bull call spread should be in profit but isn't. please explain

[momoneythansens]

It's been covered about a gazillion times before, but since you asked, recommended reading:

Option Volatility and Pricing by Natenburg
Options Trading: The Hidden Reality by Cottle (updated version of Coulda Woulda Shoulda) www.riskdoctor.com

I wouldn't pay to attend a seminar. www.optionplanet.com for some free seminars.

RE: Your GOOG position. You haven't answered an earlier poster's question on what you think will happen to the stock? If you are bullish then you might want to stick with it. If you are bearish, then close the position. Remember the time frame that matters most is the term of your options. You can be bearish in the near-term but for the purposes of your position, this might be irrelevant.

Your max loss for the position is what you paid for it. You can't lose more than that!

You seem to be getting too caught up in the constant fluctuations of your paper profit/loss. This far out from expiration you aren't going to be able to take profits on intra-day moves. The options you have chosen aren't the right vehicle for that type of trading. Similarly, you aren't going to make significant losses on intra-day moves either so there's no need to panic unless you think that a very large downwards move is going to occur after earnings and not recover in time for expiration.

MoMoney.

Quote from frankr:

Thanks everyone for the suggestions.

Buy1Sell2

What should I do if this is the case with intraday quotes on options prices? The same day goog went above $450 as I thought it would, it went back down and closed at around $433. So in the future if a stock moves in my favor intraday, what am I supposed to do besides look at intraday quotes to make my decision on what to do with my position? Aren't intraday quotes all you have to work with during the trading day? I guess I'm asking , if intraday quotes were the reason why my trade constantly showed the short call rising in value faster than the long call, yet that is a problem because each leg of the spread is not updated at the same time, how would I know where I stand along the profit-loss continuum?

In regards to Optionetics, ra1

Did you do the advanced courses that Optionetics offers? I didn't. Maybe the details on greeks and volatility were taught in those courses but not the first course. They did mention the terms "greeks" and "volatility" many times but not in detail as I would have needed. I read the books, watched the dvds, listened to the cds, and took notes down. As you remember, they had tons and tons of examples where you plot the risk curve and they kept driving home where breakeven is and where profit or loss is on the curve. That was their main focus. Based on just that, my trade should have been in the profit. I know you mentioned you checked and my trade was in the profit, but as I said my account never at any time showed my in the profit.

ra1 and MTE
One or both of you might have suggested books to read, and if so I have written them down. But if you didn't, have you any suggestions? For that matter, if anyone at all have suggestions, please tell me. And please don't just throw out random titles that you haven't even read or have only skimmed. If there are some highly recommended books on options, especially on all the suggestions you guys have made regarding my situation with the GOOG trade, please let me know. I will start to read them as soon as I can, but if I get a huge list of recommended books it may be overwhelming.

Lastly, I'm trying to decide what to do with my GOOG position and I have to decide by Mon because earnings is due on Tue. Expectations are super high. So I will be thinking about what I should do. As it is I've lost a few hundred already on the 2 contracts. If any of you trade GOOG and have suggestions I'm open to hear them.

Thanks everyone!

 

[frankr]

Mo Money

Yes, I have been reading all the book suggestions. I am on 2 forums for this topic and have been jotting down all the suggested titles from both forums. I simply asked again here because it seemed like a number of new people responded to this thread so I was trying to get more suggestions. Then I will read reviews online to narrow down what I will buy and read first.

About my GOOG position I did mention my opinion (or lack of opinion) on being bullish or bearish. When it rose from $400 to $435 on Mon I was convinced it would hit $450 by the next day or two, so I was bullish. BUT, my plan was to get out as soon as it hit $450 before earnings came out next week. So after it hit $450, I don't know if I feel bullish or bearish anymore. Because of my inexperience this whole situation occurred where I wasn't in the profit like I thought I would be, so I didn't exit the position while I'm trying to learn more from the forums. I don't know what to expect from earnings, but I know expectations are really high, which is a bad thing if they don't meet or beat them. And I know earnings for a number of other big tech companies have been no good so far this year.

