Facebook turning an 'about face' coming back strong on heavy volume.

Alright, I still don't have any money to put into this trade but if I did would have already gained some upside from where I called for a $FB rally. The stock is up almost $2 from where I called a turn. There is a good looking chart that is showing a support level beginning to form in all the right places. 

What I think happened here is that on the 12th the stock gaped up and broke a weak resistance level that has now formed the support. Though this is a VERY short period of time to be basing any technical analysis on I think it is good enough to show an upward trend that is likely to hold for a while longer. 

This one is still risky because this chart does NOT have very much data to base many conclusions off of. But I think I was right about the rally a few days ago and I think it will continue to the $26 price point over the next several weeks that I called for originally. 

Off-ice Depot about to be On-Ice if the chart holds. $ODP PUT options holding steady.

$ODP Office Depot is still holding on to its elevated position where it jumped after the fancy new investor came in and inflated the price. It doesn't belong where it is and I'm still expecting the fall but we may have developed a bit of a 'short squeeze' on this one and have to wait it out.

One of the reasons I am so confident that the stock will come down is that over the last 3 years the stock has been stuck in the same channel and not come out. A long slow decline has been persistent with the stock occasionally flirting with cyclical highs only to return to the pattern in which it has been stuck. 

Granted, the jump we've seen off the support level has been pretty wild. But it was not based on anything fundamental to the business. If $ODP were going to break out of a multi-year resistance level it would have to be on some big news that changes the nature of the stock. Some guy coming in a buying 13% of the stock and office depot hitting their numbers for once does not constitute a fundamental change in the declining nature of the business. 

One of the great things about options is that even though the stock has gone up since I bet against it with $4 PUT options the value of the options has barely moved, in fact I'm still at even money on it. One of the reason for this is that I got what is called 'Deep In The Money' put options. Meaning that the strike price was so high above the current stock price that the stock would have to move a ton to get me 'out of the money' or to the point where I couldn't execute on my $4 PUT.  Deep in the money calls and puts tend to lose money and be less volatile overall than 'near the money' options. Plus with options investors are holding on the puts because very few people think this is going to hold. 

It probably would have fallen already if their wasn't some sort of short squeeze going on.

I'll let you know how it goes!

Thanks for reading!

Straight from the Chart 

Disclaimer:

Just to be clear, nothing that I'm posting on this blog is in any way advice that should be followed by anyone else. All investment decisions should be made carefully by all individuals taking into account their own financial situation and appropriate levels of risk. Do not take anything I say for anything more than it is, opinion, speculation, and woefully undereducated guesses as to how I think a few stocks are going to perform.

SPLS 42% gain in one day on Jan 2013 Call $17.50 Strike

Thought it would be good to inform everyone as to the options I am currently holding in interest of full disclosure as well as to let you know the stocks I think have long term positive moves ahead of them. But most of all I wanted to show the 1 day gain that happened on SPLS today!

How about a 42% return in one day of trading! A 5% gain in the stock price gave a 42% gain in the option price! Again, the amount of money I am trading is miniscule ( student, no job, no income ) but if I traded out now I would net about 31% on my total investment. Of course with trading commissions that would be cut in half, so I'm holding on for a long term play with the stock moving toward $19.

Remember, options are risky. A bad day of 5% down can have just as large a negative effect as today was up. But I will take a 42% day any chance I get!

As for the other holdings, PEP continues to look very promising. I got in on the initial drop so my returns are down for now. This is a long term play so I'm not really worried if this one takes a year to show profit, but PEP is still showing 6 days of momentum after the bounce I wrote about last Tuesday. At the time I wondered about lowering my cost basis and doubling down, had I done that I would be close to profit already.

Thanks for reading,

 Straight From The Chart!

Disclaimer:
Just to be clear, nothing that I'm posting on this blog is in any way advice that should be followed by anyone else. All investment decisions should be made carefully by all individuals taking into account their own financial situation and appropriate levels of risk. Do not take anything I say for anything more than it is, opinion, speculation, and woefully undereducated guesses as to how I think a few stocks are going to perform.