Unless you’re Angkasawan (not astrounaut mind you), you should respect the Newtons’ Law of Gravity which says whatever goes up must come down. The physic law or formula applies mostly to engineering – remember those days when your physic teacher always relates your classmates who excel in physic as potential engineers but not doctor? I might wanna give my physic teacher a lecture if I have the opportunity to meet him.
My physic teacher could have forgotten or didn’t have a clue that Newton’s Law of Gravity can be used profitably in trading options or stocks. I’m referring to Google Inc. (Nasdaq: GOOG, stock) of course. Today is the day the physic law takes its effect on Google’s stock. So what’s the problem with Google that it plunges more than 5 percent or $37 a share as of writing? Traders blame it on Cisco System Inc. which drops more than 7 percent and pull the rest of the Nasdaq’s stocks into negative territory.
Using this as an excuse, everyone seems to be selling technology stocks – Apple Inc., Akamai Technologies Inc., IBM, Baidu.com Inc. etc. If you can’t beat them, join them. And so I bought GOOG Nov 700 Put Option with the intention of scalping the stock. It was quite easy with such high volatility and if you refer to the chart, the range of $10 was the perfect area to scalp. I closed the position an hour later pocketing a cool 30 percent profit. My guess was the stock could go lower because it was struggling to hold on above $700 a share. But then, I wouldn’t want to stay all day long. It’s better to take the money off the table and run. I always remind myself that “Bull and Bear make money, Pig gets slaughtered”. There’s always another trade next time.
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November 8th, 2007 by financetwitter
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Hi FinanceTwitter :
Seems like you’re now an expert in GOOG, knowing when to buy it at the right time and knowing when to scalp it with a put option when it goes down.
Yours Truly,
Tony Chai
My Options Trading Blog