Yong-Long Lai

Not a fantastic month, at least i know next month is going to be a better one!

Anyways, here’s the summary
JBM- profit $790.6 (put spread)
QBE – profit $801.8 (put spread)
OSH – profit $1,420.26 (naked put)
FXR – profit $1,836 (CFD)
NVDA – profit $879.82 (covered call) – AUD Equivalent ($1,002.99)

WPL – donated $4,863.3 (put spread)

This month profited $987.83

So far covered calls seem to be more profitable and much safer… something to think about

Looking at this trade more carefully, I clearly missed the double top warning signal. I will watch out for that next time!!

My Initial trade
The Trade (WPL) – Traded on 23rd July 2007
Sell Jul $45.5 Puts @ $0.31
Buy Jul $45.0 Puts @ $0.18

Expiry = 26/07/2007
Share/Contract = 1000

I closed this trade on 25th July 2007
Sell Jul $45.5 Puts @ $0.795
Buy Jul $45.0 Puts @ $0.445

All up this trade cost $0.22 – (20 x 1000 x 0.22) = $4,400
After brokerage: $4,863.60

I didn’t roll this trade out because the market is still a little unsteady at the moment.

ANZ was trading at the upper strike today, market has been very volatile again… and its one day before options expiry so i’m a bit cautious for this trade and decide to not take the chance and roll it out for the next month.

The Trade (ANZ) – Traded on 13th July 2007
Sell Jul $29.26 Puts @ $0.195
Buy Jul $28.78 Puts @ $0.08

Expiry = 26/07/2007
Share/Contract = 1042
Max Profit = 0.115 (0.195-0.08)
Max Risk = 0.365 [(29.26 - 28.78 ) - (0.195-0.08)]
Return on Risk = 31.51%
Breakeven = $29.145

I opened 10 contracts:
Reward for trade (excluding fees) $1,198.3
Reward for trade (including fees) $988.90
Value At Risk $3,803.3

Closing the above trade – Traded on 25 July 2007
Buy Jul $29.26 Puts @ $0.14
Sell Jul $28.78 Puts @ $0.005

It cost me $0.135 x 10 contract = $1,406.7
Remember I received $0.115 x 10 contract = $1,198.3 at the beginning
So, net loss $208.4

All up ANZit cost me $627.2 to close my position – brokerage etc. inclusive (in short, I made a loss on this trade)

Open the same trade or a variation of the same trade for the next month (this is what I did)
Opening a trade for next month (ANZ) – Traded on 25 July 2007
Sell May $29.0 Puts @ $0.335
Buy May $28.5 Puts @ $0.20

Expiry = 30/08/2007
Share/Contract = 1000
Max Profit = 0.135 (0.335-0.20)
Max Risk = 0.365 [(29-28.5) - (0.335-0.20)]
Return on Risk = 37%
Breakeven = $28.865

I opened 10 contracts:
Reward for trade (excluding fees) $1,350.0
Reward for trade (including fees) $1,140.6
Value At Risk $3,650 + previous loss amount ($627.2) = $4,277.2

This trade is actually tied in to the previous trade which loss $627.2
If this trade is successful then the net profit is $1,140.6 – $627.2 = $513.4 i.e. I would make less money over a longer period of time. Keep in mind I did increase my risk from by opening more contracts…

Earning reports was up, pre market trade saw this stock move 4%. once the stock opened I was watching the minute chart for an hour… Thats 60 bars!!! anyways, I saw a triangle forming and on the 60th minute the breakout happened… I’m bullish on this stock because of the good earning report so i’m just waiting for a signal to enter this position. I missed out on a nearly 10% drop in TAM (the Brazilian airline that crashed last week… things like a plane crash causes fear and drive stock prices) I missed out because I haven’t been looking at my tricom trader and something screwed up and prevented me from trading… Anyways, I got it fixed immediately and i’m back.

This is a USD trasaction… I actually forgot it was in USD, otherwise I wouldn’t have opened such a large transaction. I try to keep my exposure to $10k AUD per exposure unless I think its a good trade.

The Trade (23rd July 2007)
Buy 400 HAL @ $37.547 ( $15,018.80)
Margin Required: $1,501.88 (10%)

WPL is trading at its support level, taking a chance on this one as I think it will bounce back in the next 3 days. A bit of a speculative trade, this is pretty safe though… was recommended on this trade and usually its successful trades.

The Trade (WPL) – Traded on 23rd July 2007
Sell Jul $45.5 Puts @ $0.31
Buy Jul $45.0 Puts @ $0.18

Expiry = 26/07/2007
Share/Contract = 1000
Max Profit = 0.13 (0.31-0.18)
Max Risk = 0.37 [(45.5 - 45.0 ) - (0.31-0.18)]
Return on Risk = 35.14%
Breakeven = $45.37

I opened 20 contracts:
Reward for trade (excluding fees) $2,600.0
Reward for trade (including fees) $2,368.2
Value At Risk $7,400

Reason
The US market did very well yesterday night and the Australian market followed, although the Australia market did not close on a high I believe due to the world market sentiment the Australia market will perform well for next week.

CTX (Caltex) – the price dropped heavily due to poor production performance reported a few weeks back. Nothing else really changed on the stock apart from the underperforming production reports. They still have the same number of employees and factories so they should fix up their problem and perform well for the future. I only see this stock going up, plus its trading at support levels

LGL (Lihir Gold) – Gold prices usually move together with Oil prices, the prices of oil has been running for a long time and the gold prices hasn’t followed. LGL is very exposed to the gold price and a good vehicle to use to be exposed to gold prices. LGL has been trending upwards (slowly) for the past year… more like side-way with a tilt towards the bullish side. There’s plenty of support on this stock and should perform well in my portfolio.

The Trade – 13th July 2007
Buy 500 CTX @ $24.924 ($12,462)
BUy 4,000 LGL @ 3.186 ($12,744)