Today I bought 6 contracts of QQQ Jan 06 $37 Put option (YMZMD) at $5.20/share plus a commission of $19.99. These options are set to expire on January 20, 2006.
I have to admit that this transaction is inspired by Whitney Tilson's column Bearish Option Strategies on Fool.com. Also, recently I came across lots of readings that convinced me that the market is greatly overvalued (here, here and here). Purchasing a long-term put option on Nasdaq seems to be a very logical move to insure or profit from the upcoming ugly correction.
The $37 put option is already in the money. Closing at $35.66 today, QQQ only needs to fall 10.8% in the next 22 months before I can break even. Some of the articles I read suggested that the overall market is overvalued by 40%, and Nasdaq is overvalued even more.
Adding the MSFT Jan 05 $25 Put option I purchased in January (which appreciated 42% so far), I feel I haved properly hedged my portfolio against potential market downturn. I am also poised to liquidate my profitable RJR positions later this month and continue to be defensive in the near future.
TRADE #40 - Sell OCA 500s @ $8.65 in Roth IRA(April 06, 2004)
To capitalize the multi-week runup of OCA and mitigate my portfolio's significant exposure on a single issue, I sold 500 shares in my Roth IRA account at $8.65 apiece. I still hold 1,000 shares of OCA in my Datek account. Read
TRADE #39 - Sell RJR 100s @ $58.02 in AmeriTrade(March 23, 2004)
As I mentioned several times in previous posts(here, here and here), I decided to sell my RJR positions acquired on March 18, 2003 (as Trade #24) this month to log a long-term capital gain. I just did that this morning by selling the 100 shares ... Read
TRADE #37 - Buy TALK 290s @ $10.36 in Roth IRA(February 03, 2004)
I just purchased 290 shares of Talk (Talk America Holdings Inc.) in my Roth IRA account for $10.36 apiece, plus a commission of $14.95. I first got to know TALK from Motley Fool Hidden Gems newsletter. This newsletter applies a value-oriented to dig out deeply ... Read
TRADE #36 - Buy ZMFME (MSFT Jan 05 $25 Put) 1,000s @ $1.35 in Datek(January 21, 2004)
I just completed my first transaction in the year of 2004. I bought 10 contracts of MSFT January 2005 $25 Put option at $1.35/share plus commission of $25.99. These options are set to expire on January 21, 2005. Read
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