Anybody Feel Like a Rubber Band

Today was another 3-digit move within the stock market. According to CNBC, 10 of the last 18 trading days within November have been 3-digit moves, whether up or down. In my opinion, this volatility will remain for the near future, so traders who are out there playing the swing trade are loving life because of the huge gaps up and down. Even long-term investors should have their Christmas list ready and buy on dips on those stocks, which they have done research upon and feel comfortable establishing a position on. So really when you think about this volatility, the market still has alot to offer. The key ingredient is not to try and pick a bottom because even the most sophisticated trading systems are not able to predict this with 100% accuracy.

Here are the trades which I closed and/or opened positions on just today:

*Closed my December $27.50 puts on CSCO at $1.05 for an approximate 44% gain

*Opened a new position on December $30.00 puts on MEE $1.40 premium (last trade $1.65)

*Opened a new position on December $17.00 puts on EMC $0.45 premium (last trade $0.45)

*Maintaining my December $49.00 puts on QQQQ $1.40 premium (last trade $1.16)

I am also looking to make a play on RIO and it goes a little something like this. RIO closed at $31.20 and as I blog it's trading down in after hours by a few shekels to $31.12. So here is my grand scheme. I must reiterate that I like RIO very much and think that these levels are cheap, so this is why I am after this trade. My goal is to load up on some RIO at the $29.00 level and maybe even the mid-$30's. Once I achieve this goal then I plan on selling covered calls on the stocks I just bought, which will generate a premium for my account and lower my cost basis even further than my original purchase price. This is completely fine with me because I think this is at value levels. I would look to either sell the March or June $35.00 calls and collect a premium between a range of 3.00 - 4.00, which in theory could set my cost basis as low as $25.00 per share. Now that my friends is value and in my opinion a somewhat safe play in this volatile market. Of course, this trade is something specific to my situation, so please do your own research and enjoy the picture of the RIO Grande river. Yeah I know that was cheesy.