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Divergences
- Thread starter romik
- Start date
Just to keep you posted on my latest option trade on the Q's
Monday I bought
50 Sep 37 calls for 1.00
50 Oct 37 puts for 1.00
Wednesday I sold
50 Sep 37 calls for 1.90 Taking the money to open a new trade.
Thursday I bought
60 Sep 39 calls for .85
40 Oct 39 puts for 1.15
So if you will follow me here I now have the Sep 39 calls for insurance. Then on the put side I now have 40 Oct 39 puts and 50 Oct 37 puts which are basically free since I took profit on the call side which just about amounted to my initial investment.
This is how I pyramid into a short position while still insuring any upside move. I used the Sep calls only because they were a lot cheaper than the Oct calls and they still provide the insurance I need.
Hope this helps you understand what I am doing. Now I want to see them take it down to about 34 where we have a major support level within the next 2 months.
Gary
Monday I bought
50 Sep 37 calls for 1.00
50 Oct 37 puts for 1.00
Wednesday I sold
50 Sep 37 calls for 1.90 Taking the money to open a new trade.
Thursday I bought
60 Sep 39 calls for .85
40 Oct 39 puts for 1.15
So if you will follow me here I now have the Sep 39 calls for insurance. Then on the put side I now have 40 Oct 39 puts and 50 Oct 37 puts which are basically free since I took profit on the call side which just about amounted to my initial investment.
This is how I pyramid into a short position while still insuring any upside move. I used the Sep calls only because they were a lot cheaper than the Oct calls and they still provide the insurance I need.
Hope this helps you understand what I am doing. Now I want to see them take it down to about 34 where we have a major support level within the next 2 months.
Gary
Quote from 4re:
Just to keep you posted on my latest option trade on the Q's
Monday I bought
50 Sep 37 calls for 1.00
50 Oct 37 puts for 1.00
Wednesday I sold
50 Sep 37 calls for 1.90 Taking the money to open a new trade.
Thursday I bought
60 Sep 39 calls for .85
40 Oct 39 puts for 1.15
So if you will follow me here I now have the Sep 39 calls for insurance. Then on the put side I now have 40 Oct 39 puts and 50 Oct 37 puts which are basically free since I took profit on the call side which just about amounted to my initial investment.
This is how I pyramid into a short position while still insuring any upside move. I used the Sep calls only because they were a lot cheaper than the Oct calls and they still provide the insurance I need.
Hope this helps you understand what I am doing. Now I want to see them take it down to about 34 where we have a major support level within the next 2 months.
Gary
that's great, it's a lot more clear now. I assume it's 100 shares as well per contract? Basically, if price moves over 37, you profit on the calls side, depending how much the quote to sell them and vice versa on the down side, right?
Quote from romik:
DELL (NASD) Dell Inc
Current: $23.87 1/2 max position
PT1: $29.00
PT2: $32.00
PT3: N/A
Stop: This is a tricky one, as the stock has broken through all recent support levels, actually from 2003, developing a double top on weekly in 2005, but no risk no gain, so I would scale in with 50% @ $22.50 and stop @ $21.
BLD in RSI(perhaps making a double bottom, depends on the settings)/MACD HIST. CCI in heavily oversold territory recently and pulling upwards breaking -100 on the way up. All on weekly here.
http://finance.yahoo.com/q?s=DELL
--------------------------------------------------------------------------------
It's shot passed the stop level and I have decided to hold this one for the time being, if this was a small cap stock I would have dropped it by now, I see a possible B class BLD developing on weekly in HIST, possibly adding to position @ $16 range, which will prove to be a 'make it or break it' point for this stock. This is turning out to be a positional play, rather than a swing trade.
#############UPDATE######################
Still holding this long position and will average down on lower price level, if there is a negative reaction to earnings announcement, which I believe is already priced in anyway. I am not into news and fundamentals in this journal, but this whole case with batteries is, how should I say, is not big enough to downgrade this company. How many car manufacturers recall their vehicles, quite a few and that's real safety issues, we drive these vehicles at fast speeds and our lives are at stake. These faulty batteries are made by Sony, so it is Sony's issue as much as DELL's. Anyway, that's not a big deal IMO, slowing down demand, now that's a different matter and THAT IMO is already priced in. Now let's hope techies will start moving this stock.
DELL (NASD) Dell Inc
Current: $23.87 1/2 max position
PT1: $29.00
PT2: $32.00
PT3: N/A
Stop: This is a tricky one, as the stock has broken through all recent support levels, actually from 2003, developing a double top on weekly in 2005, but no risk no gain, so I would scale in with 50% @ $22.50 and stop @ $21.
BLD in RSI(perhaps making a double bottom, depends on the settings)/MACD HIST. CCI in heavily oversold territory recently and pulling upwards breaking -100 on the way up. All on weekly here.
http://finance.yahoo.com/q?s=DELL
--------------------------------------------------------------------------------
It's shot passed the stop level and I have decided to hold this one for the time being, if this was a small cap stock I would have dropped it by now, I see a possible B class BLD developing on weekly in HIST, possibly adding to position @ $16 range, which will prove to be a 'make it or break it' point for this stock. This is turning out to be a positional play, rather than a swing trade.
#############UPDATE######################
Still holding this long position and will average down on lower price level, if there is a negative reaction to earnings announcement, which I believe is already priced in anyway. I am not into news and fundamentals in this journal, but this whole case with batteries is, how should I say, is not big enough to downgrade this company. How many car manufacturers recall their vehicles, quite a few and that's real safety issues, we drive these vehicles at fast speeds and our lives are at stake. These faulty batteries are made by Sony, so it is Sony's issue as much as DELL's. Anyway, that's not a big deal IMO, slowing down demand, now that's a different matter and THAT IMO is already priced in. Now let's hope techies will start moving this stock.
Interesting thread -
<img src="http://stockcharts.com/c-sc/sc?s=JDSU&p=10&b=5&g=0&i=t43356645695&r=8626">
I have jdsu $3 sept calls - a long way off I know, but earnings coming up and positive market sentiment for now anyways
also ebay $27.50 sept calls
Just experimenting here, but i'll make out in the jdsu if those break $3, I have 50
<img src="http://stockcharts.com/c-sc/sc?s=JDSU&p=10&b=5&g=0&i=t43356645695&r=8626">
I have jdsu $3 sept calls - a long way off I know, but earnings coming up and positive market sentiment for now anyways
also ebay $27.50 sept calls
Just experimenting here, but i'll make out in the jdsu if those break $3, I have 50
Divergences after stops are blown work the best. If trading intraday look for the divergence after a new high or low is made on the day. That will make sure the stops are blown and the move more likely to be over.
Keep in mind that the specialist will try to blow those stops for order flow.
John
Keep in mind that the specialist will try to blow those stops for order flow.
John