Friday, September 5, 2008

Green banana trade for Ike

Several things were in my mind last night - this week's hedge fund redemptions, the dollar/yen cross, Hurricane Ike, Bill Gross' bitchslap.

Oil was down near important support at 100. This looked like as good a time as you'd get to put on a defined-risk trade, really, nothing but a bet with a couple of ways to win.

Sitting at 72 yesterday, DIG looked to me like 2 down and 10 up. With 70 as support and every divergence in the book, I bet on a little overshoot. I put out bids at 69.50, 69, 68.50, 68. Got hit on 250 at 69.50 early in the day.

2 PM runs of all 6 models show Ike skimming south Florida and entering the GoM as a Cat 3.

After the close, we get more Nice, Cheap Words from Treasury about a Fannie/Freddie bailout that ought to goose everything at the open on Monday. The question is whether the bounce lasts a month or an hour in the morning.

Of course, there's always that twinge for selling NLY up only 9% when it's going to pop on Monday. Never regret taking a profit, though.

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