2nd Trade Update: Closing My Second of 3 MS Put Spreads

by Dan November 3, 2011 11:21 am • Commentary

Update Nov 3rd 2011 @ 11:23: With MS at 16.45 I want to close the NOV 16/14 Put SPread that I legged into early last week for .29, now at .50 for a .21 gain……2 down 1 to go…….I am still long the Jan 10/5 Put Spread that i am thinking about turning back into a 1×2.


Update Oct 25th 2011:  With MS and GS down a little more than 2% each I want to manage yesterday’s put purchases a bit……GS is first on the agenda as it is a weekly option and will start to decay quickly the longer it remains above the strike I am long…..

In GS’s case with the stock at ~$101 I want to sell half of the position at 1.40 for almost a .40 gain.  and then sell the Oct28 95 weekly put at .40 locking in another .40 gain, thus risking little between now and Friday’s close while leaving on 1/2 of my original position but now capping my gains at the 95 level.

For MS at ~16.60, I want to sell the Nov 14 Put at .35 and creating a Nov 16/14 put spread that I am now only risking .29 for a $2 wide Put Spread…..

Original Post Oct 24th, 2011: 

The Easiest Way in My Mind to Fade This Rally Is to Short the Banks

The SPX is up almost 18% in a straight line since making new intra-day 52 week lows 20 days ago……Enough is enough……Since covering most shorts Oct 3/4/5th I have added a few on a tactical basis in front of events and believe it or not even added some longs……At this point, equity markets are acting irrationally and I think this could set up to be a great opportunity to get short in front of the second Euro Summit (Wednesday) that is very likely to disappoint….

There is no doubt that it appears that our markets are rallying for the reasons they should be, healthy US corporate earnings…..and CAT‘s report and outlook this morning might have been the nail in the coffin for the bears…..

But away from Tech and Industials,  the banks are now extended, there I said it, and I think the rally off of the lows this month could be shaping up as a great near term opportunity to short a space that will get destroyed if Euro leaders and finance ministers can’t enact a solid plan to contain their debt contagion…..

I wan to look at MS and GS…GS because in my opinion it trades very poorly off the lows, and MS because it has acted so well off of the lows….


GS vs stock at 103.20 I am buying the Oct28 weekly 100 puts for 1.00

MS vs stock at 17.07 I am buying the Nov 16 Puts for .69

Both names I will look to leg into Put Spreads as the stocks start to go lower…..