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Tuesday, July 1, 2008

Stock trading, stock market, Forex trading: NDX trading, Nasdaq-100 Trading, June 30, 2008, XLF Trading

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This is update on what I did today and the situation with after hours prices:

1. I sold strangles of options expiring today (quarterly options) on the QQQQ ETF. They did not need any defense, and close them before the close paying a little for them after selling some of them on Friday, and some during the day while the stock was waving around.

That was profitable and with any work, other then double checking from time to time, that things are staying in range which what I thought.

2. I then sold ITM july 2008 puts, and hedge them by selling OTM calls above the strike of puts. I am essentially selling volatility at higher strikes and synthetically longing the QQQQs.

This position exploits various things: a possible reduction in volatility, the passage of time, the fact that this is a short week in terms of trading ( 1.5 days then normal). In addition if market goes up, volatility would go down, and with the price heading towards my short strikes where it will be going towards neutrality with a rising theta. So it is a good position if the scenario I have in mind turns out to be right. If it is not, I have various ways to defend it.

It is also a smaller than normal size position (because we are against the daily trend even if I think that we might see a fast bull couter attack is possible), and I plan to manage it whether market is up or down depending on future outlook and future price action. In addition, I have profits from today and the previous days which allow some room to take the initiative (assume that the risk is manageable).

3. XLF: This is in retirement account. I got the confirmation from my broker. I got the price of 4:00PM, as my order came between 3;00PM and 4:00PM, and they price by the hour.

4. AFTER HOURS: QQQQ and XLF are both UP after hours. And Lehman is apparently up more than 3% in afterhours. Therefore the climate is starting to show a possible mark up in equities in the next few days.

5. If there is a markup, I expect it to be sharper in the Dow and XLF (and less sharp in the QQQQ even if the latter have historically a higher volatility).

I am also looking for NDX (in case of a rally) to try to close the gap down of last week (June 26?). NDX in the area of 1920 is where I currently project a possible stop of price rise if a price rise takes place.

Happy trading

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Happy trading,


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