Contrarian/ Buying the lows

A

arturo100

I am buying these days lows, with expirations ranging from few weeks to few months. As you can imagine, this strategy is killing me! One of the things I am clearly missing is some PUT coverage. Among the most shorted underlyings in this time frame I see the following:

AAPL
FB
QQQ
BRK.B
NFLX
PFE
CSCO
WDAY
XLE
LULU
XLI
IWM
AMZN
OKTA
XLNX
NVDA
GOOGL
LYFT

Would you recommend anything among these underlying? Or, may be, some new one?
Thanks in advance.
Arturo
 
Contrarian strategies are better when you do not get in all at once. You will never just pick the bottom or top on day 1. You should also not go all in with your entire account as these will all be corrected to the QQQ on your list. Hedging is up to you. That would make more sense if you picked just stocks and bought puts in one of those indexes. Or, swapped buying stocks for vertical call spreads in each to limit your losses to the premium you buy-if that fits your trading.
 
OK to trade reversal up signal.

But counter trend trading aka kamikazae trading is not acceptable.

Sometimes distinction between these are very clear, sometimes not clear.
 
Robert Morse said:
Contrarian strategies are better when you do not get in all at once. You will never just pick the bottom or top on day 1. You should also not go all in with your entire account as these will all be corrected to the QQQ on your list. Hedging is up to you. That would make more sense if you picked just stocks and bought puts in one of those indexes. Or, swapped buying stocks for vertical call spreads in each to limit your losses to the premium you buy-if that fits your trading.
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Thanks, Bob. I always like your thoughtful and competent answers.
I agree with you.I am investing roughly 1-2% of the trading capital I allocated for crazy things like this. I am expecting the market to correct itself in a few weeks for each transaction I make. But things are tougher than I thought. I mean am still reasonably doing well with transactions like, say, K and DKS, where I bought the low and got some kind of rebound (Call 52.5 and Call 34), but instead I got completely wiped out on CTRP where I entered too early and the stock is still falling (Call 37). The expiration of these calls is on June 21, but I might sell earlier profitable positions, especially if don't manage to come up with any reasonable hedging. Once MSFT options used to be a great hedger, I mean low-delta, high-OI, high leverage and so forth. May be I should look into them...

P.S. My system is just underlining the pre.market fall of CNC (-9%). It advices to follow it for a possible rebound, since it was on the long list of several people...let see wht's happens
 
maxinger said:
OK to trade reversal up signal.

But counter trend trading aka kamikazae trading is not acceptable.

Sometimes distinction between these are very clear, sometimes not clear.
More...
Absolutely. You must absolute wait for some kind of reversal signal, otherwise you are catching a falling knife.
 
arturo100 said:
Thanks, Bob. I always like your thoughtful and competent answers.
I agree with you.I am investing roughly 1-2% of the trading capital I allocated for crazy things like this. I am expecting the market to correct itself in a few weeks for each transaction I make. But things are tougher than I thought. I mean am still reasonably doing well with transactions like, say, K and DKS, where I bought the low and got some kind of rebound (Call 52.5 and Call 34), but instead I got completely wiped out on CTRP where I entered too early and the stock is still falling (Call 37). The expiration of these calls is on June 21, but I might sell earlier profitable positions, especially if don't manage to come up with any reasonable hedging. Once MSFT options used to be a great hedger, I mean low-delta, high-OI, high leverage and so forth. May be I should look into them...

P.S. My system is just underlining the pre.market fall of CNC (-9%). It advices to follow it for a possible rebound, since it was on the long list of several people...let see wht's happens
More...

Good luck, overall I have rarely made money fighting the trend and do better staying with it.
 
arturo100 said:
Absolutely. You must absolute wait for some kind of reversal signal, otherwise you are catching a falling knife.
More...

catching reversal signal is very important.
almost half of my signals are reversal signals.

as mentioned, distinction between counter trending trading and reversal could be very clear, or very blurr.


counter trend kamikazae trading - catching falling knife with bare hand.
smart reversal trading - catch change of trend with firm iron glove.

so if you want to be successful trader, better know how to
catch continuation signal, reversal signal, and don't do
kamikazae counter trend trading.

There are quite a few counter trend traders in this forum.
success rate wouldn't be very encouraging.
You can't bring home the bacon doing such thing.
 
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You might be in for a rude awakening even if those stocks bottom out. Volatility is quite high in a few of those names and the money you make on delta you will lose in vega. Buying calls in this environment is nuts for anyone other than the kind of Buffett who has an incredible power in signaling. We have not even passed the largest down moves yet.

arturo100 said:
Thanks, Bob. I always like your thoughtful and competent answers.
I agree with you.I am investing roughly 1-2% of the trading capital I allocated for crazy things like this. I am expecting the market to correct itself in a few weeks for each transaction I make. But things are tougher than I thought. I mean am still reasonably doing well with transactions like, say, K and DKS, where I bought the low and got some kind of rebound (Call 52.5 and Call 34), but instead I got completely wiped out on CTRP where I entered too early and the stock is still falling (Call 37). The expiration of these calls is on June 21, but I might sell earlier profitable positions, especially if don't manage to come up with any reasonable hedging. Once MSFT options used to be a great hedger, I mean low-delta, high-OI, high leverage and so forth. May be I should look into them...

P.S. My system is just underlining the pre.market fall of CNC (-9%). It advices to follow it for a possible rebound, since it was on the long list of several people...let see wht's happens
More...
 
arturo100 said:
I am buying these days lows, with expirations ranging from few weeks to few months. As you can imagine, this strategy is killing me!
More...

No wonder. You're simply trying to do the wrong thing in the wrong market.

A trending market can cover your mistakes and pull you out of hot water. But this is not a trending market, and impossible to consistently place winning bets weeks or months out.
 
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