Catching Tails

FAZ is now printing 25.85. It is tough to watch this one run away.

I expect it to top out shortly, retrace for a few days, and possibly put up the same pattern on a larger scale.

"You're either already rich, or you will remain poor".....

I visualize myself in possession of a mountain of cash in times like this. It helps keep me from chasing trades that have high risk.
 
If it isn't Mr. Big Swinging Dick, himself.

Thanks for stopping by and giving your impressions of my live calls and methodology.

True, I'm just starting out and only have 30 AAPL shares worth of trading capital, but if that's the only thing a professional such as yourself can hold against me, I take it as a compliment.......badass

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Quote from Wide Tailz:


True, I'm just starting out and only have 30 AAPL shares worth of trading capital,
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Kudos for being honest, I'll take back my comment. A few suggestions, keep it small until you get consistency for a few months, you will learn more from your mistakes, find a method/setup ect.. that makes sense to you, trying to follow someone elses or people on ET will prove worthless, be the hardest working trader you know
 
Quote from Wide Tailz:

If it isn't Mr. Big Swinging Dick, himself.

Thanks for stopping by and giving your impressions of my live calls and methodology.

True, I'm just starting out and only have 30 AAPL shares worth of trading capital, but if that's the only thing a professional such as yourself can hold against me, I take it as a compliment.......badass

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I'm going to give you probably the single best piece of trading advice that you've ever received:

In lieu of the underlying buy the deep itm options.

For your trade in which you subjected almost $ 18k of capital at risk (the highest risk being that of a black swan event that could be catastrophic...ala a wide tail...albeit highly unlikely...but nonetheless the risk still exists) in order to make less than $ 180 or 1% on a $ 5.50 move... you could've subjected less than 15 % of that amount in a deep ITM call that wouldve captured 90% of the underlying movement w/o subjecting yourself to implied volatility risk or time decay (it simply is not an issue since the premium primarily is intrinsic vs extrinsic time value in much lower deltas)....yet made approx $ 500 or almost 3x your $ 180 (remember with options you control 100 shares...more than triple your 30 position) with a return on capital of around 20% minimum... at the same time limiting your risk to a maximum of around $ 2500 in the event of a black swan vs much higher risk of loss in the 30 shares. Yet you have unlimited potential for profit. And it even gets better-- if price goes against you- deltas go down... vs owning the stock which has you at 1 delta no matter up or down-- so if you get close to your stop-- you are closer to only 80-85% of the stop loss amount had you got stopped on the shares. I know it sounds too good to be true....but this is one instance where it's not. I challenge any and all to refute this... you will not win the argument I guarantee it.

Think about it. It will be financially life changing. The keys are -- .9 delta or higher...high beta/ATR equities such as aapl with tight bid/ask spreads and decent OI/volume.... and option series that have the shortest possible time to expiration that matches with your trading timeframe and expected move....that's it.
 
Quote from riffrafffpatrol:

I'm going to give you probably the single best piece of trading advice that you've ever received:

In lieu of the underlying buy the deep itm options.

For your trade in which you subjected almost $ 18k of capital at risk (the highest risk being that of a black swan event that could be catastrophic...ala a wide tail...albeit highly unlikely...but nonetheless the risk still exists) in order to make less than $ 180 or 1% on a $ 5.50 move... you could've subjected less than 15 % of that amount in a deep ITM call that wouldve captured 90% of the underlying movement w/o subjecting yourself to implied volatility risk or time decay (it simply is not an issue since the premium primarily is intrinsic vs extrinsic time value in much lower deltas)....yet made approx $ 500 or almost 3x your $ 180 (remember with options you control 100 shares...more than triple your 30 position) with a return on capital of around 20% minimum... at the same time limiting your risk to a maximum of around $ 2500 in the event of a black swan vs much higher risk of loss in the 30 shares. Yet you have unlimited potential for profit. And it even gets better-- if price goes against you- deltas go down... vs owning the stock which has you at 1 delta no matter up or down-- so if you get close to your stop-- you are closer to only 80-85% of the stop loss amount had you got stopped on the shares. I know it sounds too good to be true....but this is one instance where it's not. I challenge any and all to refute this... you will not win the argument I guarantee it.

Think about it. It will be financially life changing. The keys are -- .9 delta or higher...high beta/ATR equities such as aapl with tight bid/ask spreads and decent OI/volume.... and option series that have the shortest possible time to expiration that matches with your trading timeframe and expected move....that's it.
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Now ideally this will be best suited for you once you achieve the ability to buy at least one round 100 share lot of aapl...here's why-- if price goes against you- deltas go down... vs owning the stock which has you at 1 delta no matter up or down-- so if you get close to your stop-- you are closer to only 80-85% of the stop loss amount had you got stopped on the shares. And now the risk of catastrophic loss benefit is even better- because with shares you'd have almost $ 55k at risk... the $ 2500 amount mentioned above hasnt changed. Is there any tradeoff? A very small one-- if you hit your target you didnt quite make as much--Im taking perhaps a taco bell lunch--why? Because as price of stock goes up so does your delta- nearer and nearer to 1.00. Big deal- all about risk:reward.

In the meantime- with 30 shares- yes-- since you are holding overnight-- if your wide stop loss amount gets hit you do take triple loss $ amount-- so technically I do stand corrected- w/o modification to your trade style or share size it is too good to be true--albeit all factors considerd not by much however...but there is a very easy fix for this and one that is the lowest risk trade of all-- convert from swing trading to INTRADAY ONLY AND FLAT AT END OF DAY with a stop based on a shorter time frame chart resistance/support level....an example would be today-- aapl hits support at 569 and moved 5 points... stop below the pivot low on first candle. If you wait for confirmation for reversal to be valid-- you are probably subjecting yourself to a $ .75-$ 100 loss to make $ 400-$ 500.

Make sense?
 
Quote from riffrafffpatrol:

I'm going to give you probably the single best piece of trading advice that you've ever received:

In lieu of the underlying buy the deep itm options.

More...

I've already been down this road. And you know what the best advice really is? Worry about minimizing risk, not about maximizing gain.

I'm comfortable with my returns. The only thing I can hold against stocks is they take 3 days to settle in a Reg T account. This, too, will pass.

:)
 
Quote from riffrafffpatrol:



For your trade in which you subjected almost $ 18k of capital at risk
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The risk was not the full account, it was $108, unless you think the exchange itself is going to fail.

AAPL is a lot more liquid than your ITM options. My stops are much more likely to be honored with minimal slippage on the stock itself rather than some thin market derivative......
 
Quote from Wide Tailz:

The risk was not the full account, it was $108, unless you think the exchange itself is going to fail.

AAPL is a lot more liquid than your ITM options. My stops are much more likely to be honored with minimal slippage on the stock itself rather than some thin market derivative......
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AAPL DITM is very liquid...

And as for stops- because they are .90 plus and move with the stock... your stop is based on the underlying... always. Pure TA on the underlying dicates when to enter and exit the option.

Good luck- single best thing I ever did however was stop trading the underlying and strictly trade the option directionally intraday-- flat overnite. % on capital exponentially higher-- risk much lower. Exactly what you want-- I want too.
 
FAZ has retraced most excellently over the past two days. Here is where it gets interesting...... It has now traced out the wave 2 on the hourly chart of the expected wave III on the daily. It pricked the .618 fib line in the last hour of trading today.

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