Well, I made a few dollars on ECA-tc's pullback, because the first down day opened shy of previous close, and continued from there. On such a bullish rise for ECA-tc, especially on the last days before reversal, candles don't overlap, so I knew it was a downer when it opened low. Rode til close today, which formed a nice hammer. Characteristically, hammers on Eca-tc mean a bullish reversal or a resumption from a bearish pullback. So, sold the puts and bought one toe-in-the-water call just before close. Sure enough, after hours indicates a further rise. Confirmation tomorrow.
For Directional traders
- Thread starter palawan
- Start date
The next day doji'd on ECA-TC and couldn't keep my nerve about staying bullish on the previous day's hammer. Lost some as I sold the call, rode puts that stopped out later in the day. So I was right after all, just didn't have the courage to play the strategy. Could have bought a call cheap near day's low to prepare for the present uptrend. I've been playing calls and puts over the last 2 days intraday to maximize my profits but haven't mastered it just yet, using previous trending days' highs and lows to gauge likely present day highs and lows - also takes courage to execute at these theoretical optimal levels. Anyway, trend still looks up, holding calls over the weekend. Jim Cramer on Mad Money confirmed to get back into energy stocks (which are up again) after their brief correction following the hurricane rally. He also said to buy up GOOG, saying it will hit $350 by Christmas, maybe even by Thanksgiving (Nov.24). I noticed just after that it has indeed broken out of its bearish trend to trading on the upper side of the Bolinger Band range. I'm noticing that previous to its all time high, it was trading between the 20Ma and the upper BB line, and since then, until 3 days ago, it's been trading bearish, below the 20MA and above the lower BB line. A good reversal indicator I'd say.
nice calls (no pun intended
) there. goog is an interesting one. i can certainly see it hitting 350, but it could also reverse direction at anytime. i wonder if some long-term DOTM calls and puts maybe a good play on it?QQQQ is the one that's tempting me. when it closes above 40 for 2 days, i think i am gonna load up on some december calls on it. the risk is that it can get away from me if it goes beyond 41 right away.
best of luck and continued success on your plays.
Hi Bitstream,
Yes, playing them intraday can be expensive, unless I am quite confident of the underlying's characteristics, which I am in this case. Yes, it's always possible that a gap up or down will happen, but that will happen whether I'm trading intraday or long term. My knowing the historical picture of the underlying in this case affords me more opportunity to play and profit from high probabilities than I might suffer setbacks. I'll keep posting how my observations and plays are working out, and then you might see what I mean.
If on an uptrend, the stock opens higher than $0.36 above last day's close, especially if it was a clear candle, I can count on it becoming a dark candle, or down day, even though it's on an uptrend. Meaning that, holding calls at day's open, I can wait til a likely high point of the day, close out the calls, buy a put or 2 and ride them til a reasonable day's low point, then close them out, buy calls again since we're still on an uptrend, and hold them again overnight. With a low volume day, there may not be enough movement to profit on the put play, but at worst, if you get caught on a doji day, you'll only have lost the bid-ask spread amount, or thereabouts. Doji's are infrequent on ECA-TC. What I actually did was sell only 1 of the calls and traded it for the put - I have yet to prove the feasability of the sytem as I just came up with it a week ago. There is rarely a significant gap between candle ends of any 2 days in this stock, so a day's movement direction is fairly predictable if the trend direction is known.
Yes, playing them intraday can be expensive, unless I am quite confident of the underlying's characteristics, which I am in this case. Yes, it's always possible that a gap up or down will happen, but that will happen whether I'm trading intraday or long term. My knowing the historical picture of the underlying in this case affords me more opportunity to play and profit from high probabilities than I might suffer setbacks. I'll keep posting how my observations and plays are working out, and then you might see what I mean.
