Tuesday, June 23, 2009

WMT Call Calendar Cont.

I am holding off from adding another short call right now...Why? Two Reasons...
  1. There is no premium for the 52.50 strike in July. With my cost basis for the current position (SEP 52.50 Long Call) at 1.40 it just doesn't make scene or cents to sell the July 52.50 short call if all I can get is 0.08 cents with 24 days till expiration.
  2. This has to do with the chart...particularly the trading volume. Since the 15th the stock has been down and moving sideways, near its support at 48. Yet the volume has been lower or in other words trading action has been slowing, and money has been flowing out of the stock (see indicator MFI Money Flow Index.) You will also notice when looking at the MACD (Moving Average Convergence/Divergence,) that uses moving averages, which are lagging indicators, to include some trend-following characteristics, you notice a slight shift in the momentum.


This in no way means that WMT can not trend lower...it most certainly can. However it is giving me a heads up and telling me to wait a few days. I will have plenty of time and or premium to turn this into a September 47.5/52.5 Bear Call if support is broken.

The Bear Call is a credit spread, this adjustment should always eliminate the debit, BUT it can and most often will increases the risk profile)

Wal-Mart News at Google Finance

Thanks for reading and to all of you who have donated...Thank you so much your kindness will not be forgotten.

Questions on this trade, any other trades or trading strategies please contact me at:
CoachNuge@gmail.com
OR
InvestingDAZE@gmail.com

Thank You and Best in Trading, Coach Nuge

P.S. RIMM is setting up for some great opportunities with this recent pullback. More to come.
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