Game theory

A pundit on TV was saying that the talk will be tough all the way to the last minute, classic game theory. Obama was just speaking and was slightly conciliatory but the House speaker Boehner is definitely talking tough. Mind you, that sort of thing is usually playing to the constituency, behind closed doors things are probably quite different.

US reaction last night was measured and European indices were flat so it was a definite overreaction for us yesterday. Our market is falling from an early 40 point gain on Boehner's reply which is overly bearish once more and, I think, shows a misunderstanding of the political process.

Best news for me is FMG which has been as high as 674 and is just drifting back with the market to be at 667 so the July 675 calls might still come good.

I've sold some FMG at 671 along with BSL at 131 (bought more Aug 130 calls at 6 yesterday), QAN at 189.5 and LYC at 214.

IPL is also firmer and a confusing chart is clarifying so that a decent push through those two recent highs just above 400 could be imminent.

Yesterday, I saw most of Friday's decent gains evaporate and today has seen a recovery despite the modest points rise. Usually, I get pretty uptight when the market is whipsawing like this but I was pretty confident in the market and it occurs to me that I'm getting some more perspective. Maybe it's writing this blog because although it is often just a straightforward trading diary as before, I'm really trying to test my motivations all the time even if it doesn't always come across in print.

1.51 The market is up 50 points after the wobble following Boehner's response to Obama's speech. US futures have turned positive and Asian markets have moved from flat to firmly higher. I have a book that's pretty long apart from a few NCM puts and a deep in the money CPU put spread that expires on Thursday. I got out of the balance of NCM July puts yesterday at 21 which is a minor gain but I've added more of the August 3750s at 20. The stock is holding up after some early selling but if the risk stocks keep rallying I expect a pullback to 3850-3900. If it's quick enough, I should be able to sell these puts for about 40.

Another stock which is having a wild ride is LNC; flirting with stops yesterday and charging back to just below the critical 300 level today. I still have the 20k that I bought at 291 on Friday.

4.16 It was a cautious end to the day with the market trimming the gains to 43 points. FMG slipped back to 663 and LNC to 293 but the rest closed well. I sold bits and pieces through the day and have reduced my exposure.