Greetings and Good Trading to everyone.
After about 4 losing years, I think I may finally have a winning one this year.
I've had my share of winners (profits) in the past, but I eventually lost them all and then some. I've always played options (calls or puts) on the long side and from reading this forum, I see that the majority trade some kind of spread and/or delta neutral positions. That's good, but I'd like to start a thread where people who wanna take a position based on an idea of the direction of the underlying can throw them and maybe let people follow them or maybe even take the opposite side of the direction.
A background on where I'm at right now will explain what I'm trying to do here. As I've done in the previous years, I put a position that has a small dollar risk capital and finally hit a home-run. Specifically, I bought 7 Sept call options 260 on CME back in late April when they were around low 190's. Reasoning for the trade was that CME at the time announced very good earnings and had good guidance going forward. Market cap was around 6.5B and I visualized in my mind that their market cap should be around 10B which would put the share value at around 300/share. I thought in my mind that they can at least hit 275 by Sept.
Lo and behold, they hit 250 a share after a month, and even though I was still 10 points out of the money, my position was worth $9,000. CME was extremely volatile at the time and I finally just said, hey cash out now before losing that much money. A week or so later, right before lunch (California time zone) I noticed that CME was up 10 points and looked at the news and there were rumors that CME and CBOT may merge. CBOT was planning to go IPO before that time. I bought 7 call options 320 on CME that cost me around $1600, the next day, I sold the 7 calls for $10,800 when it was confirmed that CME did approach CBOT about a merge.
So, those 2 positions have wiped out years of losses (over $17,000 in profits on a capital that started as a $1,000). The thing that hurts though is that if I only was able to hold on the original 7 Sept 260 calls....
OK, on to the purpose of the thread....
I've made some trades since then, and luckily for me, I've had more winners than losers and made more money the last 3 weeks. Nothing crazy like the CME trades, but then again, I'm not really going for homeruns anymore and I'm quick to take profits. A few times, too quick and left substantial money on the table.
Here's the bottom line:
I have a lot of stocks that I watch and I spend a lot of time every night trying to look for something to play on any of them. Strictly options plays and strictly directional. Sometimes, there's just not enough of a reason for me to put a trade. If we throw ideas around, then we could benefit. The positions that I took will give an example of what "ideas" I'm talking about.
DWA Dec 30 calls - Currently a mark-to-market loss of $1260 for me. At the time I put this position, I visualized that DWA would hit 35 by Dec based on the fact that they have a low PE and madagascar did very well in the box office. They already warned the previous quarter and in my mind, have already lowered expectations. The entry point was very good as they were near their 52-week low. I was wrong, they warned again last week and... The position is still open
KSS Jan 50 puts - currently losing $700 on it. KSS in my mind is like Circuit City against the likes of BestBuy. How can they compete with Walmart, Costco, Target? My problem on this is maybe I'm just not that familiar with this company... A few months ago, they opened one near my house and my GF insisted we go there. She's into shopping. We both were not impressed. I'm not into shopping, but I'd rather go to Target or Walmart as they have better products and better prices. The position is still open.
CME Aug 250 puts - I didn't think CBOT would pass up on the chance of cashing out big if they go IPO, so they would probably say they're still gonna go ahead with it. An article came out the next night stating that is still their plan. I was jumping up and down as I was waiting for the morning for CME to crash about 30 points. They didn't, but they were down a few. I closed the position for a profit of $300
KLAC Sept 47.5 calls - Very good company, very good margins, no debt, lots of cash, still have growth, nice free cash flow from operations and good entry when the stock was around the high $43/share. Earnings will be reported in a few weeks but will cashout if the target price was hit before earnings. Target was $48/share. Cashed out for a profit of $1445 on a risk capital of $1600
Goog July 300 calls - interesting play and one that I had been thinking of doing for a while. On options expiration week, I look for a very high volatile stock and if it's generally down monday and tuesday morning, i will buy calls and either cash out for profit when the target is hit, or whatever i can get for it sometime on Thursday. This position was put on Tuesday morning, when GOOG was around 291 with the target of 298 by thursday. wednesday morning, cashed out for a profit of $720 on a risk capital of $560. I wish it didn't hit my target on wednesday, as some guy from Lehman raised the price-target on GOOG to 350/share on thursday morning and i could have made another $3000. BTW, if GOOG was up monday and tuesday, i would have bought puts...
