More upside to come?
The market’s continuing strong rally from the recent lows may now be reflecting a mixed trend picture (I’m away from my main PC and unable to run the program that calculates this). While a “breather” or pullback might be expected at any point, the upside potential of this move would still appear to be significant given the extremes from which it began.
New positions
Bank of America (BAC) – On Tuesday I sold some February 42.5-strike calls against my long position in BAC (purchased 1/22/08) as the stock continued to rally strongly with the rest of the financials. I wish I had waited a bit on this, as the stock’s closing price on Friday was already over 45.
CBS Corp. (CBS) – On Tuesday I sold some February 25-strike calls against my long position in CBS (purchased 1/22/08) as the stock rallied with the rest of the market.
Citigroup (C) – On Friday I sold some March 32.5-strike calls against my long position in C (purchased 11/19/07) as the stock continued its strong rally along with the rest of the financials. This is intended more as a protective move in this position against the likelihood of an eventual pullback (or retest of the lows) from these or higher levels and will only lock me in at break even or a slight profit if the stock is called.
Group 1 Automotive (GPI) – On Monday I sold some February 25-strike calls against my long position in GPI (purchased 1/22/08) as the stock rallied along with the rest of the market.
MGIC Investment Corp. (MTG) – On Monday I sold my long position in MTG (purchased 11/19/07) at a loss. This was both a defensive move and to free up capital to be able to take advantage of far better opportunities. I missed several opportunities to exit this position at a profit earlier on, and since then the fundamentals have deteriorated. Despite taking this loss and that from a small position in Ambac, my account as of Friday is currently within a hair’s breadth of its all-time high (reached last December).
Microsoft (MSFT) – Last Friday I sold some February 30-strike puts on MSFT as the stock sold off sharply on news of the company’s $44 billion offer for Yahoo.
Paychex (PAYX) – On Tuesday I sold some February 32.5-strike calls against my long position in PAYX (purchased 1/22/08) as the stock rallied with the rest of the market. Again, another defensive move against the possibility of a pullback rather than one designed to produce or add to profits.
Watchlists
I’m away from my main computer and unable to run my usual watchlist scans this week.
