Hartford Financial Services Group showed up on our scanner again today.  Since we've recently taken to trying to improve profits by taking smaller bearish positions in the financials, we turned this one over try and see how we could profit from HIG's further decline.  We started with a look at the Equivolume chart:

Equivolume: HIG click for larger version

There was a substantial move to the downside about 3 weeks ago (13 trading days).  After the move downward, there was still elevated volume at the lower price before the price popped back up.  Now the price has been butterflying lower. HIG is sporting support at around $8.25.  Next we looked at the premium charts for options:

Put Premium Chartclick for larger Put Premium chart

Call Premium chartclick for larger Call Premium chart

The January options are premium in excess of 25% of the current stock price.  Not surprising considering the 21 period average true range is $4.20 which is 45% of the current price.  We're going to be looking selling a tiny parcel of naked Jan $10 calls at around the $2.30 mark.  Stops will be set at $3.25.  If price breaks below the strong support, we'll sell a few more naked calls at whatever the bid is at the time, adjusting our stops accordingly.  If we manage to get a bidder with either transaction, we'll hold onto them until we get stopped out or the New Year rolls around.

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