VPHM Aug 10 calls - pure earnings play! they had phenominal earnings announcement last quarter and I was hoping they'll do it again on 8/2/05. I got shaken out today (with the London bombing news, they went down a lot and luckily recovered enough for me to cash out). I cashed out for a profit of $1100 on risk capital of $1600. I may re-enter tomorrow.
QCOM Oct 37.5 calls - pure earnings play! Lately, good earnings have been rewarded very well - AAPL, IBM, etc. QCOM mostly does well on earnings and they didn't disappoint me this time. Target price was $38/share and I cashed out for a profit of $1400 on a risk capital of $1550.
So, how about it? Throw a stock, state the idea of which direction it will move and a price target, and the reasoning. The reasoning can be anything - FDA decision about to come out, earnings play, a pattern (like my trade on a highly volatile stock on options expiration week), etc.
I only have one right now, and it's closer to expiration the first time I played it so, choose your time frame and strike:
VPHM Aug 10 calls - same reason as before. Good entry point would be if each call can be bought below $1.4 Target is $13 if hit before expiration, otherwise gamble that the earnings will be good on 8/2/05 and hope that they announce spectacular earnings as previous quarter. I'm not buying longer term options, as this is really a hit or miss position. If they miss, I don't know how low they'll go. They've gone up from around $3 a few months ago. Why not a straddle? As the title of this thread suggests... I'm a directional player and I only pick one direction.
My purpose is to be right more times than wrong.... or at least less wrong than right. If I'm wrong and the position doesn't go anywhere, I only lose a little. I only hope to make enough on the ones that I'm right more than the ones that don't go anywhere and bleed time value and the ones that go wrong and lose big.
Sorry for the long post... I must fess up that because I have a full-time job, I actually am running out of ideas and after the earnings season, I'll just have the one idea on options expiration. I think sharing ideas wouldn't hurt your original idea, but if you think it would, then of-course you don't have post it.
Thanks for your time... Best of luck on your trading.
-jerry
After about 4 losing years, I think I may finally have a winning one this year.
I've had my share of winners (profits) in the past, but I eventually lost them all and then some. I've always played options (calls or puts) on the long side and from reading this forum, I see that the majority trade some kind of spread and/or delta neutral positions. That's good, but I'd like to start a thread where people who wanna take a position based on an idea of the direction of the underlying can throw them and maybe let people follow them or maybe even take the opposite side of the direction.
A background on where I'm at right now will explain what I'm trying to do here. As I've done in the previous years, I put a position that has a small dollar risk capital and finally hit a home-run. Specifically, I bought 7 Sept call options 260 on CME back in late April when they were around low 190's. Reasoning for the trade was that CME at the time announced very good earnings and had good guidance going forward. Market cap was around 6.5B and I visualized in my mind that their market cap should be around 10B which would put the share value at around 300/share. I thought in my mind that they can at least hit 275 by Sept.
Lo and behold, they hit 250 a share after a month, and even though I was still 10 points out of the money, my position was worth $9,000. CME was extremely volatile at the time and I finally just said, hey cash out now before losing that much money. A week or so later, right before lunch (California time zone) I noticed that CME was up 10 points and looked at the news and there were rumors that CME and CBOT may merge. CBOT was planning to go IPO before that time. I bought 7 call options 320 on CME that cost me around $1600, the next day, I sold the 7 calls for $10,800 when it was confirmed that CME did approach CBOT about a merge.
So, those 2 positions have wiped out years of losses (over $17,000 in profits on a capital that started as a $1,000). The thing that hurts though is that if I only was able to hold on the original 7 Sept 260 calls....
OK, on to the purpose of the thread....
I've made some trades since then, and luckily for me, I've had more winners than losers and made more money the last 3 weeks. Nothing crazy like the CME trades, but then again, I'm not really going for homeruns anymore and I'm quick to take profits. A few times, too quick and left substantial money on the table.
Here's the bottom line:
I have a lot of stocks that I watch and I spend a lot of time every night trying to look for something to play on any of them. Strictly options plays and strictly directional. Sometimes, there's just not enough of a reason for me to put a trade. If we throw ideas around, then we could benefit. The positions that I took will give an example of what "ideas" I'm talking about.
