Monday, April 23, 2007



As I mentioned on Friday, I have bought a June 35 call. There are a few reasons why I feel this is a correct trade.

- First off, I know what my max loss will be. Entries into a market are important, but if you don't know how or when to exit, you won't do very well.

- Secondly, this stock is technically ready to move. The 200,50, and 20 day averages are all together. The Bollinger Bands are within 1 1/2 points from eachother. That is a very tight range and a good indicator of upcoming volatility. There has been a 50% Fibonacci retracement from 38 back to 35 after a move from 32 to 38.

Earnings were good and positive. They mentioned a low exposure to the subprime sector. There are also 20 Million less shares shorted than in March.

These things combined with my rules for what I buy told me that this particular option is the one with the most reward for the least risk. I have my stops put in and I feel good about this trade.

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