Vacation Time

Today was the start of the long weekend, and I took today off just so I can trade options all day. Yyeah, I know its crazy, but I guess I really enjoying doing it.

Anyway, the market hasn't been too volatile, and Bernake's speech along with Bush's speech has calmed the markets.

I've taken two large positions on the S&P500 and Nasdaq Index, betting they will do better in next two months. I expect the Fed Rate will be cut by 25bps, which will propel the market back to its mid-summer highs.

Market Changes

On Monday, the Nasdaq started dropping and I sold my September calls for a 105% profit. Then, later in the day, I started buying up October options. As the market continued to dip, I bought more October options today. The hope is that this downward trend will not continue for long

Nearing the end of the month...

And it appears I've going over my budget again. I'm not sure what the issue is. I keep trying to readjust my budget, and I keep being just a little over it. Maybe the trick is to set my budget low so that when I go a little over it, it's actually not too much over?

Aggregating across the last four months, I am about $400 over my budget. Is my saving rate of 10% unrealistic? Should I be spending more/less? Does the 10% even mean anything if that's what I budget for, but I'm always over budget every month?

Nasdaq continues upward

The tech index keeps going up, and my options are already in the money. With 30 days left, I forsee it doubling.

This week is going to be my final week of testing the trading platform of my new brokerage. Starting next week, I will be betting more than $400 at a time.

Second Trade

Thursday, I discovered that my brokerage had a mobile trading platform, so that I could keep track of my portfolio at work on my cell phone. Man, that totally helped my day, as I was checking it in between projects, or when I had a brief moment between conference calls.

Now Thursday saw a crazy day for the Nasdaq, as it started the day dropping, and it looked like everything was going into crisis mode. Unfortunately for me, I bought 2 call options on QQQQ, the Nasdaq index ETF, in the morning at $0.90 a contract and saw it drop all morning. By lunch time, I was very worried, but also saw a huge opportunity to lower my cost basis, as the contracts were down to $0.64. I purchased 3 call options at that price, which gave me an average cost basis of $0.80 a contract.

Now, I bought in because I believed Nasdaq will go up by next month, since I didn't think this subprime mess was more than just fearful investors betting on emotions. So come Friday morning, at about 8:10AM, and I was screaming for joy.

I had CNBC on, and they had just announced that the Fed had cut discount window rates by 50 basis points. This immediately caused stock market index futures to spike up across the board, and I knew my contracts were making a profit.

Although the Nadaq see-sawed through-out the day, it ended up, and with my contracts worth $1.13 each. That was easily a $150 profit off of about a $410 investment in a day!

I'm praying the Nikkei does well prior to the market opening, and that I can keep watching the profits roll in.

First Trade

Today was the first day I could trade so I tried something small to test out the platform. As I have often promoted, I bought Cisco today. But rather than the usual stock buying, I purchases two call options for Cisco ending September '07 at a strike price of $32.50 for $0.45 each.

Options contracts are sold usually in multiples of 100, so buying two contracts really means I purchases 200, or $90 worth. A call option purchase makes money if the underlying stock rises above the strike price by the ending, or expiration, date. In between, the price of the contracts can rise as the underlying stock closes in on the strike price. Also, there is inherent time value of money depending on how far away the expiration date is.

I will talk more about this later, but for now, my roommate is wielding my very nice cutlery in her first attempt to make a fruit bowl out of a watermelon, and I need to make sure she doesn't lose a limb.

Trading, Not Yet

My brokerage is taking its sweet time setting up my account. They have already received my money but are still requiring me to wait until next Wednesday to begin trading. I'm not sure if its new regulations or what, but it seems unreal that they've got my money and won't let me use it.

Until then, I'm still going to tell you what I would have bought this week: Cisco, Google, and Exxon Mobile. My usual 3 favorites. They have been hit hard this week, and there is no good reason other than market fear. Fundamentally, the three are financially sound.

Market Volatility

When investors don't know which way the market should be going, it is a terrible time for long-term investors due to the enormous risk, but just an amazing time for traders, as volatility = profits.

For me, as I start to do my "investing", my strategy will be one of trading on volatility. Now, I wouldn't recommend this as the only investment strategy for the long-term. I have my own safer long-term investments.

But, since I'm not worried about my financial future, I am investing my excess cash into short-term trading and speculation.

I will be reporting my gains and loses and thoughts here.

Stabilizing Cash Flows

This month begins my attempt at stabilizing my cash flows. Now that I'm moved out, and I have an idea what the increase in food and utility costs are, I've reworked my budget so that no longer is my excuse "It'll get better when its not a 'special' month."

In terms of costs, I have increased rent costs of $1175 (not he full $1275, since I was paying my parents a nominal $100 a month), increased food costs of $125, and obviously new utility costs of $120.

This obviously puts a dampener on my ability to save up money.

Maybe I'll have to increase my gambling trips... :-)

Birthday!

August 2nd was my birthday, and I spent it sitting in my room playing with my computer.

No, it's not because people don't like me, but it had been a long week and I really just needed time on my own.

Anyway, things are looking up in my word. I'm going to start trading (stocks, options) again! I can't wait to be back in the swing of things.