Sunday, December 21, 2008

Keepin' Score (12/15)

BBY - I said: "Positive news could boost them to the 29 area..."
What happened: +0.5 points for highs of 29.04 and 29.66 on 12/17 and 12/18 respectively, despite some rather grim comments. I would add that I really should change my phrasing from "positive news" to "positive reaction" since perception and reaction seems to have little connection to whatever is stated or implied.

NKE -I said: "NKE is intriguing but the options pricing is very reflective of the chart and has a break-even low price of 42.50, which would be just below the recent lows. Another one to probably avoid unless you feel like gambling with naked puts on op-ex week."
What happened: -0.5 points since NKE would have been profitable on a strangle when NKE hit 54.25 on the 18th.

JOYG -I said: "The break-even high at 24.88 leaves little room for error with the 50 DMA just above that at 24.98. Another one with no clear reason to play on op-ex week."
What happened: -0.5 points since JOYG would have been profitable at the high price of 26.50 on the 17th.

RIMM -I said: "This one is attractive to play as a strangle, even with the warning that these contracts will be worthless if the shares do not make the appropriate move."
What happened: RIMM gave good guidance and the 2.46 which would have been kind of a worst case price for the strangle would have paid off 59 cents when the 40 calls sold for 3.05. (They peaked higher than that, later.) +1 point for getting the strangle call correct.

Total: +0.5 points for the week.
Aggregate Total: +1.0 points

As I was writing this week's Keepin' Score recap, it occurred to me that I should have some kind of standard and consistent scoring scheme going forward. Here's what I was thinking:
+0.5 points: getting a high or low level correct even if the release isn't worth playing.
-0.5 points: stating a particular release is not worth playing and then it turns out that it would have been profitable to do so.
+1.0 points: Recommending an ultimately profitable strategy.
-1.0 points: Recommendation is not profitable.

I'll probably tweak them a bit as different situations arise but they should serve as a start.