I know, I know…it has been a while since you have heard from me, and you are probably tripping out. But chill, I am back to blow your mind with some really far out stuff man…
Ok enough of the funny stuff! Time to get serious.
The reason why you have not seen your ol pal Merlin around much lately is because of the increase in volatility we have been experiencing these past couple months. Take a look.
You see that? Obviously the volatility has been up.
“What does this mean Merlin? I am so lost right now, bro”
I said enough of the funny stuff!!!
What this means is that the implied volatility is up a bunch, and that means my profit margin gets a lot smaller and more complicated. This leads me to another reason why you have not seen me that much during all of this hogwash. I AM OLD, and I simply do not have the time or the patience to muck around with this crud. When I see this kind of stuff I know it is time to slow down, go easy, and perhaps take Mrs. Merlin to some exotic location and lay on a beach.
When you get all old and stuff, like me, you will understand. I have had my good times in the wild markets, and I came to a point years ago where I realized I did not have the energy to trade in those conditions anymore. I do keep my eye on the index and look for a place to possibly take a trade in a futures contract or two or some in the money index options, but those opportunities happen few and far between, so you end up just sitting around waiting a lot of the time. So again, I usually do not have the temperament for this kind of thing either anymore.
There are always trades to take though, and I do keep an eye out, even in tougher markets like the one that has been flying to and fro of late. One that I could not resist a little while back was this CGC. I had been talking to JP one evening about a few stocks we had on the watchlist and he mentioned that he thought 32 was potentially a good area to get long the stock or the options.
So I kept the stock on my screen and waited for it come down to that location. Sure enough it came right in there and I went after a call position, as I had done my own analysis and decided that I agreed with JP and 32 looked like a great spot to take a shot.
That brings me to the final point of all this rambling on. I am currently long CGC with the December 33 calls and have been patiently waiting for this little fella to take flight.
The stock gave it a go a few times after I got the calls and the position has been rocking back and forth from profitable to slightly red. Until this December call position I’m holding either starts ripping or goes bust, your old friend Merlin will be sitting here staring at this here chart.
There you have it. The long strange trip that is my trade in CGC. Hope you enjoyed the ride!
Oh and one more thing about that VIX chart above. Do you notice anything else about it? No? I Didn’t think so…so I will just tell you. It has been steadily coming down, and ol Merlin likes that, a lot.
Stay tuned for the next episode my friend!