New Option TraderLearning how to be a successful option trader and blogging about it

If you think there’s more pain ahead for the Dow, then buying DOG which is an inverse ETF for DJIA might be a good idea.

This morning I bought a DOG NOV 72 call with an 82 delta.  I’m doing a stock replacement strategy and plan on rolling down when the delta goes above 85.   This strategy of ITM calls with 80-85 deltas and rolling to keep that delta has worked well for me before.. We’ll see how it works out.

On another note, DEFINITELY moving this blog this weekend!  If anyone has experience moving from Typepad to Wordpress please pass along any gotchas I should know of now..

Yes, I know, I’ve been absent.. Sorry about that.  Had a few things going on such as getting laid off (Yes, it’s a good thing, wanted to leave anyway), and the Options University Live Mastery classes started (very consuming, very intense).

So, anyway, this market has really been a shift for me because as long as I’ve been interested in the markets things have for the most part been pretty strong.  But, from everything I’m hearing we are in a bear market.  There may be rallies here and there but between the credit crisis, housing disaster, and falling dollar — it’s a bear market.  Let’s just face it.

However, there are bull markets in mining, agriculture, oil, and just about every currency except the dollar. Talking about the dollar gets into forex pairs, so I won’t go there… but the point is that the dollar is very weak.

Gold:
I think mining in general is pretty strong, but gold is seriously going through the roof!

gold

Agriculture:
Can anyone say Potash?  It’s at an all time high and this thing doesn’t look like it’s going to stop.

Oil:
And then we have oil which has broken through $100 a barrel — yikes!

Regardless of day-to-day volatility, the QQQQs are still in a strong uptrend and don’t show signs of slowing down.  In fact, I’ve heard several times of the past month that technology is where it’s at — and the QQQQs are have alot of great tech stocks.

• It’s trading above it’s 50-day moving average
• It’s trading in a very steep channel and despite an occasional dip, it generally stays within the channel

ETFs (Exchange Traded Funds) by now are pretty common place.  SO, wouldn’t it be nice if our 401(k)s could have ETFs in them instead of mutual funds? Not sure how soon (if ever) we’ll see that because if it did happen what would the Vanguards of the world do?

Okay, fine.  But, given the huge advantages over mutual funds they’re definitely the way to go if you want diversification, a better return, and tired of all the extra fees that come with mutual funds.

Here’s a quick review of the advantages ETFs have over mutual funds:

• Available for all major indices (Dow, S&P 500, Nasdaq, Russell)
• Available for all major sectors and countries (Oil, China)
• Lower expenses because they’re index based — not actively managed
• Can be traded throughout the day — not just at the end of the day
• Can be shorted without an up-tick
• Options available on most ETFs

ETF Watch List

• Broad market indices (DIA, SPY, QQQQ, IWM, MDY)
• Sectors (Energy, Health Care, Semiconductors)
• International (Japan, China, Brazil)
• Other Asset Classes (Commodities, Treasury Bonds, Currencies)

What Makes a Good ETF?

• High volume and consequently, liquidity
• Economic factors occurring (ie, emerging markets, rising oil prices, etc.)
• Hot markets and/or healthy indices (technology, Nasdaq)

Good ETFs to Trade Now:

ETF Resources

• Yahoo Finance – ETFs
• Amex
• Holders
• iShares
• Select Sector SPDRs
• ProShares
• Seeking Alpha