It was a spectacular week in world markets with the Dow-30 and the S&P 500 just a few percentage points short of all-time highs. Meanwhile the broader market as measured by the Russell 2000 scored new all-time highs in 6 of the last 7 sessions as reflected by ETFs IWM and IWN. Fortunately, my portfolio participated and has already exceeded the highs of 2007 and broken out to new all-time highs.
It reminds me of a story heard back in the 1990's as told by the SOES (Small Order Execution System) bandits. Due to the rules at the time, they were able to hit the bids and offers of the market makers who were obligated to quote and automatically execute on 1000 shares at a pop. At that time, large cap stocks were quoted in fractions with a minimal tick of 1/4 or $250 on 1000 shares. When a position worked in your favor, you made $250 a second and could easily be up a few thousand dollars by 9:45 AM. And at that point, you could take the rest of the day off and go fishing!
As for me, I made $250 a second at several points during the week, but all I had to do was click the refresh button on my browser. There was no crazy risk taking, mostly just position trading. I also had a few spectacular trades as follows:
- Bought the FB 30 calls for 90 cents and sold them at $1 about 10 minutes later. That's a 10% gain in 10 minutes!
- Bought the AAPL 485 calls for $29.90 and sold them for $31.50 later that day pushing my TradeStation account to a new high up about 2.5% for the year.
- Sold my position in IBM stock at $207 on a huge earnings-related spike.
In the interest of fairness, all was not good and I had possibly worst timed-trade in my entire trading career as follows:
- Took a small position in AAPL stock at the close of Tuesday's trading ahead of earnings.
- Position size was 10 shares in 1 account and 15 in the other. Total exposure ahead of earning, plus or minus $25 per point move in the stock.
- Stock cratered 50 points and I lost $1250 overnight on that trade! I took my lumps and sold early on the day expecting more carnage ahead.
Despite the fiasco in AAPL, most of my other positions worked out well including nice rallies in CTRX, DNKN, FB, HRL, NEOG, RIMM, and TCX. Most of these are fast-growing mid-cap stocks, so they benifitted from the rising tide of the broad market. Finally, to cap off the week, I went out long the Priceline PCLN Feb 1 115 calls and made nearly $500 (unrealized) in the last 10 minutes of the trading day! Thanks John Carter and looking for an opening gap on Monday to take profits.
I'm almost starting to feel guilty making money so easily while other people struggle all day to make $100 or less. But I am reminded that life is a zero-sum gain and I have stepped up my spending (particularly for local goods and services) to increase the velocity of money and do my part to grow the economy.
One commentator reminded me that in some years we make 30% a year returns in the stock market. 2013 could very well be the year. And if that happens, Financial Independence could be much closer that I expected.
That's enough for one week. Get some rest and check back later for Range Bands part 2.
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