Baidu September Option Pain Raised Again

I brought and closed the 2 Baidu September put contract I was holding. I net about $400 hundred on that deal. I didn’t wait for it to expire because that was quite a return given the small amount of investment ($600) in a short period of time. I feel there may be chance for me to sell put again at a good price before the option expiration day. It is the third time I make money on trading options. Baidu’s September put options pain was raised again at $320 currently. Looks like traders are not as bearish on Baidu as they were at the end of last month.

account balance 2009/09/05

My account balance is still short of my initial investment amount. But I am not eager to earn it back. I will just take it slowly. I feel comfortable with what I am holding and I think the day I recover my initial investment amount is not far. My focus recently is to get back to work. I really feel it is not easy to get a job nowadays. I feel the companies that are looking for people are pickier and they take it slowly. With 9.7% unemployment rate the companies that are hiring are sure to have a lot more choices than before.

I am not convinced that the recession is ended. I believe the problems of the banks are not over yet. I kind of think that the real estate market is better only because of the government’s incentive for first time buyers. Retail sales didn’t have major improvement. Further more I believe foreclosure will continue to raise as more option ARM reset occurs. I am maintaining a major portion of cash in my portfolio and waiting for opportunity.

Seems That Baidu is Able to Predict the Market Trend

I mentioned in my previous post that Baidu’s September option pain was $300. I checked it again and the option pain was higher a little bit at $310 at the moment. What would be your guess if you predict Baidu’s price movement without looking at the option pain a couple weeks ago when Baidu was about $340? I would probably think it would go up instead of retreating. Obviously option pain can really tell something. It can tell how institutional traders see a particular stock. If option volume on an issue is large enough option pain on that issue may be able to tell how institutional traders see the market overall.

I checked INTC and BAC September and October option pain. They are trending downward. They seem to tell the bearish sentiment of the market should be extended into October. However Baidu’s Oct option pain is at $330 which is higher than September’s. I am not sure if you agree or not but I have already convinced that option pain is a very good leading indicator on the underlined issue or even the overall market.

Anyway I didn’t trade for a while. I was busy looking for a new job. I add 200 shares of CSKI at $13.09 and I sold 2 contract of Baidu Sep 290 Put at $3. I was thinking if Oct Baidu option pain is $330 I wouldn’t mind to have it at $290 in the mid of September. There is $20 difference or about 9% difference between $290 and Sep option pain. I thought it could be safe. But again who knows. We will see how it goes.

Baidu Option Went Well and I Saw a War Between CSKI Management and Professional Short Seller

My Baidu put option went well finally. I collected the $420 option premium. In my previous post I mentioned I sold a contact of Baidu Aug 320 Put. The market took a deep a few days ago. I thought the put would end up in the money and I would be forced to buy Baidu at $320. I didn’t mind if that happen though. But magically on expiration day which was the passed Friday Baidu closed at $344, a price very closed to its option pain. Seems to me the option pain theory has some credibility. It is the second time I sold put and it is the second time I saw stock price closed near option pain on expiration day. Baidu’s September option pain is $300. Does that mean institution traders are bearish on Baidu? I really want to fine out next month.

I believe CSKI is under value and I did some research on the stock to find out what was holding back this company. I found there was a so called professional short seller spreading news that he had reason to believe CSKI management was providing incorrect financial information. He even has a web site to tell his story http://waldomushman.com/. I don’t know whether I should believe this rumor. Maybe the short seller used to be a potential investor on CSKI but got opt out and felt pissed off. That is wild a guess and I hope that is the case. CSKI has to proof to all investor that the short seller is wrong. I feel there is a war between CSKI’s management and the professional short seller. I am still holding CSKI and of course I hope CSKI management will win the war at the end.

I Have Got Harsh Comments From CAP

I haven’t update the stock traders blog for a while because I was busy. I took a look today and I found someone name CAP posted some really harsh comments. I deleted most of them. Sorry about that CAP! I hope it is not because CAP followed some of my trades and lost money on them. The information on my blog can not serve as investment or trading advice by any means.

