Friday, March 26, 2010

Short RINO...

I bought 5 Jun 10 $30.00 RINO Put Option contracts yesterday afternoon after RINO broke technical support around $23.80.

I deliberately bought in the money contracts three month out because I believe RINO along with other chinese stocks are heading downwards longer term. I chose RINO specifically because it has a near term catalyst that may accelerate its decline.

RINO has had several quarters of impressive earnings growth along with earnings surprises. However, the price action I am seeing suggests that RINO is likely heading lower longer term and that an earnings disappointment may be on the horizon.

So I am taking a chance on RINO. If RINO declines going into earnings and therefore gives me a cushion. Then I will take a chance and hold through earnings announcement next week. I will either lose a the chunk of the profits I have managed to make so far or make a "big" score. On the other hand, if RINO does not decline or even worse rise going into earnings I will exit for a fairly sizable loss.

I have already gotten to $5,000. My next target is now $7,500. Hope I get there soon!

Good luck and good trading!

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