Wednesday, January 30, 2008

Hedging my portfolio and how I dropped the ball

So today I figured, you know what, the FED might not cut...or maybe the market has factored in the whole .50 basis point cut. So I decided to buy puts on JPM and COF. I also had bought puts on AMZN in hopes that they would drop the ball. Anyways, when the cut was announced, I decided to sell the puts because I saw us going to 300 like every other rate cut.

then, everything came tumbling down. A hedge is a hedge, you forget about it and sell whats up...the calls. Selling my calls I would have created good cash and would have money for tomorrow. Instead I sold my puts for a loss and now my calls lost the value they had when the market was up 200 points. I can never figure out the market unless I devote myself mentally and physically, 100% to this.

Long term this should be the right move but I'm not sure about the short term due to volatility.

Let's hope AMZN disappoints like all other techs and my puts gain value.

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