Volatility

Oh the pain and suffering. With today's market downdraft i really should be buying more put options and selling call options. For that matter i compounded my misery by BUYING call options on several stocks yesterday.

I found IMG-T and WAG-N to be lagging or beatin up as of late. So i purchased some calls on both yesterday! Was that smart? I don't know yet? I also sold out of my UUU-T call options today... at a loss. These were shares i picked up when Uranium was sagging. I had to sell today because they expired and i didn't want to buy the shares on Monday (these calls were in the money).

I may buy back UUU-T or another PDN-T but will wait to see how the markets shake out come Monday. I did a quick calculation on my trading account today and figured i lost just over 2% today. The so called 'safe' TSX index lost just over %2 also today! My trading account is presently 30% cash, almost 45% BVF-T common shares, and several call options making up just over 25%.

It's leveraged slightly more than i would like at 25% in options but i should explain why. I have protective puts to cover my BVF-T shares. After including dividends these puts will limit my max loss on this stock to only 5% until the end of Jan.

Why did i do this? Well i do like BVF-T long term, but this account is after all my 'trading' account. If you looked at BVF-T on a 1 yr chart the reasons for 'protective puts' becomes obvious. Ever had a stock 'gap down' on you? No stop loss in the world will save you from a 'gap down'. Why didn't i buy the call option instead?

Good question and i already had is my answer. Tax planning was the name of this game. Dividends are taxed a 'nicer' rate than capital gains so i was just trying to keep a few more dollars at tax time.

Well happy trading. I will post more fun updates as they unfold. My watch list radar today has some stocks for long term such as L-T, ATA-T, and BCB-T. As you can tell by the picks i don't enjoy following the 'hot' picks but rather the beatin down dogs.

DH