I was wrong on many of my trading positions taken lately. Especially the put position on Baidu. I sold one contract of Baidu Put and I am still holding it. As I mentioned before Baidu likes to follow its home market, the Chinese stock market. At this time PST 1:47 AM 2008-08-19 the Chinese stock market dropped some 5%. Seems to me the US market will be ugly when it open later today. In fact US future already dropped almost 100 points. If Baidu drop 5% today it will be below $320, the strike price of my Puts. There is a very high chance that I will lost money on the Puts. I will know this weekend. I added another stock to my portfolio though. That is Monlia Healthcare(MOH). I bought it at $19.95, 100 shares. And I am losing money on that again. CAP said I almost lost money on every trades and can’t believe I am holding an MBA. That’s almost true.

Indeed I wasted a lot money getting my MBA. If I didn’t take it I would have saved a lot of tuition. If I didn’t take it I wouldn’t trade stocks and I wouldn’t lost $70K. Do I regret taking it? I don’t think so. I might have gain something not in monetary terms while I lost this money. At least I felt OK that I still survive after this kind of lost.

Under Valued Stock - CHINA SKY ONE MEDICL (CSKI)

It is very hard to find under valued stock nowadays but I came across a stock that I believe under valued based on its financial statements. The company I mentioned was CHINA SKY ONE MEDICL (CSKI). I found its business is simple and its operation and its book are very easy to understand not like those banks you don’t know what is true and what is not. I brought 200 shares of this stock today at $15 something and I am planning to hold it for a while. I sold my Fortress Investment holding at $5 today. I made about $350 on that stock.

As I mentioned I like CSKI because its business is simple and easy to understand. It produces and sells over-the-counter drugs in China. I went to its web site. It has a portfolio of over-the-counter drugs. So its sales are not relying on a single drugs and it has a pretty stable sales trend. More importantly it has a very healthy cash flow. It makes profit for the past four quarters and its trailing 12 month P/E was lower than 8. Forward P/E is a bit more than 6. Price to cash flow is less then 10. Net income grow was more than 30% for the past three years. I don’t think I can find a second company like this. It was under valued by all measure.

If you are reading this post I hope you can take a look at it and post what you think about it. Are you able to find any company comparable to this one? I am thinking about all in again. By the way I bought 500 shares Dry Ship again at $6.45 a couple days ago. Planning to hold it for a while too.

Can I Be All in Selling Baidu Put

Once a while I have this crazy thoughts. I did not have too much crazy act though. Evey time I act crazy I got burned. I mentioned I ever short 300shares of Well Fargo using margin capital almost 2 times of what I had in my account. Today I had a crazy thought again. I thought about using all the cash in my account selling Baidu August 320 Put. I really don’t think that Baidu will go back to $320 a share by August 22nd. If it does I believe it will create a buying opportunity. That is why I want to sell Baidu August 320 Put. At the end I only sold 1 contract for $420. I ever mentioned that selling put is a strategy to earning more than CDs rates if you have cash sitting idl. I still believe so. But we’ve got to be very careful picking the stock and option strike price when doing that.

After I sold Baidu put I saw my account requires me to remain $6,374 of cash. So if I want to be all in the maximum number of contract I can sell is 4 only. 4*420 = $1680. So if everything works out the all in strategy can net me $1680 by August 22nd. It looks like Baidu is not going back to $320 given the current market sentiment. But my experience told me it is very hard to predict. Market sentiment can have 180 degree change over night triggered by a single story. So I dare not to be all in. Anyhow I am holding two positions now. 500 shares of Fig (Fortrest investment group) and 1 contract of short Baid Put. The picture shows my balance.

As to Fortrest investment group. I feel it will reach 6 if the market remain positive. Blackstone drop a lot today and it seem to me it will go up tomorrow and so will Fortrest investment group. let’s see what happen tomorrow.

