowing you missed your chance. I have enough experience to know I indeed missed my chance, but making $23 is better than being down $130!!

Trading Activity For The Day

Sold everything except my Ford. Doubled down again on the APRIL 15 2016 12.75 CALL at .20 cents each after having made 75% and selling at .34 yesterday. Have another order in for 22 more at .15 if it decides to continue falling with a current position of 38 options.

I understand the auto industry has probably peaked. I get that. However, I do not agree with the current price for Ford stock. This is ridiculous. Ford is knocking it out of the park, they’re making the best looking vehicles and they understand how to make money and stay alive. Don’t even get me started about the dividend opportunity! You would be a fool to sell Ford stock.

Stock and Option Trading