Typically I'm more of a swing trader, as I don't like taking short term losses that are easily avoidable. The downside to this is that I miss some big moves and often after exiting a position with a profit I will forget to get back into it after a pullback - usually because I've found something new. But from time to time, I will enter into a basket of trades to hold as one unit, expecting that most short term losses will be offset by other parts of the basket. What better time than March Madness to enter into a basket?
The premise of these is pretty simple. All 8 made the same entry signals on their weekly charts that I use to enter into a position via daily charts. I'm entering all posiitons willing to take the max loss on them as long as the basket as a whole is performing. (Max loss in my case being $500-600) All 8 options I'm entering expire after earnings date, so we will see a volatility uptick on all of them leading into their announcements. All 8 will be sold right before their earnings announcements, unless we've taken some profits due to massive gains. In the case of massive gains, I may hold a portion through earnings, or spread them. I'll post as I exit or adjust, but it's mostly a simple buy and hold basket.
Typically when we get out of these we'll have a couple max losses or close to it, a couple that are up or down a little, and a few that have tripled or quadrupled or more. The goal is a 50% gain on the whole basket. Not bad for a couple months, is it?
1. Lennar Homes (LEN) - Buying 5 of the April $43 calls, current cost $560. Just off a 4-week pullback and breaking back to the upside following earnings. I can easily see this in the $47-48 range if all goes well.
2. Schlumberger (SLB) - Buying 4 ot the April $80 calls, current cost $575. After a nice little pullback it looks like it wants to make a run at $82 again. If it clears that before earnings, the ceiling is pretty high.
3. Abbott Labs (ABT) - Buying 5 of the April $34 calls, current cost $550. Not the stock you usually think of when you think aggressive options plays, but ABT can go on extended runs when the time is right, and it looks like it might be right now. Targets at $36 and above $39.
4. Cisco Systems (CSCO) - Buying 9 of the May $22 calls, current cost $585. Beautiful looking setup for this stock, with long term pent up energy ready to break out if the market continues higher.
1. Apollo Group (APOL) - Buying 7 of the April $16 puts, current cost $520. Apollo can't get out of its own way. I've been in this with puts since it fell under $20. Chart is godawful on any timeframe be it daily, weekly or monthly. Sooner or later Apollo hits $12. Here's hoping for sooner.
2. Peabody Energy (BTU) - Buying 7 of the April $21 puts, current cost $560. I could write the exact same thing as I wrote for APOL, except I've been in BTU since $25 before getting stopped out for profits on last week's meaningless bounce. It also has $12 in its future and will be a leader downward if we get any market pullback.
3. Caterpillar (CAT) - Buying 3 of the May $85 puts, current cost $528. CAT couldn't do a thing in this latest big up week. If the market ever gives it a push, it's going below $80.
4. Freeport McMoran (FCX) - Buying 7 of the May $31 puts, current cost $623. FCX would likely also lead any downward move in the market, breaking down from a 2-year long wedge in the process.