Happy Chinese new year!

i, finally, managed to closed my positions on 28/1/2009. It was quite hard to close the position due to the options low liquidity. Ya, i learn something from this trade. Liquidity is important. There was a big gap between its bid and ask price too.

Commission took a huge part of my profit. I think it is not a big problem as there are many cheap online brokers available. I still feel glad as i am able to make a profit (USD 80)in my first options trading.

For your information, now i am paper trading options using Optionsxpress Virtual Trade.

a trade on Options.

I am interested in trading US options due to its sophistication and low cost of online-trading in US market. Options allow us to profit no matter the market is uptrend, downtrend or moving sideway. But in my humble opinion, we need to learn higher skills compared to investing in stock market, if we really want to be successful in options trading.


On 5/1/2009, i paper traded Callaway Golf Cp (ELY). I bought a contract of FEB 10 PUT and a contract of FEB 12.5 PUT.

From the chart, we can see that Callaway Golf Cp is moving sideway. I bought the 2 put options when Callaway Golf Cp was near its resistance. There was DOJI appeared on its candlestick chart. Appearance of DOJI signaled uncertainty and it normally appears at resistance and support.





Stochastic is a powerful indicator when we expect a stock to move within a range. Stochastic indicator signaled a overbought situation.





RSI was slowing. +DI is neutral and ADX is slowing.





Although MACD gave a buy signal, i did not put much weight on it. I expected the current down trend of the whole economy was going to persist and I did not think Callaway Golf Cp would have enough catalysts to push the price above its resistance level.





I still have not closed the position as the whole market is still in downtrend. I plan to close the position of both contracts on 26/1/2009 (a day before Callaway Golf Cp earning announcement). Callaway Golf Cp is expected to release its earning announcement on 27/1/09 (before market opens).





Normally options will have higher implied volatility (IV) on days before earning announcement, thus, options will have higher value.





I would not speculate on its earning, but I really would love to close my position for a higher options value.






Currently, FEB 10 PUT value has increased a whopping 27% and FEB 12.5 PUT value has increased 23%. All these happened within half a month!


As 26/1/2009 is Chinese New Year, I don't think I would be facing my PC and updating my blog. So I would tell you guys the result of my position after that.





Enjoy Your Trading.

IJM

In 1984, three enterprising local construction companies - IGB Construction Sdn Bhd, Jurutama Sdn Bhd and Mudajaya Sdn Bhd - merged in a bid to to form IJM to compete more effectively against bigger foreign rivals.

i paper trade IJM at RM2.60 when DOJI appeared on its candlestick chart.

+DI is gaining strength, RSI in oversold region and there was a buying signal from MACD.

The price was sitting on its 14d, 25d and 50 day MA, thus giving IJM a very solid support. Moreover, its price is cutting above 14d MA. Ya, it is a buy signal.

For stochastic, it is in oversold region.

I also truly think Malaysia government will pump more money into construction sector in order to revive the economy.

Sold IJM at RM3.38 when there was DOJI, again, appeared on its candlestick chart.

I did not wait till MACD gives me the signal to sell as RSI, stochastic and bollinger band indicated overbought signals. RM3.38 was around IJM resistance.

This trade helped me to recover some of my previous loses on IJM when i still had not learn technical analysis. Technical analysis not just helps me recover my loses on IJM, in fact, i made some handsome profit too.

Technical on IOICORP

IOI Corporation Berhad is an investment holding company engaged in the cultivation of oil palm and processing of palm oil. It operates in five segments mainly plantation segment, property development segment, property investment and resource-based manufacturing segment The other operations segment is engaged in management and operation of hotels and resorts, landscape services.

i paper trade IOICORP at RM3.68 based on its technical and fundamental points.

From technical aspect, IOICORP is sitting on it upward-trending line. It is always better to buy a stock near it trend line. 25d MA is giving IOICORP a support

+DX indicator is pointing upward signaling uptrend is getting stronger. RSI is gaining too.

Stochastic is at around 30%, almost in the oversold region. Both redline and blue line are fight neutrally.

Trading volume is declining. This always happens when the stock is in consolidating phrase.

Although there is no confirmation from MACD, i paper trade IOICORP based on the fact international palm oil price did not manage to drop much although there is worry about the health of current world economy especially when US companies are starting to annouce their quarterly financial report.

Stop loss at RM3.44, Resistance at RM4.47.

Enjoy your trading. GOon