Saturday, December 30, 2006

Some Off-Site Recommendations

There are a several sites I use when short term trading to see what kind of edge I might have when I take the trade. These three in particular -, and

I use Ivolatility to get a current perspective of historical volatility versus implied volatility. I like stocks that I buy to have a 10 point implied volatility edge over the historical volatility. Even though volatility is low in just about every stock - I find that the 10+ point difference suggests that a stock might be moving in the near future. Since I expect the move to be up I'm not concerned with the direction as implied volatility is directionless. An example of this would be one of my current short term holdings, DHI where current historical volatility is 17 and implied is 34.

I use Whispernumber to find out when the stock will be reporting earnings because I dislike holding short term trades through earnings. I've been burned too many times by this to let it happen again regardless of the story being told in front of the fact. You have to register at whispernumber but it takes a minute and it is meaningless. An example would be the fact that I know that two of my short term holdings are reporting earnings in 24 days. So I will be out of them by then.

I use the NASDAQ site for information regarding institutional holdings. What I want to know is how much of the float is being held by the 'tutes because for a short term stock I want high participation. I look for at least 70%. For example, SYMC a short term stock that is turning into an investment has 91% of its shares held by institutions. With 8000+ mutual funds out there I would be concerned with a stock that wasn't held widely by the 'tutes. (You can also get this information from Yahoo Finance and others as well - I use NASDAQ because it is so easy).

Just a few ideas to help your trading go a little more smoothly.

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