Putting my theory to my test, and seeing if the "pain trade" means more upside I am buying a modest 3.5%ish index position via SPY calls. September's expire at end of week so I am going with October so I don't have decay killing me. My thesis is once we clear the highs of the day 1130 will be a slam dunk. We have not had a reversal day in ages so it would be atypical to have one...it seems like computerized trading - once it has its mind set does not change directions. Hence once we get going to new intraday highs the momentum should be up yet again.
I might sell these by end of day if 1130 is broken with conviction today as finally the bears should throw in the towel. At that point, I'd be interested in being more aggressive on the short side... (I was hoping for a gap up this morning in fact but it was not to be had). As always these index purchases with SPY calls or puts are very short term oriented plays to hopefully add some frosting to the performance cake. I have done very little the past 8-10 weeks as the market has been a choppy place if misdirection and confusion.
For now that is my story and I'm sticking to it.
EDIT 1:20 PM - I sold these calls as the market did not break over S&P 1126 as I had hoped. Nothing easy.
Long SPY 113 October calls in fund; no personal position
Tuesday, September 14, 2010
Bookkeeping: Bought October 113 SPY Calls [Sold]
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