I Bought Something Today

I finally decided to buy something today. I bought 500 shares of FIG (FORTRESS INV GP LLC). That is not much and I am planning to hold it for a while. I just bet it will report a good quarter. I thought Bank of America would go down after its earning release but that thought was proven so wrong. BAC just kept going up with the other big banks and with the overall market. If I don’t remember wrong almost all data released these few weeks exceeded expectations. The Dow went from 8150 to 9300 in a few weeks. It turned out that we should be all in when the DOW was at about 8000. And it clearly showed a V share recovery at least during the past two quarters.

Thinking back I was quite stupid to liquidate my entire portfolio back in March when the market was close to its lowest. As I mentioned I had a portfolio of about 100K back in year 2000 and when I liquidated my portfolio I got back about 30k. I still keep track of my original portfolio and my original portfolio has MSFT, INTC, ORCL, JNPR, EMC and SNPS. If I didn’t touch it I would have 65K today instead of 27k. So I started to question my new ways of investing - day trading. What I see is that there is no one way of investing to work well at all times. I bet no day trader worked better than someone that bought and held for the past couple of quarters.

I ask myself do I want to go back to buy and hold? I don’t know the answer yet. I feel there are some companies worth to buy and hold. I am recently looking at something very conservative like Q(Quest Communication), OB (OneBeacon Insurance Group) and BP. I might be too late on OB because I feel its price is going to jump starting today. I am watching the big banks also. The big banks were doing very well but somehow I feel they are just very good at hiding the bad news or postponing them. I still think they are overvalued unless they resume a reasonable size of dividend payout which could be years away.

I haven’t report my balance for a while and there is not much change. My balance stood at $27,107 and I am holding 500 shares of FIG at the moment

Trade Options Again Today

Well Fargo released earning and exceeded earning expectation today. I thought it wasn’t able to do so. I think analyst will still need time to look at its earning component to decide whether it worth to buy going forward. In fact it was to my surprise that Wells Fargo was able to exceed expectation. It was to my surprise too that it stock price went down. Will see what analyst have to say on its earning report.

I brought some puts on Star Bug Coffe and US Bank. I am betting they will go down and I am at lost again.

Account Blance 2009/07/22

Account Balance Changes: -$254.98

Trade For Blogging Purpose

I shorted BAC again and made a small profit. In my previous post I was asked why I dump BAC with such a small change in price. The question really make me think a lot whether it worth while to trade in and out so often. I don’t know. I don’t find I am comfortable to hold anything.

I didn’t think it worth while to hold long position on BAC. The market is already up a lot. After this earning season I think we will see profit taking. I don’t see much excuse for the market to pump BAC with its unclear earning picture. In other words I feel BAC will have more bad news coming then good ones. How about the short side? Hold a shorted BAC position for a couple of weeks. I don’t want to hold short position either because I feel uneasy holding a short position especially after I missed a better short entry point above $13. But my reasoning keeps telling me that I may see BAC touching $11 soon. Please convince me if you think I am wrong.

It was like I traded this few days for blogging purpose so that I had somthing to talk about here. It should’ve been the other way around. I blog for better trading. I am searching for some kind of confidence that I had before and I still didn’t find it back. I have no confidence in holding anything.

Anyway Wells Fargo is going to report earning tomorrow before market open. It will be the focus of the financial sector tomorrow.

Account Balance 2009/07/21

Transaction 2009/07/21

Account Balance Changes: +89.80

Earning Potential is Ultimate Driving Force of Stock Price

I lost again all because I didn’t trust my own analysis. In a previous post, “Baidu is Holding up Well Today”, I mentioned that BAC’s earning was not good in fact. Because of general market sentiment I didn’t take the short side today and I bought into BAC today at $12.32. I thought it was low enough to expect a same day rebound. It didn’t happen. I lost again. Bank of America dropped big time today all because its earning potential. I guess BAC will make no profit for the rest of the year so did many analysts. Earning Potential is ultimate driving force of stock price and that is why BAC dropped. I guess BAC will see profit only when loan loss preserve start to decline. With rising unemployment it probably won’t happen still next year. $13 is probably the CAP for BAC in the coming months. I am very disappointed as I haven’t seen a decent green amount on my account for a long while.

