Options

This is the start of my weekly market reviews for my trading journal. This is my digital watering hole, where I can celebrate wins and commiserate losses. It’s where I’ll work hard to figure out my new trading strategy and find opportunities in the market. I’m an old trader, definitely not a bold trader. What a week! I sold my stock holding in NVDA for a 20% profit and closed out all my AMD and COST calls. I made 68% profit each for those option trades. Options trading is insane and you can make sick money with it. Of course, you can lose sick money with it too. ...

I bought a call for COST, strike price 900 for June 21st expiration. The strategy behind buying these calls is this: earnings are due for Costco on Thursday and I expect good results. On top of that, COST has been one of my best long-term performers and I wanted to make some extra income from its strong trend. AMD closed down yesterday and NVDA managed to close up. Yesterday was a down day for the market but these two hanging tough in the face of the sell-off means the momentum is strong. ...

I agree with fund manager Mobius that derivatives are a bad thing but banks love them because they make a lot of money from them.  The problem I see is that all the recent acqusitions of failing derivative portfolios (Bear Stearns, Lehman Bros) by other firms, such as JP Morgan, allows fewer and fewer firms to have more and more derivatives.  All you need now is one large financial institution to go down and you'll drag the entire system down. ...