CLF - WTF?by DPeezy on May 6th, 2008 at 1:42 pm |
About as frustrating as the election has been so far is today’s action in [[CLF]]. Currently up over 9 points & 5%, after missing with earnings. And it’s not like they missed by a little…analysts were expecting an EPS of $1, and they reported $0.32! Revenues rose, but net profits fell by half from last year! Shares fell in pre-market, as much as 5%…
I had a strangle in CLF from yesterday, with 160. Calls and 155. Puts…in light of the pre-market action and the above reported earnings, I blew out all the calls at the open. The stock got bid up nicely yesterday, so profits were booked on those. The frustrating part is obviously that instead of dropping, as expected, the stock is exploding higher, leaving my puts essentially worthless and making the sale of the calls look like a schmoe move.
Fortunately, the profits from the calls almost guarantee a breakeven at worst, so overall, it could’ve been worse. Plus, the names from yesterday are still working, including [[CHK]], [[DO]], [[DVN]], [[EOG]]. Enjoying some gains in [[STP]] calls as well.
But I just had to vent/whine about the retarded CLF action. Perhaps this ‘election’ is getting to me…
Silly. CLF and X will go up forever.
May 6th, 2008 at 1:50 pmApparently so.
May 6th, 2008 at 1:55 pmI’m young, naive, and unlearned in the ways of CLF & X. Lesson learned…
Do you often sell only half of the straddle and hang onto the other half, or is it only in exceptional situations like this?
May 6th, 2008 at 2:05 pmAll bad news and misses are now good news by order of the government.
Don’t forget, if oil goes higher, consumers can afford less food and gas, and our economy sucks, then the dollar becomes more worthless, and therefore the stock market must go up because it is denominated in dollars. It has a weird sort of logic to it, somewhat like the 1984 double-plus good logic.
May 6th, 2008 at 2:14 pmCLF is probably in play.
May 6th, 2008 at 2:17 pmMost of the time I do sell straddles in pieces, usually selling the ‘losing’ half once the stock picks a direction, especially if the position was opened as an ‘earnings play’.
So, for example, if a company reports good earnings, I look to sell the puts and ride the calls as long as possible.
I keep both sides of the straddle as long as the stock is flat, but will get rid of the whole position if the price action remains stale for too long…
Been meaning to put together a post on this…hopefully will get around to it soon…
May 6th, 2008 at 2:37 pm