StockTwits for Idiot Retail Investors: Week #4

Quick post, light on the analysis. Too much time Superbowling. I also spent a lot less time tracking the market this week due to a lot of other commitments, so this one is light on the StockTwits analysis. I’m kind of settling in that it takes about four hours a week just to do the normal research and trading work, and at least another two hours of actively following the StockTwits community to derive value, validation and ideas.

INTC Win

Closed out a long April $15 call position in INTC early last week for a 36% gain. I had initially entered with a lot of calls at .60, doubled down after a drop to .50 for a cost basis of .55, then sold it all Tuesday for .75. I might have been able to let this run a little longer, but I think I ended up pretty close to the optimal position. This is the second week I’ve flipped INTC calls for gain while being net short against the market in my trading account. With INTC closing at 12.90 Friday, I may look to go back to the well one more time, with the April 15 calls trading at .49 now, I will probably stake out a small position with a limit buy.

The Good: AAPL and BBY Puts

I also went with AAPL July $80 puts this week; they’re slightly up on the week (about a half-percent). I almost was able to average down. The Best Buy (BBY) June $25 puts I picked up at 2.50 are up 14% as of Friday…these are the ones I’m going to let run a little. They represent an averaging down on a core short BBY position (which is still underwater). Now that the big game is over, it’s hard to see what’s going to drive business for BBY until next Christmas.

The Not So Good: X and MA

My US Steel (X) puts are not doing well. I heard about a huge slump in Asian manufacturing late last week and thought that might be enough to take it down in sympathy, and it did recover some of the rather large loss I’d already incurred. Cost basis on July $20 puts is $3; the puts are trading at $2.45 now. I don’t have a lot of conviction around this one, so getting out at even money or a small loss may be the best course.

A few days ago I posted why I don’t like credit card companies. The basic premise: they’re a business that really works against their best customers, they’re exposed to economic downturn, and they’re a necessary evil. So I went with Mastercard (MA) July 115 puts which promptly got hammered and now sit down 6.7%. Discover Financial Services (DFS) might have been a better one to bet against.

In general, I have not faired well with any of my financial company trades, being wrong on the timing at various times with C, WFC, JPM and now MA, losing about 4 times with 2 wins. This is compared to a rather remarkable winning percentage with AAPL, INTC and AMZN. The sample size is still small, maybe 12-15 tech trades to 5 or 6 in the financials, but my sense seems to be stronger sticking with AAPL and INTC. Consequently, it would take a crazy DFS price before I’d look to add another position. I haven’t given up on MA yet, though. The financials are tough for me because the fix is in, so you have the government putting in all these short term measures which stretch out the time it takes for gains the be realized, while not providing clear opportunities. Ironically, the government interventions seem to introduce more perceived volatility than they take out.

The Missed: PALM AND SRS

I’ve had this standing order to buy PALM May $5 puts for about a week now, and it has not filled yet, even though the spread has come down to put my bid in contention. I’m holding the line on this one; I think if PALM hits 8.50 (or if volatility increases) I may be able to fill this, but I fear now that these puts are too thinly traded to be a good investment.

I didn’t buy more SRS when it hit $49, nor did I sell more premium when it was in the $60s. I could do either or both this week, depending on how it goes. I’m really liking my long term prospects on SRS now; the buzz I pick up around how this recession is progressing leads me to believe that the commercial real estate domino is teetering. Hard to explain this intuition or pattern; it’s almost a deja vu feeling around the talk 2-3 months before some of these other massive failures occurred, only this time the early warning system is around commercial real estate. Consequently, I’m going to continue to hold SRS and sell premium on half of it on the way up. If we get an SRS eruption, this could be a huge win. I’m very interested in buying more on the next mini-rally of the market and if it drops into the 40s again. I know leveraged ETFs suck, so if there’s a better way to do this, let me know.