Is the bottom in?

Came across two stocks that have interesting technicals. Both seem to have run into their lows of the year.
For your consideration I present
NITE - Knight group - market making group and
ADY - American Dairy - Dairy products company operating in China.

It's possible to play the rise as stock and option play.

NITE had a huge drop from recent all time high of 23.11 and there have been several times the stock hit $14 area and reversed, so I'm counting to see similar behavior. Would not want to hold it below 13.50.

Can also play it via selling 15/12.5 JAN put vertical for about .80 cents (mid-price is .82)
Max loss: 168
Max gain: 82. 
Break-even: 14.18

This trade can benefit from three things:

• Directional increase in price
• Time decay 
• Volatility decrease

If the doesn't move for a month, and stays in this range, you can win form time decay and volatility decrease. 

For the second play:

On May 15, 2009, there has been a gap up and a very large range expansion.
May 14, 2009: close: 18.43, high: 19.37
May 15, 2009: open: 23.45, close: 28.48

We have touched $20 level Jul 13, 2009 and we're touching that level now. The formation is not the prettiest, it resembles a flat base descending triangle on daily, but can also be looked at as a double top forming on daily around $20 level. However, I would not be too surprised if we make way into 18 3/4 area.

ADY is optionable, and can be traded by selling JAN 20/17.5 put spread for .80.
APR spread with same strikes goes for 1.05, but I don't like it as much because there's not that much compensation for extra 3 months of waiting as APR composite volatility is 38%, but JAN comp. vol is 51.35% so time decay costs more in JAN.

Well that's it for today.

Lemon Financial is born!

I'm observing the markets on daily basis and needed a place to put trade ideas for people to comment on in one place. Hence an idea to start a blog. I'll be posting some ideas I'm considering for swing trades as well as interesting intraday stuff.