Tuesday, February 07, 2006

Direction Correction

And so, it tanked. As they say, "the first impression is usually the right one", and so was mine with Oil. We kept our long gamma and are very happy with it. Also, I reentered short delta on OIH on the midday lift.

Yes, I am back to being a bear on Oil.

However, the really, really right trade is simply to own gamma from the start. That's where the most money is being made. Again, this is why our fund is an options fund first and stocks last.

The overall markets held up relatively well. Part of me is thinking that the moderate selloff on the indices was contained by a massive selloff in Gold, Oil and Housing sectors (That also explains S&P-500 down 10 with NDX-100 down only 6). If so, there is likely more pain ahead. A few days ago we sold some credit put spreads on NDX and now we're going to wait before adding any more to that position.

Regarding our recent recommendation on long BZH and GOOG plays - well, they are basically here. I would like to see both trade through the near strike (65 and 365 respectively) before accumulating long deltas. These are likely to be very quick plays so be around to pull the trigger (on both sides of the trades).

Overall, looks like an interesting week ahead of us. Stay tuned.

Cheers,
/Dmitry

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