Taking profits on half my BT position:

 

Sold half of my BT long...sold £100/penny with the equity around 280p (got paid 281.4 on the Dec future). Stock has had a VERY good run, and I'm happy taking my money partly off the table here. I'll have a good think about the rest of it.

 

Think stock could reach 320p in the near future, if BT profits rise nicely, and their expansion strategy becomes liked by the market so allowing an expansion of the P/E multiple. However I also think the fundamentals of the stock are relatively unloved, so if the market were to turn it could give up a fair bit of the gains.

 

Still long Pipex also, so have UK IT/Telco exposure still. If Pipex got up to around 13 I'd probably take my profits. This is a company with HUGE upside, see some of my earlier posts on it. Wi-Max Wi-Max Wi-Max, it is the future.

Covering the EURIBOR short, and buying longer-dated S&P puts

OK...on Sep 29th I sold £75/tick of Dec '07 EURIBOR @ 96.25, I just
bought it back yesterday (Oct 23) at 96.12, so pocketing £975. Trade
worked out nicely as ECB came out with some hawkish rhetoric this month,
although I feel this should have made about £2500 as I missed my entry
point by a day as I was working and I faffed about before putting it on,
and since the market was lower than what I wanted I did half the size I
intended. Dammit. I continue to make money on interest rates, but not
nearly enough due to me sizing it too small. Whilst my DOW and S&P
shorts are swinging about in thousands of pounds, my rate trades feel
like they're about a fifth of the size. Must try harder.

And I just increased my Equity market short. The more I read, the more
the bigger picture seems to be that the housing boom has come to a firm
end, wage increases are not keeping up with inflation, inflation itself
is higher than the FED wants (and just maybe the FED will hike again),
profit growth seems to be slowing (and there seems to a decent chance
that profits fall), and there is a DEFINITE risk of consumers pulling
back in their spending.

Also it amazes me that corporates IN GENERAL make so much money
considering we are 10 years into the Internet Age, I would think that
the price transparency and lower barriers to entry that the internet
offers would cut into profits.

So despite having taken a BATH on my S&P short, and my DOW option trade,
I just paid 20.48 for a 1330 Mar '07 PUT on the S&P, in £250 per tick,
so £5,120 premium, which is my total downside. With volatility so low,
now is the time to be buying options, and I like pushing them further
out (the other ones I could have traded were only until December).

Bring on the crash.

Buying back my Bund short, and selling out Intel...just taking profits:

Just bought my £15/tick Dec Bund future short back at 117.11, and sold
my £10/cent Intel long out, spot price was $21.60.

Booked £425 on the Bund, and £1,432 on Intel.

Sigh. I put the Bund on at about 117.40 average (that had the 10y Bund
around 3.78%), but the market did trade way above 118 after I did it,
annoyingly I 1) missed a higher entry and 2) didn't add to the trade
when the terms were better, despite my strong belief in it.

I still like this position, but think I'll get a better entry. Would
like it in bigger size also...my interest-rate positions are never big
enough! Having a CLOSE look at Dec '07 Eurodollar also, its pricing in
5% right now, think at some point the FED will move into rate-cutting
mode, and could cut pretty quickly especially if housing downturn
unfolds further. However, the last week or so it has felt like the FED
are on hold at 5.25% for a while, that the ecomony will continue to
strengthen, and that more hikes could be in order. So I'll hold off,
maybe at 5.50% I'll look to enter in size.

And sold my Intel purely because I've had a nice run on it, but also
because I'd like to have double the size, and so will see if I can get a
better entry level for a new position of more like £40-45k worth of
equity. Plus I think equity markets are due a bit of a setback (fingers
crossed anyway, I've taken a pummelling being short S&P and short DOW
11,500 calls!). Market is a little euphoric for my liking.

That's it for now, its getting late and cold here in London...its
reaching the stage where by next week it'll be dark on the way to work
and dark on the way home...how depressing, at least the ski season
starts soon.

Year-to-date P+L is up £16,500 at today's prices. Biggest losses have
been on GBP against USD which I'm still short and like, and on being
short US stock indices. Biggest wins have been individual equities,
Crude oil short which is now closed, and in rates, where I've generally
been betting on higher US rates earlier this year.

Selling out my Cisco and IAC Corp...why? And covering a little of my GBP short:

Sold Cisco in £10/tick, spot price 24.30...thats about £24,000 of stock.
Had bought it back in Feb and March (wow time sure flies), seen a 15%
rise or so. Part of the rationale is that I wasn't long enough, so I'll
step out of the position for a bit and see if I can get an entry point a
bit lower. Think still a lot of potential in the stock, as internet
TV/Video continues to grow, and so demand for routing equipment etc will
increase, but I feel the market cap is kinda high relative to earnings
(profits for the last few years have been ~$5bn a year, but market cap
is close to $150bn). Will wait for a new entry point. P+L from Cisco
Year-to-date ~£2,750.

Similar rationale in IAC Corp (Ask.com), still like it, but cutting out
of my long of £10/tick today (spot price was $29.10). Wasn't long
enough, still like it, but will cut out now and wait for a better entry
point to put on maybe 50% bigger position...I'd like most of my equity
positions to be ~£40-50k. Total P+L for IAC Corp Year-to-date is DOWN
£6,200. Pretty disappointing, but main problem was doubling my long
earlier this year after a large rise in the stock, but then cutting that
as it dropped later on.

Also bought £2/tick of cable (GBP/USD fx), bought the Dec contract but
spot was at 1.8536. Was short £13/tick (equals £1300 per big
figure)...still like being short, but buying a little back as it falls
so I can trade it around a little.

Continuing the equity build-up...selling WaMu:

Sold £10/cent of Washington Mutual...mid-price of the stock was
$43.29...so selling ~£43,000 worth of stock.

Why? Well 1) I dont like the smell of the US housing market, read
Roubini or the Big Picture for some good commentary on it, it seems to
me like the US is way over-leveraged, far more so than even here in the
UK. Whilst the Bank of England slowed the boom by taking rates to 4.75%,
then brought it to a halt without letting it drop by taking rates back
to 4.50%, it seems that with the more "exotic" loans available in the
US, there is more potential for Joe Public to struggle to meet payments,
even if the FED does try to cut rates to support the market (negative
amortisation, optional payments, etc).

2) Hat tip to Mish for this awesome post on how lending
guidelines were tightened by the regulator this weekend...this has HUGE
potential to massively slow the housing market since fewer people will
be able to get mortgages they cant afford to buy a house that is
over-valued.

3) I also think that as this "crash" unfolds, we will start seeing
class-action suits targetting banks/brokers who sold them mortgages they
couldn't afford, in a similar way to the lawsuits we saw on the back of
the dot-com crash.

So then it falls down to: Who should I short? WaMu seems an obvious
example, being the largest pure-play mortgage bank out there. I'm sure
that despite securitisation, they will still have risk on their balance
sheet, and also if the above scenario unfolds, the revenue slowdown
could be drastic. Also having a close look at Countrywide, but this
short will do for now. And also interested in the Mortgage Insurance
players, such as PMI/MGTC/Radian, but don't feel I know enough about
them yet. Any thoughts appreciated.