Stock Traders Blog

I brought and closed the 2 Baidu September put contract I was holding. I net about $400 hundred on that deal. I didn’t wait for it to expire because that was quite a return given the small amount of investment ($600) in a short period of time. I feel there may be chance for me to sell put again at a good price before the option expiration day. It is the third time I make money on trading options. Baidu’s September put options pain was raised again at $320 currently. Looks like traders are not as bearish on Baidu as they were at the end of last month.

account balance 2009/09/05

My account balance is still short of my initial investment amount. But I am not eager to earn it back. I will just take it slowly. I feel comfortable with what I am holding and I think the day I recover my initial investment amount is not far. My focus recently is to get back to work. I really feel it is not easy to get a job nowadays. I feel the companies that are looking for people are pickier and they take it slowly. With 9.7% unemployment rate the companies that are hiring are sure to have a lot more choices than before.

I am not convinced that the recession is ended. I believe the problems of the banks are not over yet. I kind of think that the real estate market is better only because of the government’s incentive for first time buyers. Retail sales didn’t have major improvement. Further more I believe foreclosure will continue to raise as more option ARM reset occurs. I am maintaining a major portion of cash in my portfolio and waiting for opportunity.

I mentioned in my previous post that Baidu’s September option pain was $300. I checked it again and the option pain was higher a little bit at $310 at the moment. What would be your guess if you predict Baidu’s price movement without looking at the option pain a couple weeks ago when Baidu was about $340? I would probably think it would go up instead of retreating. Obviously option pain can really tell something. It can tell how institutional traders see a particular stock. If option volume on an issue is large enough option pain on that issue may be able to tell how institutional traders see the market overall.

I checked INTC and BAC September and October option pain. They are trending downward. They seem to tell the bearish sentiment of the market should be extended into October. However Baidu’s Oct option pain is at $330 which is higher than September’s. I am not sure if you agree or not but I have already convinced that option pain is a very good leading indicator on the underlined issue or even the overall market.

Anyway I didn’t trade for a while. I was busy looking for a new job. I add 200 shares of CSKI at $13.09 and I sold 2 contract of Baidu Sep 290 Put at $3. I was thinking if Oct Baidu option pain is $330 I wouldn’t mind to have it at $290 in the mid of September. There is $20 difference or about 9% difference between $290 and Sep option pain. I thought it could be safe. But again who knows. We will see how it goes.