Friday, October 30, 2009

New Trade - XOM put diagonal by Joseph





Fundamentals:
1. XOM released its earnings report on 10/29/2009. The stock drops after the earnings.
2. EX-date for dividend on 11/11/2009. In the past year, after the dividend date, the stock drops $2- $6.
Technical:
1. MACD sell signal, RSI at 49, and 5ema below 20ema
2. 50 sma at 70.6. Might serve at support
Expectation: Price is between $73 and $70 at 2009 Nov expiration.
Trade: Stock at $72.43
BTO 2010 Jan 75 put at 4.83
STO 2009 Nov 70 put at 0.86
Net debit 3.97
BE at $73.2
Delta -28.
Maximum risk: $3.97. Max profit: $2.1.
PE: 20% gain
SE: Roll short call up/out if very bullish
Posted by at

7 comments:

  1. InnovestorOctober 30, 2009 at 11:46 AM

    Joseph,

    Thanks for the trade.

    I think this is a brilliant trade.

    The stock is having a resistance around 73.5 and a support at 70.

    Thus it is a high probability trade

    ReplyDelete
  2. josephOctober 30, 2009 at 6:49 PM

    One correction: on SE, it should be roll short put up/out if very bullish

    ReplyDelete
  3. josephNovember 4, 2009 at 7:28 AM

    XOM supported at $71.16. Today it formed morning star candle pattern. It means that the downward movement likely ends. Adjust the trade:
    Roll Nov 09 70 short put up and out to dec 09 75. It is a put calendar now.
    put. Credit 3.49.
    New cost base:0.48
    new BE (Dec expiration): 72.08 and 77.97

    ReplyDelete
  4. josephNovember 4, 2009 at 8:34 AM

    I should have waited one more day to do the adjustment.

    ReplyDelete
  5. josephNovember 4, 2009 at 1:19 PM

    Lessons learned today: One day does not make a trend.
    The candle pattern did not complete a morning star pattern.

    ReplyDelete
  6. InnovestorNovember 4, 2009 at 1:40 PM

    Joseph,

    I think the overall market may still have some leg to push the SPX to 1100.

    What I am not sure is whether it will lose steam by option expiration this month. So, I avoided any bullish positions until situation are clearer.

    XOM actually demonstrates some bearishness - it is peaking 74, MACD has turned negative, RSI is also negative, MA also cuts negative.

    For big stock like XOM, I will probably be interested if they next show some support probably at 60-62 level. But the overall market may still push the stock up in the next 2 weeks. So your trade may not be a mistake.

    This stock has a lot institutional following who are trying to generate income.

    ReplyDelete
  7. josephNovember 23, 2009 at 8:45 AM

    Close the trade today at 0.8. Cost base 0.48.
    Profit is 0.8/0.48= 0.32.
    66% ROI for this trade

    ReplyDelete

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About Me

An engineer by training graduated with B.Sc (hons) and MBA from Strathclyde university in Glasgow, Scotland. Started as an engineer in R&D for 3 years with Philips. Then, worked with DuPont for 13 years. Last job was VP, Marketing for Asia Pacific. Left to start a number of companies in various segments which include a large electronic distribution, a VoIP provider, an internet trading portal in Australia,and an executive training consultancy firm. Have listed companies in NYSE, Australia Stock Exchange, Singapore Stock Exchange Main Board. I was on the Board of Directors for 1 company listed in Thailand, 1 in Singapore and 1 in Australia. Was in the senior management of a company listed in NYSE. Still holding major share positions in the VoIP and Executive training companies. Both are private companies.

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These articles merely reflect the opinions of this author and are by no means a guarantee of future economic conditions, market or stock performance. Though the author strives to provide accurate and relevant data, he sometimes relies on external sources and cannot assure the reader of the accuracy of these external sources. Additionally, these articles are provided for INFORMATIONAL PURPOSES ONLY and are NOT MEANT to provide investment advice to anyone. For investment advice, please consult your professional adviser.