Still in the ODFL Business

Considering the weak day on the market ODFL fared pretty well. It managed to close above it's support line and that is good. $38.06 was the closing price. Not a wonderful day but kind of a typical day on the market.  Time will tell if ODFL can launch upward from here. Stops remain in at $37.49. Tomorrow is another day! to quote Scarlet O'Hara.

ODFL's Cash Is Still In The Box!

Rough sledding in the market this morning. Nothing unusual there though so get used to it if you want to trade.  Bot (trader's short hand for bought) the $40 April calls this morning at the open for 45 cents when the stock opened at $38.56. Looking for a 5% gain would make our target price $40.49. I lowered our stop to below the support line at $37.49 on the close of the day. Of course shortly after getting into ODFL this morning the market started to sell off and the weak sisters holding ODFL followed suit. We however are bold as a lion, "The wicked flee when no man pursueth:  but the righteous are bold as a lion." Proverbs 28:1 KJB. So we are sticking to our position at least until closing time if it looks to be closing below $37.49 tonight. The stock sold off a little bit down to $37.50 and has recovered to back above the resistance-now support line for the time being. Reader Cindy asked if I personally trade any of these. The answer is yes! In fact this morning I am trading ODFL. And as is often the case am underwater at the moment. ODFL is a strong stock though hitting new 52 week highs so it is reasonable to expect it to hold its own even on a dipsy doodle day. Stay tuned!

Will Old Dominion Freight Line Put Cash-In-The-Box?

Old Dominion Freight Line, ODFL, Broke out of its 2 1/2 month long trading range Friday on a very nice volume spike. See the ODFL chart above, courtesy of FreeStockCharts.com.  This will make an excellent paper trade. Place a contingent order that if the stock trades above approx. $37.98 then buy the stocks or April $40 Call Option on the open at market. Then we plant to hold it for a 5% gain in the stock price. The protective stop loss should be set just below the resistance-now support line at about $37.69 ish on the close. Friday the the $40 April Calls closed at about 35 cents with a 10 cent spread so the bid price (the price you get if you decide to sell) is about 25 cents right now. However if the stock gains about 5% in the next several days the options could be worth about 82 cents on the bid price according to the option price calculator at OptionsXpress.com so we have a chance of doubling our money on the options if things work out as planned in the next few days. Stay tuned!

Cashing in on ASPS

ASPS is another Cash-In-The-Box winner. This short side breakout closed tonight (I'm posting this after midnight so the date is Saturday but I'm referring to Friday) at $69.88 after falling as low as $69.46 a mere 11 cents above our target price of  $69.35. The April $70 Put is now worth $2.50 and probably triggered a sale when the stock reached $69.46 according to the option calculator, the option hit $3.01 on the bid price today, well above our $2.70 estimated target price. So if we had our order in to sell at our target price of $2.70 the option would have sold for a 13 percent gain. However if we had a contingent order in to sell the option when the stock reached $69.35 we would still be holding our position. If we sold the stock short we would be up $3.12 per share so far on the close. I think I probably would have taken profits on the close today rather than holding over the weekend. So we can call this trade good enough.

I will see if I can find another Cash-In-The-Box for us to paper trade on Monday morning and post it this weekend.

Bitten by ASPS?

Am paper trading ASPS this morning. I have been watching this stock for awhile as a potential breakout short candidate. This might be interesting since it can be hard to "fight the tape" in other words short a stock, or take a bearish position in a bull market which this market is. As you can see from the above chart courtesy of FreeStockCharts.com ASPS broke out of its Cash-In-The-Box on a big volume spike yesterday. So this morning we shorted the stock at the open.for approximately $73.00. We are looking for the stock to move down 5% to $69.35 which is our target price.

If you wanted to play this move using options you would select an April or May Put option at or close to the money which last night was the closing price of ASPS was $71.80 so you would have probably picked the April $70 Put for this morning's opening. Placing the contingency order to buy the Put at market if the stock traded at or below the support line price of $74.75 or less.

 This morning's Put would have been purchased at $2.20.There is a horrendous spread on this stock's current month's options of about 90 cents. So right now the Put's bid price is still under water at $1.80 even though the Ask price has moved up to $2.70 already since the stock is already down $1.50 from the open. Remember Puts increase in price if the underlying stock's price falls. If the stock hits its target the option bid price would be about $2.73 according to the option price calculator at OptionsXpress .BTW you can sign up for free at OptionsXpress and use all of their tools, charts and give their Virtual Trading program a try if you've never traded before. This gives you the real hands on experience and is a great way to keep track of your paper trades in simulated reality which is handy even if you have traded before. Virtual Trading is listed under the Toolbox tab at OptionsXpress.

Ins and Outs of ABG

Above is a 1 minute chart of ABG this morning at the open courtesy of FreeStockCharts.com. ABG opened at $37.45. See the arrow in the little rectangle. That's the opening prices at 1 minute intervals.  Since the stock opened below the breakout line we bought into the stock at $37.45 on the open and were out of the stock less than a few moments later at the same price or better of $37.55. So about broke even or with a small loss or gain on the stock trade. This makes me realize that the best way to place these orders on open is to place them as a contingency order if XYZ stock sells at or above (below in case of going short) the breakout line price then purchase the stock or option. That way when the stocks are opening lower as they did this morning you don't even get in.  Live and learn.

 Now if we made this mistake and bought the option this morning we are out a bit more because of the spread between the bid and ask prices of options. When you buy an option you pay the Ask price which is higher than the Bid price which is the price you get when you sell it. On this April $40 Call the difference between bid and ask is 40cents. So in all likelihood you would be out 25 to 40 cents per contract depending on how speedy you were to get out. In this case 5 minutes later gave you a gain in the stock price of about a dime. So this is why we paper trade to find out some of these bugs. However by putting in the contingency orders from now on this will not happen because the buy will not trigger unless the stock is trading higher (or lower in case of going short) than the breakout price line.

Paper Trading ABG

Haven't had time to look for lots of Cash-In-The-Box setups. But ABG looks good so why look any further. If you were to trade the ABG breakout, you would buy on the open Monday morning at market. Or if you are playing the options buy the April Call close to the money strike price of ABG. The $40 Call is about 70 cents per share or $70 per contract. The goal will be about $39.95 on the stock price. Sell when the stock hits $39.95. The stop loss is just below the breakout line in case it's a dud, the resistance now support line, at approximately $37.60ish (some people like to give it a quarter under the line which would put a stop at $37.41).