BAC Update

Everything I said about the IWM applies to BAC, this is the second 1 day or less trade in BAC using puts in the last week, the first made nearly 30% and today's made 57% on the trade, I'm treating them as semi-speculative trades and not swinging for the fences, generally using about 10% of portfolio value for the trade (before margin). So in essence, I'm using these options trades on a very short time frame (1 day or less). I'd like to see BAC close the gap and hopefully go flat for a bit, that's where I'd be looking for the next trade.

As for longer term positions, I still think BAC breaks below $5.00 and I have longer term positions that I'm leaving alone, but when these opportunities come to hit a single or a double, I think they are worth the swing.

Today the IWM and BAC are what I'm most focussed on, but I suspect there will also be some commodity related opportunities as well.

 The 2 min BA chart suggests it has enough support to fill the gap, more importantly the Industry group shows the same support-XLF below.

Notice how similar XLF and BAC look? XLF showing the same 2 min positive divergence intraday, so I think we can get the gap fill. On a side note as I have mentioned many times, there are very few break away gaps like the one in GLD, the market has been filling the majority of gaps, so that actually works to our advantage here, but just like the Cats and Dogs trades, you have to take the profits on these particular trades pretty quickly. Any time I have 1 day double digit profits in a speculative trade, I almost always take enough off the table to guarantee at least a break even trade and often will just take the whole trade off.

You can go broke taking too small a profit, but n this case the exit strategy has to fit the trade strategy.