Tuesday, January 16, 2007

Adding to the short DOW position with Jun options

Just sold DOW 12,000 Jun calls @ 864 in £5/point...
 
...and bought DOW 12,000 Jun puts @ 173.2 in £25/point.
 
Net premium I pay is £10 (that's a tenner, not £10k!).
 
 
Will give me a nice leveraged position on the downside, need about a 4-5% drop in the DOW for it to really get going. If the DOW had a 5% drop fairly soon, I'd be up about £4,200, so think the target should be for a bit more than that.
 
Complacency rules supreme at the moment. Lets get earnings season going with some bad numbers out the homebuilders and mortgage lenders, and some weaker growth out of, say, Intel, and we can get the downward momentum going.

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