Confessional Booth Time: Sell Something, Anything... Volume 200810

My CENX play resulted in very little trading plaisir, with my position experiencing a very minor +3% profit at best. This position did not hit the right spot and I entered hoping for some serious upwards momentum with the options expiry occurring on 21 August 2010.

Prices closed slightly below my initial entry level of $10.25 today and I am looking at the September 2010 options for some clue as to what to do. The $10 battleground remains relevant, but the upside doesn't look convincing.

If we do manage to break above $11, then $12.50 is likely. However, the question is will $10 hold? I think we won't know for certain until oil starts doing something definitive. In terms of seasonality, though, miners usually outperform towards the final trading months of the year. So, even though I wanted only a 21st century ORTT with CENX, I'm going to give myself till mid-September. I am going to prevent myself from postponing the sell indefinitely.

Here's what went wrong with this options chain...

I looked back on my notes from previous options chains inspired trades that I've done. Two-sided winking from both the call and put side has to be very prominent. Current prices have to be above a significant amount of put options and there also has to be significant open interest on put options above current market pricing. This means that fear will start driving prices up, resulting in very quick market action.

With the CENX play a few days ago, there was not enough option interest to drive the move up - particularly from the put open interest side. There was some call action, but not much was going on to put any fear in the bears. (So my Mom's actually got some newer dance moves than me, in case anyone's wondering).

What keeps my interest is that hostile bids seem to be dominating the headlines - BHP's hostile bid for Potash and Korea National Oil's hostile bid for Dana Petroleum are two recent examples. Companies have been hoarding cash - a well-known fact.

Maybe I'm delusional and schizophrenic, but my intuition says this could be a large-scale revenge move from the players who didn't get enough out of the previous market bottom that the Lehman bankruptcy caused. Those who didn't get in on the recovery are now going to pluck everyone and do a S&R to the upside. Pure, heartless evil!

M&A's are dominating headlines - not bankruptcies. And this is encouraging, considering that more than $50 billion of M&A proposals occurred this week according to FT.

Until oil gets battered, I'm sticking to my plan and holding onto my equities whilst looking to hedge myself with some timely Bwahaha type forex trades...

-1.45% on the SBA
-0.5% on the Roth IRA