GOOG PCCRC

===========================
How to view the entire chart:


1. Try clicking on the name of the most recent article in the column on the right. This will remove the "Archives" list.
2. Try right click on the chart itself and open it on a separate window.


I am sorry that I cannot always make the chart small enough to fit neatly on the left column. I want you to be able to see the details I want to point out.


I Hope this helps,


Juan

---------------------------------------
I have been focusing on my own trading for a while but I think it is time that I begin to share my excitement about the results I have had over the last 12 months. I have increased my capital by almost 30% over the last 12 months. My approach, as you have seen, was not by blow out, high risk, high reward positions, but by limiting risk while maintaining the potential for unlimited rewards. My strategy has been mostly using the PCCRC.

I have chosen to enter PCCRC's in a handfull of situations that I will summarize here:

1. Stocks that I consider high fliers: Stocks with the highest % gain over the last 90 days.
2. Stocks with large skew between front and back month. I demostrated this strategy with IMCL. I actually showed 2 profitable trades.
3. I have chosen to trade stocks AFTER exceptionally good earnings. On a daily basis I look at stocks that jump >10% in price and if the IV is low or declining, I enter a PCCRC. This technique has also proven profitable. I will be showing you some examples.

There is nothing wrong for you to pick stocks that you simply would like to own (or trade) as long as they have a good IV profile. Here is an excellent example:



The IV in this stock is at the low end of its range and does not exceed 40%. Note that the stock recently declined strongly but it is now reversing to the upside. GOOG, the stock in question, reported earnings a couple of weeks earlier. As I told you before, earnings causes IV to decline, a good time to enter a PCCRC. Early in the day (Sept 13) GOOG jumped in response to an alliance with Intuit.

http://finance.yahoo.com/q/h?s=GOOG&t=2006-09-13T20:40:09-04:00

I entered the following trade:



I would like to share with you my favorite Elliott Wave pattern: The nonlimiting triangle:


As you probably know, the Elliott wave triangle is formed by 5 waves (ABCDE). If E itself takes the form of a triangle, the whole sequence is named the nonlimiting trangle and the following exit of the triangle results in a jump that is 256% the amplitude of wave A of the triangle. Thus, one should expect a very large increase in GOOG's price over the next few months. As you may have guessed, I a willing to take advantage of this opportunity, but only with the risk protection that I feel I get with the PCCRC. Today, only 1 month after I entered the trade, GOOG has jumped >$30, but I expect much more. Here is my trade today:



With the PCCRC you can enter trades in stocks that may have already run a long way, as long as the IV profile is acceptable: IV must be >40%, and the IV of the options you sell must be > the IV of the options you buy. Do NOT go too far into the future, there is no need to waste capital in long-term options. I chose Jan options back in Sept. If you wish to enter a similar position in GOOG, do NOT go beyond March. Try it as a paper trade, the education will be quite valuable, I assure you!