Account Balance 2009/07/20

Transaction 2009/07/20

Account Balance Changes: -$160.30

Baidu is Holding up Well Today

Yesterday I thought about shorting Baidu at $318. I am glad I didn’t do so. Baidu is holding up above that price and didn’t follow Google dropping. I guess traders are waiting for its earning report on Jul 23rd.

I traded again today I was tire of watching. And I lost again. I short Bank of America at $13.30. It went up to $13.47 after that. I covered it when it fell back to $13.33. It kept falling after I covered it. I shorted it because its earning was not a good one basically. It reported profit only because the big gain on selling stake in China Construction Bank. The gain was more than 5 billions instead of 2 billions that I guessed in this post “Bank of America Earning Forecast and Financial Statement Analysis”. If the gain was 2 billions then Bank of America will show 1 billion lost as I was expecting.

Seems to me Bank of America will report no profit or will report loss for the coming quarters. I kind of think Bank of America will keep falling starting from here. But again I don’t trust my judgment.

Here is the trade today and balance.


Transaction 2009/07/17

Transaction 2009/07/17


Account Balance 2009/07/17

Account Balance 2009/07/17


Account Balance Changes: -$50.33

I Need a Break

Like I felt yesterday Intel’s result dragged up the market. I lost on the Baidu put and I sold them. I traded on GCI (GANNETT CO INC) today. I noticed this stock in my trading tool’s news window. I felt this company was kind of under valued even at today’s closing price but I didn’t follow this company for long. It reported 2nd quarter profit of $0.46 a share and its stock price was at $4.50 at close. Its forward P/E is quite low. I have no confidence on my own judgment any more so I am not going to keep it. I feel I just need a break. After more than a month of hard work I am still at loss. So I may not be trading for the rest of the week.


Transaction 2009/07/15

Transaction 2009/07/15


Account Balance 2009/07/15

Account Balance 2009/07/15




Account Balance Changes: -$260.59

Again Never Underestimate the Tie Between Oil and Energy Stocks

Yesterday I kept my 800 shares of PCX (patriot coal) in hope that it would rebound when oil price rebound. In early today there was report that oil price was held stead above $60 a barrel and PCX was up at around $5.45 not long after market open. The DOW was up 40 some points at the time. I thought that was it and the rebound of PCX was disappointed to me. I was eager to find a chance to sell PCX. I sold it at $5.47 early in the morning. Looked at how it closes. PCX was at $5.63 and the Dow was only up 5 points. So once again don’t under estimate the tie between oil price and energy stocks. Energy stock can be affected by oil price more then by the general market. So this is a bad move I made today. I brought these 800 shares at $5.76 a couple days ago.

I did make a good move. I bought some Bidu (Baidu) puts and sold them later net about $120. So my total gain today is about $250. Not a lot but my account is back above my initial capital of $30,000. I have learned to be happy with small gains and I love this thinking “Go slow. Preserve capital. Learn the fundamentals. Achieve consistency”


Account Balance 2009/07/09

Account Balance 2009/07/09


Stock Trades 2009/07/09

Stock Trades 2009/07/09

I feel the overall sentiment of the market is still bearish. The market is waiting to see how the financial sector was doing in second quarter and is very cautionary. I bet the University of Michigan Consumer Sentiment Index tomorrow will not have a good reading since unemployment rate is still going high. And I feel good holding only cash.


