My Plays for June 1st

• stevenplace
• June 1st, 2009

Another week, another 100+ premarket move.

As I mentioned on Stocktwits brunch this past Saturday, I think that the month long range we’ve established has about run its course, so we’re looking for a new expansion in price. I also think that the shorter term traders have had some attrition set in with all the wipsaws of the past month, which could fuel an even larger move. Keep an eye out on the 13 on XLF to confirm that this is a good upside move. Remember this thing can turn on a dime, so if you’re complacent you’re may get burned.

Since I am expecting a larger move in price, I feel that being an option buyer is much more sensible than it was in May. That means the positions are a little more speculative and leveraged, but the price action should make up for the time decay incurred. Remember, never buy front month options unless you have a good reason.

Here’s my 3 ideas:

Very nice and liquid options– I’m looking to buy July 45s and sell 1/2 Juns into strength. A break of 45 and it could run the upper BB higher.

I’ve been eyeing this stock as a short for a while, but to be honest it could go either way. A break of 35 and I’ll look at Jul 35 puts to buy *or* for a little more tricky play, selling a Sep/Jul 40 call spread. It’s a delta negative position but if the stock whipsaws and breaks 39, it becomes a delta positive play and you’re breakeven above 44-ish. If it rips above 39, Jul 40 calls make sense.

Nice looking break above 19 and I want to get long. Could have taken an anticipatory long on the pullback to the 50 MA, but it’s probably got room to run. Be aware of the declining 200 MA just above the breakout area.

Tickers: ilmn, nue, wfr

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