For Directional traders

update for week ending 7/29...

i guess i can't complain. from last friday, i'm up about $200 over all. if i just didn't put a gamble play on goog, i could have been up a lot more. oh well... gotta be consistent on being extremely selective. there's too many disadvantages to being an options-buyer, already, as it is.

dwa dec 30 calls - still practically dead position, but showing some life the past few days, with universal rumored to be buying dreamworks skg. this position is on dreamworks animation, though.

kss jan 50 puts - no earnings warning from kss. less than 2 weeks from earnings announcement, so it's quiet period now. whatever happens on earnings, i'll keep this position until sometime in sept, unless they crash or hit $47, then i'll cashout. still behind on the position from my entry.

vphm aug 10 calls - don't plan to hold through earnings on this. earnings announcement next wed, and i'll close this on monday morning or sometime in tuesday. would prefer monday morning. currently ahead on this position, but even if this position turns into a small loss, i really don't wanna hold through earnings. vphm has runup so much that a lot of upside is already built-in to the price.

goog aug 330 calls - closed-out for a loss of around $700 (comm. included). arrrggghhhhhh... no additional comments necessary.

after the vphm position has been closed, i will be looking into opening a call-position. still bullish on the markets as i still see the market in a buy-the-dip, respond-to-good-news, recover-from-bad-news (such as london bombings and $60+ oil) mode. kss jan puts will be my balancer on the "short" side. dwa position is still in a coma and will be left alone indefinitely. if it dies, may it RIP.

Good luck everyone.
 
mini-update for 8/1/2005:

vphm aug 10 calls - closed out for a profit of ~$1275 this morning as planned. it wasn't the best-executed exit trade, as i sold at very near the low of the day for the options (not the stock). it was stuck at a price this morning and just decided that before going to work, i should close it out as i had planned to.

this afternoon, vphm rallied and after hours, it hit my price target of $13 (afterhours, though). i could have sold for an extra $900 at the bid this afternoon before market close.

plan for the next day or so... a call-position on a stock i'm bullish on. put-positions are attractive on some of the usual suspects, but i'm still bullish on the market and until that changes, i'm trying to limit myself to only initiate call positions. if nothing is attractive enough, i won't put on a position.

Good Trading, everyone.
 
position update (entered a position today 8/3/2005):


NFLX Dec 22.5 Calls - Reasoning: nice earnings results (previously announced quarter), good balance sheet (imo), good stock price-action (uptrend), and of course, my market opinion of a bull-market in the short term. price target for nflx is $30/share. hold the flames. i'll exit based on over-all market action and if any significant news come out.

it appears i got a good entry @ 1.35 each call option this morning. time will tell whether it's really a good entry or not (if i sell it at a loss :) )
 
looking to enter a position on DRYS tomorrow 8/4/2005.

DRYS Dec 15 calls (DQRLC) - current 1.70 x 1.95 unattractive spread, but i'll put a bid on 1.80

i really have enough position now (25% of my account) and shouldn't look at this, but it looks very good for a target of 19/share on DRYS by Dec. will even exit if 18/share is hit within a month.

this really looks too good to be true, PE and latest earnings announcement vs current market cap of the company. i'm gonna take comfort in the HUGE amount of institutional buying.
 
Quote from palawan:

looking to enter a position on DRYS tomorrow 8/4/2005.

DRYS Dec 15 calls (DQRLC) - current 1.70 x 1.95 unattractive spread, but i'll put a bid on 1.80
More...

nothing done. volume on the stock is too low for my taste. options are not very liquid (hence the big spread). as soon as the position is initiated, it's already down almost 15%. maybe later but for now, i got enough on my plate.

current quote 1.95 x 2.20

Good Luck.
 
Quote from palawan:

nothing done. volume on the stock is too low for my taste. options are not very liquid (hence the big spread). as soon as the position is initiated, it's already down almost 15%. maybe later but for now, i got enough on my plate.

current quote 1.95 x 2.20

Good Luck.
More...

i'm glad i didn't put-on the position. i would have been so p*ssed-off right now, i might break my computer monitor :D

when i was looking at this, quote was 1.70 x 1.95. i could have gotten it at 1.95 (my usual size is 15 contracts) in the morning as the stock didn't gap-up or anything.

looking at the quote now: it's 2.20 x 2.60. i'd be making $375 minus commissions and the spread is $600. if i had put it on, i would have been right on the direction (so far, anyway) and i took the risk, but the spread/MM makes more (mark to market).

just ridiculous...
 
update for the week ending 8/5/2005:

i knew it was a good week for me compared to last friday's end-of-day mark-to-market values of my account, but i didn't realize how good.

i'm up ~$1700 from last friday's closing prices.

position updates (bid prices used):