Account Balance Changes: +$259.67

Market was Neverous About Alcoa Earning and so was I

Today is a perfect trading day for day traders. It is perfect because it has multiple ups and downs and that is what a trader is looking for. If a trader can master all this ups and downs then great profit can be made. But I didn’t make much profit. The market was very nervous about Alcoa’s earning and I was very nervous about it too. My nervousness made me avoid two short attacks on BAC. I bought 1000 shares of BAC at $11.95 and sold them at $11.98. I later bought 1000 shares of BAC again at $11.78 and sold them at $11.84. This two trades only net me $30 in total. I sensed the nervousness when I sold them but I dare not to take the short side. My nervousness also make me miss the big run up close to the end of the trading day. I didn’t regret for not taking the short side but I regret for not buying into BAC again when it drop below $11.50. I sold DRYS (Dry Ship) for a profit and I trade on PCX(Patriot Coal) to make some profit too. At the end of the day I still hold 800 shares of PCX and my account is up $134.61. Not a lot but I feel good that I was able to avoid a loss on trading BAC


Stock Transaction 2009/07/08

Stock Transaction 2009/07/08


Account Balance 20090708

Account Balance 20090708


Bac Stock Graph 2009/07/08

BAC Graph - Shows where the two BAC trades were taken


Account Balance Changes: +$134.61

Keeping PCX While Oil is Dropping Means I am Disconnected From the Market

Yesterday I was planning to sell PCX and DRYS today so that my account could be up above my initial capital. I saw this opportunity in early morning but I didn’t act on it. I was expecting more. Actually news already pointed out early morning that oil was continue dropping., It made sense that it would put pressure on energy stocks however I didn’t pay attention to it. I kept expecting a 4% bounce backup on PCX after yesterday’s almost 10% drop. It certainly wouldn’t happen when oil was continue dropping. I just didn’t sense the connection between oil price and energy issues. That’s definitely another lesson learned.

There is always ups and downs in a trading day and there is always opportunity to make profit. To train myself to make more right decisions than wrong is the purpose of the “Stock Trading Lesson Learned” category. I also watched Baidu today I wanted to trade on its call options and I set an order to buy its Jul 280 Call at $6. The price was set too low however. My account was down almost $300 at today’s closing price

Account Balance 20090707

Account Balance Changes: -$272.80

Cash is King But I Can not Withstand the Temptation

Last night when future was down more then 80 points I was expecting the stock market to drop at least 100 points at close today. So I took profit when I saw opportunity. I sold BEAT and USB at a profit. I traded on FAS but lost a little bit. At market close when I saw the DOW was up 40 some points and some of the hard hit stocks didn’t bounce back I couldn’t withstand the temptation and bought a couple of them. I bought PCX (Patriot Coal) and DRYS (Dry Ship). I think if the DOW tomorrow can remain unchanged or up a little then PCX and DRYS may rebound nicely. I didn’t buy a lot though. I am still bearish on the market with the earning season coming. The following are the transactions today.

Transactions 20090706

My account was up about $100 at closing price. I believe at some point tomorrow I will have the opportunity to sell all my position to make a profit and my account can be up above $30,000 which was my initial capital.

Account Balance 20090706

Today I focus on a couple news related to Bank of America. First is “BofA’s bad loans up 10% in 2Q”. I think this is the news that caused BAC tanked today. Second is “Whitney’s New Take On Modified Loans”. Meredith Whitney thinks that with the held of regulation and government incentive loan modification will soar and that will lower loan loss reserve which will benefit banks in near term. I don’t know how this two factors will play out in Bank of America’s second quarter income. I remain cautionary on Bank stocks. Bank of America ever dropped below $12 this morning and quickly bounce back. I was busy on something else and didn’t get this opportunity.

Account Balance Changes: +$118.29

Paid 180 Dollars of Trading Commission in a Single Day

I paid 180 dollars of commission today. As you know I am using TDAmeritrade. Its stock trading commission is $10 per transaction. How did I get to that far? Well I thought trading option is also $10 per transaction. So I bought 100 contracts of Microsoft Jul 24 Call option at 0.32 per share and sold them at 0.36 or 0.37 per share. I thought I was able to net about $400 on that transaction. In fact I was only able to make about $230 on that.

