Hi Guys,
The volatility is back. It took a one-day hiatus but then apparently decided that was too boring so it got back to thrashing. The S&P dropped 100 points in 24 hours, and then bounced back up another 40 points or so. There's no telling where it will go next, although over the last year it has always eventually rebounded after periods of volatility. We just have to wait to find out how it unfolds this time.
The timing of that market drop wasn't particularly fortunate since I had a lot of options positions closing at the end of the day yesterday. It sucked a lot of value out of those. I still have two options positions (YUM and EW) that I couldn't sell yesterday even though they reached their time limits. I couldn't even sell those for a penny, which means they're basically worthless right now. I have a market sell order set up for both of them so that they'll sell if any buyers come around today, but otherwise they will likely expire worthless when the options expire at the end of the day today. No action will be needed by me if that happens. It's the same as taking a full loss on the position.
I picked up some new positions today. None were in the main account because I have limited buying power in that account. In the extra options account I grabbed positions for American Express and Verizon. In the low-priced account I bought stock for CLF and NLOK.
I talked earlier this week about how it was a bummer that I had an MES futures position where the price took out my stoploss, only to then almost immediately rebound and go upward. I said at the time that it can hurt to take a loss that way, but that the same thing can happen in reverse for a profit sometimes too. I want to point out that this week we had a few cases where it did exactly that. One was for a separate MES futures position that hit its profit target just two days later. It went five ticks above the profit target and has since dropped like a rock. I also had two options positions (CSCO and FDX) that went 10-20 cents above their profit targets and have dropped in price ever since. I'm pointing these out because it's good to notice the times where things go our way. And when I say it's good, I mean it's been scientifically proven to be helpful to our state of mind when we "soak in" the good. By focusing our attention on the good stuff, it's like we're wiring our brains to look for it more often. It can lead to a deeper sense of peace, which can help a lot with stock market trading (not to mention with life itself!).
Anyone who owned HRL stock overnight last night will be receiving a dividend of 26 cents per share. No action is needed to receive it. Most brokerages automatically credit your account within several weeks for the dividend. Speaking of HRL, that stock took a turn for the worse this morning. It was looking strong yesterday and this morning it's the exact opposite. The same can be said for HLT and a couple others I own. You just never know what's going to happen next in the stock market.
The stock market is closed on Monday due to the Martin Luther King holiday. I'll catch you next Tuesday.
If you have any questions or feedback, I'd love to hear from you.