DWA Dec 30 calls - still comatose position. down $1260. risk capital was $1820 when position was entered on 7/1/05

KSS Jan 50 puts - still underwater from my entry back on 7/1/05, but this position serves as a "balancer" for my constant long positions (call positions). at one time when it got to around $1120 of "paper-loss", i thought about closing out and taking the loss, but held-off because there's a catalyst (earnings announcement) looming. glad i didn't as the position has come back a lot and i'm just down $210. it's tempting to close it out now, but i'll hold as it's still serving a purpose of being a balancer. earnings is next week. risk capital was $2730 when it was entered on 7/1/2005

NFLX Dec 22.5 calls - up nicely on this position. ahead by $675 paper-profits with a risk capital of $2025 when it was entered on 8/3/2005. price-target for the stock is still $30/share or will close the position out on any significant news or a change in my market opinion in the short term (2-4 weeks)

VPHM call position was closed-out on monday for a nice profit


Good Trading to everyone...
 
Quote from palawan:

update for the week ending 8/5/2005:

i knew it was a good week for me compared to last friday's end-of-day mark-to-market values of my account, but i didn't realize how good.

i'm up ~$1700 from last friday's closing prices.

position updates (bid prices used):

DWA Dec 30 calls - still comatose position. down $1260. risk capital was $1820 when position was entered on 7/1/05

KSS Jan 50 puts - still underwater from my entry back on 7/1/05, but this position serves as a "balancer" for my constant long positions (call positions). at one time when it got to around $1120 of "paper-loss", i thought about closing out and taking the loss, but held-off because there's a catalyst (earnings announcement) looming. glad i didn't as the position has come back a lot and i'm just down $210. it's tempting to close it out now, but i'll hold as it's still serving a purpose of being a balancer. earnings is next week. risk capital was $2730 when it was entered on 7/1/2005

NFLX Dec 22.5 calls - up nicely on this position. ahead by $675 paper-profits with a risk capital of $2025 when it was entered on 8/3/2005. price-target for the stock is still $30/share or will close the position out on any significant news or a change in my market opinion in the short term (2-4 weeks)

VPHM call position was closed-out on monday for a nice profit


Good Trading to everyone...
More...

How do you determine position size.. and fo you pay attention to the greeks and impied volatility?
 
Quote from Trend Fader:

How do you determine position size.. and fo you pay attention to the greeks and impied volatility?
More...

thanks for your interest...

i do watch the greeks... just for fun, though. i mostly trade based on the underlying.

let's take for example the KSS position and the NFLX position.

KSS put-position is a position with high IV right now and will probably get lower next week after earnings. do i care? i do, but not as much as the next guy. KSS is a position that serves a purpose for me so i can sleep at night even if there's some huge catastrophe. is that the only purpose? no. i'm also bearish on the company (from page 1) and actually wouldn't mind if it crashes or just goes down a lot and hit my $47/share target. is that it? no, when i put the position, it was at 52-week high and i thought it was at the top of its trading-range and will come down.

NFLX-call position is a position that i have based on the latest earnings and my opinion on the company going forward. is that the only reason? no. i'm also bullish in the intermediate time-frame. the latter reason can change and i don't mind closing out this position for a loss or gain.

position size? usually about 10% of my account. i like 15 contracts because it gets filled-automatically (less than 20) if it's placed at the ask (when buying) or at the bid (when selling). i'm going out longer-term so i'm just more concerned with delta for the NFLX position. KSS has earnings next week, so there will be some IV stuff that's gonna happen.

NFLX position has a delta of .45/.47 which on my position size is equivalent to about 700 shares. today, the stock was .33 for the day, so i guess i made i made around $210. yup, it shows last night that the bid price was 1.65. today the bid price is 1.80. because earnings has already been announced, i think IV will stay about the same (barring any news) for some time. nevertheless, Vega at .498 is gonna cost money (or make money) per 1% change in IV. $75 per 1% for 15 contracts. Theta is negligible for now as I have 4 months to go.

bottom line, i know the greeks are there but i'm more concerned on the direction of the underlying.

title of the thread For Directional traders... :D

Good Trading.
 
Palawan:

Thank you for starting this thread.

I have studied and played with options for several years.

In the long run, the odds of success for the buyer of options are very very small indeed.

And that is exactly the reason why I am a buyer.

After losing money in small practice accts for years, last year I run my acct from 7K to 100K.
So it is possible to become a millionarie in a very short time buying options. As long as one understands that the odds are heavily weighted against you and how to turn these odds in your favor.

To become a millionarie selling options unless you have a huge acct is like watching grass grow imo and then a really bad day comes and you lose your house. Not for me. Too much risk for my blood.

Good luck with your trading !
 
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