DWA Dec 30 calls - Currently a mark-to-market loss of $1260 for me. At the time I put this position, I visualized that DWA would hit 35 by Dec based on the fact that they have a low PE and madagascar did very well in the box office. They already warned the previous quarter and in my mind, have already lowered expectations. The entry point was very good as they were near their 52-week low. I was wrong, they warned again last week and... The position is still open
KSS Jan 50 puts - currently losing $700 on it. KSS in my mind is like Circuit City against the likes of BestBuy. How can they compete with Walmart, Costco, Target? My problem on this is maybe I'm just not that familiar with this company... A few months ago, they opened one near my house and my GF insisted we go there. She's into shopping. We both were not impressed. I'm not into shopping, but I'd rather go to Target or Walmart as they have better products and better prices. The position is still open.
CME Aug 250 puts - I didn't think CBOT would pass up on the chance of cashing out big if they go IPO, so they would probably say they're still gonna go ahead with it. An article came out the next night stating that is still their plan. I was jumping up and down as I was waiting for the morning for CME to crash about 30 points. They didn't, but they were down a few. I closed the position for a profit of $300
KLAC Sept 47.5 calls - Very good company, very good margins, no debt, lots of cash, still have growth, nice free cash flow from operations and good entry when the stock was around the high $43/share. Earnings will be reported in a few weeks but will cashout if the target price was hit before earnings. Target was $48/share. Cashed out for a profit of $1445 on a risk capital of $1600
Goog July 300 calls - interesting play and one that I had been thinking of doing for a while. On options expiration week, I look for a very high volatile stock and if it's generally down monday and tuesday morning, i will buy calls and either cash out for profit when the target is hit, or whatever i can get for it sometime on Thursday. This position was put on Tuesday morning, when GOOG was around 291 with the target of 298 by thursday. wednesday morning, cashed out for a profit of $720 on a risk capital of $560. I wish it didn't hit my target on wednesday, as some guy from Lehman raised the price-target on GOOG to 350/share on thursday morning and i could have made another $3000. BTW, if GOOG was up monday and tuesday, i would have bought puts...
VPHM Aug 10 calls - pure earnings play! they had phenominal earnings announcement last quarter and I was hoping they'll do it again on 8/2/05. I got shaken out today (with the London bombing news, they went down a lot and luckily recovered enough for me to cash out). I cashed out for a profit of $1100 on risk capital of $1600. I may re-enter tomorrow.
QCOM Oct 37.5 calls - pure earnings play! Lately, good earnings have been rewarded very well - AAPL, IBM, etc. QCOM mostly does well on earnings and they didn't disappoint me this time. Target price was $38/share and I cashed out for a profit of $1400 on a risk capital of $1550.
So, how about it? Throw a stock, state the idea of which direction it will move and a price target, and the reasoning. The reasoning can be anything - FDA decision about to come out, earnings play, a pattern (like my trade on a highly volatile stock on options expiration week), etc.
I only have one right now, and it's closer to expiration the first time I played it so, choose your time frame and strike:
VPHM Aug 10 calls - same reason as before. Good entry point would be if each call can be bought below $1.4 Target is $13 if hit before expiration, otherwise gamble that the earnings will be good on 8/2/05 and hope that they announce spectacular earnings as previous quarter. I'm not buying longer term options, as this is really a hit or miss position. If they miss, I don't know how low they'll go. They've gone up from around $3 a few months ago. Why not a straddle? As the title of this thread suggests... I'm a directional player and I only pick one direction.
My purpose is to be right more times than wrong.... or at least less wrong than right. If I'm wrong and the position doesn't go anywhere, I only lose a little. I only hope to make enough on the ones that I'm right more than the ones that don't go anywhere and bleed time value and the ones that go wrong and lose big.
Sorry for the long post... I must fess up that because I have a full-time job, I actually am running out of ideas and after the earnings season, I'll just have the one idea on options expiration. I think sharing ideas wouldn't hurt your original idea, but if you think it would, then of-course you don't have post it.
Thanks for your time... Best of luck on your trading.
-jerry
