Trade Alert – Buying puts in a Red Box
“You wanted the best and you got the best! The hottest market in the world, S&P 500!” – Kiss Alive II
Markets are down a bit this morning, but obviously still near their newest, latest and greatest all-time highs. There’s a lot of greed out there amongst the retail crowd right now, and a lot of fear of underperformance among the pro crowd right now. I continue to preach patience and hedging the portfolios while we are at this particular phase of the market.
If you’re a new subscriber or if you’ve been waiting to build up some of your long positions, I would start slowly buying about 1/4 as much of each position as you’ll eventually want to own. You don’t have to draw a magic line in the sand and hope your cost basis is somehow never going to be breached. Let the market bring the action to us. This advice right here right now is as valuable as some of the best quick option home runs you get from me sometimes. Because not losing money and not being greedy keeps you from losses. And losses, of course, are the ultimate enemy.
As for trading, I’d look at buying some puts on some some high-risk, highly-volatile highflyers like WAGE and CSTR. I don’t know what WAGE’s downside catalyst near-term is, but I don’t like what I see in that company and it’s on my “get short someday” list.
And as for Coinstar, I think they are the Nook to Netflix’s iPad, if you know what I mean. Coinstar’s RedBox Instant is beta-max to iTunes’ VHS. Follow me? CSTR reports earnings on April 25 and I’m going to add a small tranche of puts here in it this morning. I’m bidding on the July and October expiration dated puts with strikes from $52-60 or so. I will leave this as a small trade until we get closer to the earnings report and then I might add another small tranche to it then. Like I said, we’ll let the market bring the action to us.
Twelve o’clock, I gotta rock
There’s a truck ahead, lights starin’ at my eyes
Oh my God, no time to turn
I got to laugh ’cause I know I’m gonna die
Why? – KISS (Detroit Rock City)
