i had planned on looking at solarcity; i mentioned the other daythat this was actually a pretty good bounce and here a good buypoint, it's up 5 percent. i think this supports going to hold, so i think you're going to get a nice runhere into earnings which is on may 5th.
google stock , this is a dragonfly doji here; after a big decline you like to seethese types of things where the trend is down,really down, google ( nasdaq:goog )violently so, and really kind of a broadening
wedge formation that typically doesresolve to the upside by way of a higher low like we're going to get tomorrow, and then abreak out to the upside, so i think there's a chance for a monstertrade here to the long side. as i'mdoing this now google ( nasdaq:goog )is trading at 540.00, at one point it was trading in the520's after hours, which is why i think trading in after-hours is onlyfor the stupid people, you don't want to do that. why, becausenobody else does except stupid people. the stock moveswildly,
and trust me, you have no idea what'shappening, do you really? you're in there sellingstock at 525.00 before everybody else sells, memo to you, you're the last oneselling, now they're all buying. the point is, thisis a reliable low, so you can just buy thestock if you want to put your stop a little below there, put it higher, this is not coming back tosee this price; i don't care what you do google( nasdaq:goog ) is not going to come back to test this low, i promise you that, it'sjust not, that's not the way stocks trade;
not after a big reversal doji like this, a dragonfly doji, whichreflects an intraday reversal, a close back near thetop of daily range. this is a reallymeaningful pattern, much more so than this; sure it was an intraday reversal too, but thestock closed still in the lower half of the range, you not see these thingsvery often. here, i guess you've got kind of a similar thingand work with that led to;
but the decline wasn't that steep, itwas fairly orderly, but even this oneworked; so now we've got this, where the stock goes from 610.00, down ultimately to about 520.00. that's a ninety-pointdrop and most people trade this using options, i don't buy a $610.00 stock, i buycall options or put options on it, most other people do too. remember when it was trading for twicethis, before the two-for-one split,
that was options heaven baby. soanyway, the point is you can go ahead and buythis stock at the open, i think you're going to make money.if you're an option trader, here's what i'm going to be doing, i'm going todo a wimpy trade, the low here was 518.00, i'm going to be selling some 520.00 puts, i'lldo it in a spread so i don't have to use a boatload of margin where i just sellnaked puts, which is the equivalentobligating yourself to buy, however many contracts you havetimes a hundred,
that many shares, so if you sell tencontracts it means your going to buy a thousand sharesof google ( nasdaq:goog )at $520.00. i don't know about you but that's alittle above my pay grade, so i'll go ahead and sell some 520.00puts and then i'll buy probably some 510.00 puts, and this is in may, the contract expires in 30 days sothere's going to be a lot of erosion of the time value of your options and since they're out ofthe money, it's all time baby so every day
the dollar amount of your options thatyou sold erodes. we like that, because when we sell an option as opposed to buy it, we sell an option andthen that option starts losing value, that's known as a good thing. so i'll be looking to sell the may 520.00puts, buy say the 510's, maybe the500's, i don't know, probably the 500's just because i want to getmore dough for my mo, and then in a couple days,
into next week, i'll probably close thatposition out, these are the types of trades that you can make on thisvolatility. i have a long call position by means of a long-term january bull call spread, the 550's, i think i sold the 600's, so that'll be down tomorrow. so what i'lldo is, i will be buying back the $600.00calls that i sold for a really, really nice profit. i willbe more upside down
on my long 550.00 calls, that's a drag, but the 600's that i sold are mitigating the damage to the 550's contracts. so i've effectively lowered mycost basis by selling these, i've lowered my cost basis in the 550's,which means that the drop in value of the 550's betweentoday and tomorrow, thursday, is less, the loss is lessenedbecause i hedged,
this is just a pure hedge that's all it is. i'm kind of bummed because i was hopingthe stock would stay down here at about 525.00 or so, because then the sale of these would bemuch more profitable; i knew this stock was going tosnap back from 525.00, if you follow stocks dynamically you knew this stock was going to snap back,but the fact that it did it after-hours, again, i'm kind of bummed, it probablysounds weird that i would be bummed
when a stock is moving in the directionthat i wanted it to, but on these after hour moves what you'rereally trading is the rubber band, that's really what you're trading; you wantto be trading a rubber band that is stretched so tight that when the opening bellrings that thing snaps back big. well, it's still going to be stretched kind oftight tomorrow if it opens up around 540.00, which is where it is right now, but not as tight as it would havebeen if it were 525.00. so
tomorrow the trade is definitely to the long side, however you're going to doit, whether you're buying stock, whether you're buying calls, whether you're selling puts, whether you'rebuying a spread; there's a lot of different ways you canplay it, but just know that trading after hours, and you can quote me on this, everybodyelse does, is stupid, it's just dumb, don't do it. iguarantee you that if you've been doing it you haven'tbeen making money; you'll make the
occasional buck here and there, but is it really worth it, i don't thinkso. so trade during the open hours, it's when everybody else does, it's a lotof fun, so do that but be long on google ( nasdaq:goog ) ,take advantage of this, and learn to recognize these dragonflydoji's. they have a real gooddescription of what a dragonfly doji is over on stockcharts.com, it's free,you can check that out;
they are a really good resource for alot of trading
definitions and stuff like that;and i don't forget about solar city ( nasdaq:scty ),that's working too.