MSFT option commission

It turns out that there is $0.75 commission per contract in addition to the 10 dollar transaction fee. I was trading 100 contracts so there was $150 extra commission in addition to the $10 transaction fee. That is a lot and that is something I didn’t know before I did this trade. It was lucky that I was still able to make money. A lesson learned from this is when dealing with option it is better to trading those options that prices are high. If you know any broker that offer low commission on option trading please let me know

It is a big down day. Unemployment number is not good. But my account was up thanks to the option trade. I am still holding 500 shares of Beat that I bought yesterday and at the end of the day I added 500 shares of USB (US Bank) at $17.13. I became more willing to take the long side. But I wish I shorted Bank of America this morning.

Acount Balance 20090702

Account Balance Changes: +$114.81

PS
I have to revise the gain today to +$94.81. Closing price of USB came in a bit late and it turns out to be 17.04 instead of 17.08.

Beat just Got Beaten up

Weird title isn’t it? Today I traded a stock called CardioNet Inc. Its stock ticker is “Beat”. Its stock price got beaten up today dropping more than 40% because of lower earning forecast. I got in at $9.59 and sold it at $9.90. Close to the end of the trading day I got in again at $9.60 so I am holding 500 shares of Beat right now.

In its yahoo profile it says that CardioNet, Inc. provides ambulatory, continuous, real-time outpatient management solutions for monitoring relevant and timely clinical information regarding an individual’s health in the United States. I have no idea what kind of business that is about. I did check on its financial statement and this company had a problem managing its ever increasing receivable and cash out flow. It is very suspected when receivable grows faster then sales but I was tempted by its 40% drop. Hopefully it will be up a bit tomorrow.

account balance 20090701

My account is up about $100 today. Dropping 40% in a single day seems a lot to me especially for a stock that has never traded that low. I am hopping it will bounce back above $10 in a couple days.


Account Balance Changes: +$109.93

PCX May be Short Term Bottom Out

I sold my 1000 shares of PCX (Patriot Coal) at $6.47 this morning. Net about $250. So my account is up a little bit.

PCX launched a secondary offer not long ago with offering price at $7.90. Its stock price started dropping before the offering from above $9 to $5.60 a couple days ago. I don’t know whether the secondary offering was a successful one. But I feel its stock price is stabilized. Seems to me it has a good chance to bounce back above $7 and I feel it is safe to get in around $6. It dropped to $6.08 this morning and I hope it will do that again tomorrow. I sold PCX because I am betting ADP Employment Change tomorrow won’t be good. Just a wild guess and I will see if I can get in pre-market if PCX really drop tomorrow morning.

I am bit forgetful. When I bought PCX I was planning to wait till tomorrow after the window dressing effect. I only recalled this when I read my previous post. I also notice PCX has a good volume today. Hopefully I will not miss out a good run up tomorrow.

Account Balance Changes: +$249.81

Watched the Market All Day But Didn’t Make a Move

It is a very unproductive day for me. I watched the market all day but didn’t make a move because I wanted to take the long side. I wanted to buy something but didn’t find anything attractive. I wanted to buy PCX again at $6.15. The order is still hanging around I think. Let me know if you see something you think attractive so that I can at least have something else to look at =)

Bank of America was closed at $13.14. It went up to $13.25 after market. Too Bad I sold it already. I guess I really have a bearish mind. Citi Group’s downgrade easily caught my mind. Before the conversion I believed that BAC would be trading above its conversion price and that was why I was willing to buy 2000 share of BAC at $12.50. The downgrade destroyed my belief.

There are a number of analysts that are bearish about banks. News related to bank and real estate sector are not so good actually. Malls are going out of business. More regional banks failed, etc. However market sentiment seems still bullish on BAC. I am thinking if it worth to hold BAC until earning release. My mind right now is waiting to see BAC below $12.50 again so that I can get in. Not sure if that is going to happen.

PS
Not long after I posted I bought 1000 shares of PCX at $6.18 in after market. See the following screen short of PCX right after I bought PCX. It shows the after market price at $6.18. It proved yahoo’s real time quote is really real time. =) Not sure if it this buy is a good move. We will know tomorrow.