Great Trades

Great stock trades based on fundamentals and technical analysis.

Wednesday, March 25, 2009


Adding financials short, buying SPY puts

With the market retesting the day's highs amidst negative divergences and indicators (e.g., higher TRIN, wosening internals), our trading model is reshorting the financials shorts covered yesterday and buying S&P 500 April put options (SPY April 77 puts at around 1.33). Financials did not break yesterday's high, so our stops were not hit.

The SPY puts are meant to be downside protection for when we cover our shorts and go long, as we'll want protection for the downside when we reverse to long. A 1% position in the SPY puts will provide protection for a good percentage long allocation.

Open Positions: 25% short S&P 500, 30% short financials, 1% long SPY April 77 puts, speculative traders short an additional 15% S&P 500, short financials an additional 40%, long an additional 1% SPY April 77 puts.

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