DJIA : 360 Degree To The South

Posted by Kris | Sunday, June 29, 2008 | | 0 comments »

DJIA was -360 points on Thursday after a slight rally on Wednesday. Nearly throw away my put positions on Wednesday as it breach my stop loss point. Luckily, I did not do that but it is bad idea to not follow through my stop loss. I sold my positions on that day itself, as I fear a rebound would wipe out my profits. Come Friday, it was another RED day for DJIA. Could have make more out of my put positions. Well, small profit is a profit also. Thus, i am not that disappointed with my decision. I am getting sloppy with my entry & exits points even though i was buying Puts only all this while and my positions are favourable to an certain extend. Time to cool down and take a more relaxed approach.

Nasdaq stocks took a beating as DJIA breach an all time LOW for year 2008. Intel & Apple were not spared in the bloody massacre with Intel having the worst looking charts right now. It probably will have a rebound soon and Apple is stress testing certain support points.

Volatility Index is still low which may well indicate that the fear factor has not yet reach its summit. Nevertheless, the premiums are higher now compared to 2 months ago. Spreads are getting larger also due to the volatility. Thus, getting an good entry point is essential to avoid unnecessary slippage which is essentially happening on my last few trades. :(

The next thing to come into my mind is what is the directional play that i would take for the coming weeks? Buying puts or calls?

Puts - Fear may have fizzled out due to the large drop. A technical rebound may ensure but there is a high chance of probability that further drops will happen.
Calls - Technical rebound may happened but getting the correct entry point may be very difficult. Profit & risk ratio might not be that attractive. i am also arriving at a crossroad!! Same as the DJIA. Have a nice weekend.