Update 3 - Re: Our Trades on the Mini-Sized Dow Options

By: Patrice Johnson | Mon, Jun 23, 2008
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6/23/2008 8:25:43 PM

Greetings J.E.D.I.,

Welcome to The J.E.D.I. Trader.

To learn more about my Stocks, Options & Options on Futures Trading Service, click here.

LONG TERM TREND SIGNAL: DOWN

INTERMEDIATE TERM TREND SIGNAL: DOWN

STOCK, OPTION, OR FUTURE UNDER ANALYSIS:

MINISIZED DOW FUTURES INDEX SEPTEMBER 2008 13,000 CALL OPTION AND SEPTEMBER 2008 11,500 PUT OPTION

TICKER SYMBOL FOR SEPTEMBER 2008 MINISIZED DOW 13,000 CALL OPTION: YMU813000C

TICKER SYMBOL FOR SEPTEMBER 2008 MINISIZED DOW 11,500 PUT OPTION: YMU811500P

EXPIRATION DATE OF OPTIONS CONTRACT: SEPTEMBER 19, 2008

EXPIRATION DATE OF FUTURES CONTRACT: SEPTEMBER 18, 2008

TICK SIZE: 1 point = $5.00

INITIAL MARGIN: $2813

MAINTENANCE MARGIN: $2250

FIRST NOTICE DAY: Not Applicable (N/A) - Minisized Dow Index is cash settled.

This e-mail is to alert you that our "BUY TO CLOSE THE SEPTEMBER 2008 13,000 CALL OPTION (Ticker Symbol: YMU813,000C) was filled at $62.00 for a gain of $840.00 and our ORDER TO SELL TO OPEN another SEPTEMBER 2008 13,000 CALL OPTION was filled at $56.00 on Monday, June 23, 2008."

Our breakeven points before this trade losses money is as follows:

Our breakeven point for selling the September 2008 11, 500 Put Option at $250.00 on June 4, 2008 plus commissions of $29.32 is $11,279.32 ($11,500 minus $250 + $29.32). That is this position will begin to lose money if the minisized dow falls below $11, 279.32 ($11,223.32 if we maintain the new call option position at the same time.) Our breakeven premium is $244.00

Our breakeven point for selling the September 2008 13,000 Call Option at $56.00 plus commissions of $29.32 is $13,026.68. ($13,000 plus $56.00 minus $29.32 (commissions). That is this position will begin to lose money if the minisized dow rises above $13,026.68. ($13,276.68 if we maintain the put option position at the same time) Our breakeven premium is $50.00.

My fellow J.E.D.I.,

Please see weekly chart below of the Mini-Sized Dow Index dated June 20, 2008.

WEEKLY CHART:

While volume is increasing on the down moves and declining on the up moves in the intermediate term, volume appears to be diminishing on the down moves in the long term (see volume above for the period of October 2007 to the present). This suggest that selling pressure is diminishing over the long term and that an upward bounce is likely some time in the future that will cause a bottom in this index. When? I cannot say. In otherwords eventually the bears will go into hybernation (they always do, just before Winter) and the bulls will make a comeback for the long term!

I do not see the markets bottoming anytime soon, however.

Good Luck!

And remember, follow THE J.E.D.I. WAY, and the force will be with you.

Best Regards,

 


 

Patrice Johnson

Author: Patrice Johnson

Patrice V. Johnson
The J.E.D.I Way

Patrice V. Johnson

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