Financials - Suckerbet or Bottom?

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Yesterday I made a quick $50 trading Apple off its bounce. It crashed to as low as $126.82. I picked up a meager 10 shares at $129.50 and sold at $134.50. My commissions were only $2.00 total so I netted out $48.

Today on the other hand, I put in some bets on the financials. My first play was Analy Capital. I think I may have timed it wrong. I’ll just have to wait it out for a couple of weeks to see how it plays out.

My Annaly Plays:

• NLY JAN 2009 $17.5 Calls @3.80/contract (currently 3.30/contract)
• NLY July 2008 $25 Calls @ .37/contract (currently .30/contract)

As you can see my Annaly options are clearly in the red. They announced an issuing of new shares to buy discounted mortgages. The street didn’t like the dilution apparently.

My next bet was to go short on financials. I bought 50 shares of SKF (an ETF that goes short against the financials index) @ $107.58. It is currently $103.30. In yesterday’s ultra volatile trading SKF bounced around from $129 to $106. I’m confident this volatility will give me a profitable exit point on SKF. In fact this may not be a bad time to buy both the XLF and SKF. In theory one should be up when the other is down.

**UPDATE** 2/5/08

Sold entire Annaly position for a $422 gain on a $4,100 opening position.  My SKF is still $200 in the hole, but was as down as much as $800.  This week should offer me an exit from that position.  Will be increasing my short exposure to the market this week.