alexpaz (95.49)

2009 a few lessons along the way...

August 13, 2009 – Comments (12) | RELATED TICKERS: SKF , BAC , FAS

In 2008, I had a remarkable year trading stocks. With only $1,000 I managed to earn $8557 in profit ending the year with a 855% gain. Thanks to a a few home runs such as buying May calls in GOOG before earnings and again with puts on FITB and C later in the year.....I was a College student at the time and had the time and patience to wait for great opportunities. I made only a few small bets for the last two months going into 2009.

  CALL-GOOGLE INC MAY 500 051 (GOPEO)   

200  7,430.45  1,556.50  5,873.95 <----net gain  04/18/2008  

04/17/2008  200  7,430.45  1,556.50  5,873.95 

PUT -FIFTH THIRD BANCOR OCT (FTQVC)   

500  1,930.71  538.25  1,392.46 <----net gain  09/29/2008  09/22/2008  200  730.49  215.30  515.19   09/29/2008  09/22/2008  100  521.74  107.65  414.09   10/03/2008  09/22/2008  100  266.74  107.65  159.09   10/08/2008  

09/22/2008  100  411.74  107.65  304.09 

Fast forward to the start of 2009, My last semester as a UCF Business student started and I was back in the books looking for the next big trading idea. My first thought was to invest in Commodities which I believed had any real value at the time. This is when I began studying the fatal flaws of ETF's and noticed the awful performance of USO and OIL compared to the oil futures. Although I hated ETF's and still do, I saw great opportunities in a few such as SKF and UYG. My premise was that the U.S. government would not fully nationalize and of the big banks and it would protect the common shareholders. I began by buying positions in UYG and recommending the XLF to anyone that would listen.

ULTRA FINANCIALS PROSHARES (UYG)   

1,641  4,260.75 <----cost  4,216.45  44.30   <---net gain

Below are the dates I bought and sold UYG

02/10/2009  631  1,324.46  1,930.44  -605.98   02/24/2009 Wash Sale Adj 03/02/2009  [210]    -201.67  201.67   02/24/2009 Wash Sale Adj 03/06/2009  [150]    -144.06  144.06   02/24/2009 Wash Sale Adj 03/20/2009  [200]    -192.07  192.07   04/02/2009  02/10/2009  119  342.97  364.06  -21.09   04/02/2009  03/02/2009  210  605.25  618.17  -12.92   04/02/2009  03/06/2009  150  432.31  365.55  66.76   04/02/2009  03/20/2009  200  576.42  668.67  -92.25   04/02/2009  03/30/2009  31  89.35  75.61  13.74   04/02/2009 Wash Sale Adj 03/30/2009  [300]    -32.23  32.23   04/03/2009  03/30/2009  300  889.99  763.98  126.01

I saw a home run oppurtunity in SKF to short it while it was well over $200. I picked up my first contract which was the March 140 put on February 23rd and another on March 3rd.

PUT -PROSHARES TR ULTR MAR (SKFOJ)   200  540.49  1,456.50  -916.01  <---net loss

 03/06/2009  02/23/2009  100  270.25  1,118.25  -848.00   03/06/2009  03/03/2009  100  270.24  338.25  -68.01

Yes, I sold at the bottom! But it wasn't anything to do with feer or greed. I was leaving for a surf trip to a remote area in Panama on March 9th that did not have internet access and I had to roll my contracts out to the next month. I used the proceeds of the SKF puts to buy calls in FAS and I did pick up some shares in BAC for about $3.33.

CALL-DIREXON FIN BULL APR 2 (FASDZ)   600  1,485.48  494.50  990.98   03/12/2009  03/06/2009  200  490.49  164.83  325.66   03/12/2009  03/06/2009  400  994.99  329.67  665.32 

BANK OF AMERICA CORP (BAC)   100  905.17  340.80  564.37   04/22/2009  03/02/2009  100  905.17  340.80  564.37 

Obviously if I didn't go on the trip to Panama, I would have made some big $$$. The March puts in SKF would have yielded about $4,000 a piece if I held onto them. I still did manage to gain a profit on the FAS april calls, but only after taking a loss selling the SKF puts.I think about that missed opportunity ALL the time, especially after graduating college in May and being layed off twice in the last year. I now trade scared and have very little capital to make a gain. I still do have confidence in my trading abilites, but it has been sapped lately.

I wanted to share with my fellow Capper's a few lessons I have learned so far in 2009.

1) Use Stop losses on all of your specualtive positions especially ETF's. (or else you will be holding onto a ticking time bomb, which will compound your losses daily).

2) If you are using Short or UltraShort ETF's make sure you understand the underlying security it tracks. (SRS ultrashort real estate tracks the IYR which is a compilation of the best and most diverse REIT's in the country)

3) Do not be afraid to sit on the sidelines in CASH (Do not chase the market or a rally that you have an uneasy feeling about).

4) Do your own homework (If you talk about stocks you will eventually get these "unbelievable" tips like the guy that told me to buy Citigroup when it was $18 a share. He said his dad bought one million shares, and they had the money to do it!)

5) Do not overtrade (You will cut away your profits with commisions)

6) Learn some basic skills in Technical Analysis and Elliot Wave Principles (With much of trading run by computer programs, you can learns to use channels and trendlines to see short and long term patterns.

 Thats all I have for now, I would like to thank some of the members of CIL such as Binve, GV, Columbia, Pug, Mary, Kstar, portefuille, GMX and others for putting up awesome TA charts and sharing information everyday.

 Good Luck fellow fools and have an awesome rest of your 2009!

 Disclosure: long SRS , long EDC aug 110 puts