February Trading Journals

sharptrader/ProTrader1,

Ease up you multiple personalities, you. Interesting how you jump in for the kill when Hitman has a weak or bad day, yet are strangely silent when he has good days. No need to always go for the jugular, and no need to pretend who you aren't.
 
If I understand correctly, just because you SET UP a bullet when the stock is at 100 is not the same as shorting at 100, correct? It depends at what point you actually pull the trigger on the bullet and what the stock does from that price point.

Have I finally got it?!?
:)
 
To clear things up about bullets. A bullet is a married put meaning the firm buys a put deep in the money and goes long the stock. What you are doing when you use a bullet is sell the stock you are holding and profiting or losing on the put.
 
Originally posted by trade555
To clear things up about bullets. A bullet is a married put meaning the firm buys a put deep in the money and goes long the stock. What you are doing when you use a bullet is sell the stock you are holding and profiting or losing on the put.
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Actually, I believe the "bullets" that traders put up at prop firms do not involve the purchase of a deep in the money put. Rather its the purchase of the stock, the sale of a call and the purchase of a put at the same strke. This should result in a neutral position that allows you to sell the stock on a downtick. Of course all this is done in the background and the only thing the trader sees is that he can now short on a downtick.
 
Htrader,

This is precisely what i explained a few posts back!!

Candle


>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
A bullet is a) a short call in combination with a long put at the same exercise price PLUS b) a long position in the stock initiated at the same exercise price as the option combination... essentially, the option combination provides a synthetic short and this is totally offset by the long stock, producing a market neutral position... since you are long the stock when you own a bullet, you can sell your stock on a downtick... when you sell your stock, the synthetic short option combination is activated and your position is no longer market neutral, but is a synthetic short.


 
A few critical mistakes cost me what should have been a four digit game. 15200 shares each way on 6 of 10 shooting, +1209 before commissions, +694 after, 3 bullets (2 shared).

Pre-Market: Everything looked terrible off the daily's, felt like a big sell-off day for sure but the question was how much the bear had left after a day like yesterday.

9:30: Bulleted CAL/LM/CCU and got 40 cents out of a full 1000 shares CAL, but despite of the sell-off in XAL he could not go negative and I churned quite a bit in him rest of the way. LM gave me 70 cents but I had just 300 shares and that barely covered bullet cost, he went down so hard and fast I felt he owe me something and I churned 4700 shares of him each way, down $170 after commissions for my biggest loser of the day as he was super strong rest of the way. His daily was one of the strongest but I just didn't believe he could overcome the sell-off in broker's. CCU was better and I traded a lot of it. He felt weak in the morning and I didn't hold on enough but I went long and short multiple times for everything between a quarter to half a point per attempt.

10:30: Big rally and I went for just 300 shares TGT and it went up 70 cents, didn't really trust it but will take the gift. Took CC and got just 15 cents. Had COH and stopped out for flat.

11:00: Went short RMD and it did a hard squeeze as I gave up a quarter. I had to talk to someone and I had a stop, big mistake, that print was the high of that move. I started to churn a lot (especially LM) and from +$900 I went to +$530.

2:00: Went long EMR//CCU/DOX/CRA, got 20 cents out of CRA, flat on EMR but got half a point off CCU.

3:30: Tried CAL, CCU and LM again and neither would give in.

Hopefully tommorrow will be better, I could have played a better game as today had a lot of opportunities.
 
Actually, I believe the "bullets" that traders put up at prop firms do not involve the purchase of a deep in the money put. Rather its the purchase of the stock, the sale of a call and the purchase of a put at the same strke. This should result in a neutral position that allows you to sell the stock on a downtick.
More...

NO. This is a conversion. Although you are correct in your analysis that is a "neutral" position. A bullet is as the previous post explained, is a Married Put, where the Put is deep in the money so that its delta is close to 1, i.e., the option and its undelying move one to one.

The reason to choose a conversion over a bullet is that it is cheaper to buy a conversion if you are going to be trading the stock day in and day out, i.e., a basket stock.

Bullets are used if you want to get in into a mo stock and you don't already have a conversion on it and don't necessarily expect to trade the stock day in and out.

nitro
 
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