Emil's Wicked Cool Blog

So I've excercised the remaining stock options from Intel that remain above water. There are still a large number of options that will die worthless (my original options were priced at $67 back in 2001, current stock price is $23.52, and there were no splits in between). The next set of options that even have a shot at becoming in the money are priced around $26, and with 3 weeks out, it would be surprising if they became valuable. Here's the quick story of how the excercise went down.

I excercised in three batches. The first batch I got totally lucky and sold at $27.98, exactly $0.01 off the 52 week high. Dumb luck. I sold only half because word on the street was that Q1 would be great, and the price would keep going up. In retrospect, I think selling half was a good move, but my big mistake here was not to have sold the most expensively priced options. Those options at $26 would have actually been worth something.

The stock tanked this year, but recently began to gain ground. Oddly, it picked up momentum based on almost no news (the overall market was also up). Intel did get an upgrade that did pretty well for the stock. Due to what seemed to be a short term movement and the imminent expiration of my options, I dug out some of my technical analysis knowledge and went to town:

I watched the following indicators:

• MACD: I was looking pretty short-term (<1>
• Bollinger Bands: I thought this would be a fairly useless indicator, but in fact, it was just when the stock crossed the upper band that it turned negative.
• RSI: Fairly useful indicator in this scenario
• Slow Stochastic Oscillator: Fast stoch always seems too touchy for me. Maybe if I were trading several times a day it would be different, but the slow stoch was useful
• Parabolic SAR: My primary source of when the options should be sold.
  

When the stock hit 25 and retreated a bit to 24.60, I decided to sell my second batch, a fairly small set of options that were priced in the mid 23's. My primary thinking here was to lock in some of the options since going up over 5% in one day on no news was just crazy.

At 25, the MACD, Bollinger Bands and RSI indicators all went bearish, so I thought I'd sell when the price started to dip. The next day it opened pretty low and then dropped below 24.13, which was the Parabolic SAR trigger point, so now all the indicators I was tracking went bearish. I sold at 24.08, and so far, it's down another 0.85 from there.

Lessons learned? The indicators can work...don't rely on just one, and make sure that you use the right indicator for your goal.

Another couple links of use:

• Scottrade chart: This chart is continuously updated, and summarizes what the indicators are saying (e.g. Parabolic Indicator is bearish/MACD is bullish). The conintuous updates made it more useful than Yahoo. It does, however, force you to re-add the indicators - no deep link is possible.
• Yahoo chart: I was originally using this chart from Yahoo. Since the URL includes all the options, it looks exactly as I was using. However, it only updates at the end of each day.
• TD Ameritrade Command Center 2.0: A Java app available for TD Ameritrade customers, it let me watch the stock in real-time during the day.