If on an uptrend, the stock opens higher than $0.36 above last day's close, especially if it was a clear candle, I can count on it becoming a dark candle, or down day, even though it's on an uptrend. Meaning that, holding calls at day's open, I can wait til a likely high point of the day, close out the calls, buy a put or 2 and ride them til a reasonable day's low point, then close them out, buy calls again since we're still on an uptrend, and hold them again overnight. With a low volume day, there may not be enough movement to profit on the put play, but at worst, if you get caught on a doji day, you'll only have lost the bid-ask spread amount, or thereabouts. Doji's are infrequent on ECA-TC. What I actually did was sell only 1 of the calls and traded it for the put - I have yet to prove the feasability of the sytem as I just came up with it a week ago. There is rarely a significant gap between candle ends of any 2 days in this stock, so a day's movement direction is fairly predictable if the trend direction is known.
Bitstream, I forgot to mention that I trade with Interactive Brokers, charging only $2 per trade - maybe that area was another point in your reference to "expensive " trading.
From someone who's never kept any money from this game...
From someone who's never kept any money from this game...
Hi Jerry,
Yes, GOOG could reverse any time, but we're both watching things everyday, aren't we? If we get on this rollercoaster next dip, hopefully we'd accumulate enough profit to cushion some loss on a reversal we might be late to catch.
Isn't QQQQ topping out at a resistance level of $40? It's been years since it's been higher than that. I would have expected you to want to get in at a low, unless you're going to ride puts. Why not ride Dec. calls from next low?
From someone who's never kept any money from this game...
Yes, GOOG could reverse any time, but we're both watching things everyday, aren't we? If we get on this rollercoaster next dip, hopefully we'd accumulate enough profit to cushion some loss on a reversal we might be late to catch.
Isn't QQQQ topping out at a resistance level of $40? It's been years since it's been higher than that. I would have expected you to want to get in at a low, unless you're going to ride puts. Why not ride Dec. calls from next low?
From someone who's never kept any money from this game...
hi Rob,
re: GOOG - there's a lot of money to be made on long term options if goog has an extreme move within the next 6 months. what you're saying can definitely make some good amount of money, but i think the long-term options can be more profitable. i'm just considering it, but the goog march06 420 calls are going for 3.30 on the ask and the goog march06 220 puts are also going for 3.30 on the ask. maybe 5 of each and leave them alone until goog gets to about 20 points of either strike. of course, the risk is that goog never gets that close to either strike before march.
i can see goog having its market cap cut in half, but i have a problem with goog having a market cap of 117B. so maybe, i should really just focus on one leg (the puts side) and have the same plan. that way, i also cut my risk in half. interesting... i think i've just talked myself into this position. if you were looking at my journal last week, i didn't have any put-positions and was fully long on the market. i didn't mind it too much as i was bullish on the market, but there was an opportunity for me to re-enter my AMZN puts that i closed the week before. i think i'm gonna use the goog march06 put options as a way to hedge my call-positions instead of trying to re-enter the AMZN puts.
thanks for bringing up goog. i know that you're saying call options and for the timeframe you're alluding to, i'd agree with you.... i'm gonna go on the longer timeframe and also use the position as hedge and leave it alone...
re: QQQQ - that resistance at 40 is as tough as aerospace-grade titanium. however, if QQQQ has 2 closing days above it, i can see the 40 level becoming a support-level. at that point, i'm in agreement with chagi that the QQQQ can go higher than 42 by october (next month). i would feel more comfortable buying the dec calls at that point even though the cost would be higher.
Good Trading.
I still think that we'll see QQQQ's in the ballpark of $42 or more between now and options expiry in October, even if resistance at $40 is strong.
If you look at a 6 month daily chart for QQQQ, there have been two upwards waves followed by retraces, we are are now part-way through the third upwards wave. The previous two waves were approximately 10% gains, if the current wave follows the pattern I could see it peaking out around $42.35.
This week should be a good indicator of where things are headed.
As for GOOG, I think I would be pretty reluctant to trade either the underlying or the options on GOOG at this point (even if I had the account to support it) based on my current trading knowledge level.
If you look at a 6 month daily chart for QQQQ, there have been two upwards waves followed by retraces, we are are now part-way through the third upwards wave. The previous two waves were approximately 10% gains, if the current wave follows the pattern I could see it peaking out around $42.35.
This week should be a good indicator of where things are headed.
As for GOOG, I think I would be pretty reluctant to trade either the underlying or the options on GOOG at this point (even if I had the account to support it) based on my current trading knowledge level.