Yes my max loss is the $1000 I put into it. Right now I can exit and get $700 back. Who knows what will happen after Tuesdays earnings.

This reminds me of another question. I was on another position and I also tracked a few stocks for earnings and on yahoo finance it says the earnings call will be live on such and such day at such and such time. Then on the day of earnings while the supposedly live call is being broadcast, the stock moves big up or down and even articles are posted about what happened after earnings, and all this is before the earnings call is even halfway through. How do these people out there know the results so fast?

Thanks. Have a good day.

 

[MTE]

Quote from frankr:

...
This reminds me of another question. I was on another position and I also tracked a few stocks for earnings and on yahoo finance it says the earnings call will be live on such and such day at such and such time. Then on the day of earnings while the supposedly live call is being broadcast, the stock moves big up or down and even articles are posted about what happened after earnings, and all this is before the earnings call is even halfway through. How do these people out there know the results so fast?

Thanks. Have a good day.

Frankr,

The earnings calls are usually after the the actual results release so the companies release the results and then they have a call. So you don't have to be particularly fast to find out the news before the call. Pay attention to the release time not the call time.
For example, the company may report the earnings at 8am and the earnings call may be scheduled for 10am.

 

[momoneythansens]

Apologies if I came across as being rude, not my intention. The "recommended book's" question comes up every couple of days but you were not to know!

Quote from frankr:

So after it hit $450, I don't know if I feel bullish or bearish anymore.

That decides it. Simply suggest you get out if you don't know. Not sure it's wise to listen to the directional recommendations from anonymous forum members IF that is what you were soliciting. You will likely find equal numbers of people bullish and bearish on GOOG here IMO.

Good luck whatever you decide to do with it and prosperous trading.

MoMoney.

 

[Algorithm]

frankr

Now is the time to decide what your feelings about GOOG earnings will be. The time is getting close to probably whether or not your position is going to pay off. This is a good time to think about your risk aversion in relation to the amount of chips you have on the table.

I think the earnings are going to be a big event, both for GOOG itself as well as the market as a whole. Now, what direction that move will be, I don't know since I really don't follow GOOG and my crystal ball is in the shop. But NOW is the time to re-evaluate this position, not after the fact because then you're gonna say "If I only woulda...." or "I knew I shoulda...".

Take the time to think about it for a while. You may be in a great position right now or a horrible one depending upon your thoughts of GOOG, not GOOG options. Good luck and be honest with yourself and this position.

P.S.

We won't even discuss the opportunity to straddle GOOG right now (Just a little humor).

 

[ra1]

Hi momoney
Thanks for asking why I attend so many seminars of what would appear to be the same thing.
The reason for my many attendances at the optionetics seminars are
1. options are complex and take time to master and I'm probably not the quickest learner.
2. different traders present at the seminars so one gets different viewpoints.
3. motivation - trading is a lonely business and I guess that is why you and others come to these type of forums. The seminars are just another way to keep motivated and mix with likeminded individuals.
4. they are free.
5. revision of material and basics.
6. keeps one focused.
7. like reading a book for the first time, one misses lots of bits. Second time around one learns a bit more, third time around one learns even more and this process repeats. I have never been to one of their seminars and not learned something new that was useful.
I'm sure that you wouldn't read Natenberg's book once and remember or understand all of it in one reading (I could be wrong, apologies if I am).
I also read lots of other stuff - natenberg,mcmillan, cohen bittman etc..
I also come to forums like this one.
I also trade option - straight calls/puts, spreads (cr and db).
P.S. I don't work for optionetics nor get any benefit from promoting them, I'm just a satisfied customer expressing my opinion to those who asked a question.
Happy trading y'all!

 

[billp]

I think that this is something that newbies to options should read as many who attended options courses are taught strategies like this without the educator explaining them fully. Hope that it helps someone out there.