What Happened with CSX?

by Jeff on October 27, 2009

tog_logo_bw_new copyIn a nutshell, nothing. Yesterday had a positive finish compared to the previous day and I was unable to get in with a cost basis under the support level of 41.

Today is a different story. The stock is down over 1.00 (almost 3%) and showing signs of weakness. I want to see what happens when the price hits that 41 level. If it continues down, the next major support level is at 36.35, which was resistance on 12/08, 1/09 and twice in 6/09. If it just tests 41 and bounces back up, then I might just jump in with a Naked Put.

So now it’s back to the CallWriter list for another prospect. It is going to take time to build a stable of high quality stocks with the right entry points.

I entered a Bear Call spread on RIMM today. They are in a confirmed down trend and the stock gave me a confirmation that the chances are good that it will continue down, or at least stay well below the 70/75 Bear Call spread strike (detail on the In Play page).

Normally I don’t like to trade stock that have a gap to fill, but this one doesn’t seem like it will be filling it anytime soon.

20091027-rimm-chart

For those of you who might have noticed, I closed my GS Bull Put spread yesterday for a very small loss. It just wasn’t looking good and continued to move against me. I was worrying about it before I went to bead and thinking about it when I woke in the morning. When that happens, it’s time to get it off my mind.

20091027-gs-chart

My “On Deck” list for spreads contains the following:

GOOG – it might be ready to come back down out of orbit, like BIDU did today. Looking for a Bear Call on this.

POT – made the right move today for a Bear Call, but right now it’s in no-mans land between a good return and high probability. I hope that another down day tomorrow will put it back in the sweet spot.

There are others, but I will probably put them back in my regular watch list after today.

Thanks for reading and your comments/suggestions/corrections are always welcome.

- Jeff

Tagged as: callwriter, Cash Secured Put, credit spreads, Naked Put

  • Brad

    Just discovered your website via the new Google Reader “recommendations,” must say nice, clean design, and well-written content. I’m a PT options trader myself and glad to see you using TOS and Prophet. While not the outright cheapest commissions, there is no better platform for trading options – they put out tons of great resources. Looking forward to reading your posts!

    One suggestion for the future: you may want to consider disqus for the blog comment system. They offer a lot of control and it’s pretty standard across trading blogs.

    Keep up the good work!

    -Brad
    @woollyllama

  • Jeff

    Brad,

    Thanks for the comments. I spent a lot of time searching for a theme for my blog when I decided to go self-hosted. I had to pay for the Thesis theme but it had the features I was looking for. I too don’t like a lot of clutter and I try to keep it simple. I also like to write – I spent 25 years writing software business requirements – sometimes I can’t keep it in, but I don’t have the ambition to write a book.

    Good idea with disqus, I will check it out.

    I am looking forward to more comments from you.

    - Jeff

  • Bruce

    So how do you distinguish between bouncing off trendlines and an overall bump from general economic news ie: GDP report?

    Today is a sure sign of relief, but yields clouded messages for individual stocks.

  • Jeff

    Bruce,

    I don’t think you really can. An assumption could be made that if the stock you are looking at follows the market, then I guess you could say it’s just news-related, but otherwise not. Essentially, does it really make a difference? In my trading plan I am ‘required’ to wait for confirmation of a bounce, and if it’s from economic news, then there should not be a confirmation. Also, bull and bear flags should be at least 3 days – otherwise they may not be valid.

    - Jeff

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