For Directional traders

Rob on Business,

Just got back from Vegas for the Trader's Expo. Me and my friend was there December 13-16, 2005 and just got home this morning Dec. 17. It was okay and a huge number attended. Lots of sales pitches and some good "free" seminars too!!!
SIRI is going down because the radios being installed in cars is SIRI's competitor (XMSR???). Not sure if that is the name of the competitor but, it is out selling SIRI two to one on an Investor's Business Daily article. Ended throwing away Investor's Business which was free at the Expo as I had a bag full of sovenirs and a small bag for my medication to boot!!!
Hope to improve on my trading some more. My friend bought QDEL calls when it was dropping below the 20 day moving average----that was a huge mistake. That said, this stock might be a good 3 to 5 day swing trade to the upside if it trades above $10.50 monday. I will be observing it.
 
Quote from smallfil:

SIRI is going down because the radios being installed in cars is SIRI's competitor (XMSR???).
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I'm aware that XMSR is SIRI's competitor and I did not choose it instead because the fundamentals don't look as good as SIRI's. It by the way is also going down, even worse than SIRI, and that off a high. I'm not as confident SIRI will recover as when I first got in, but I have to give it another half day at least. The markets are acting differently the last 2 weeks, falling out of pattern and seemingly undecided - the Nasdaq's been fluctuating in the same range over that time - not any strong sure-fires standing out. Sounds like you had a good trip out there. Post any good trades you find out there - I need them!
 
Rob on Business,

Watch QDEL, my friend got into this trade and has suffered a loss with it. Told her that it was below the 20 day moving average and headed down!!! She bought calls on it of all the stupid things to do!!! Anyway, told her to observe it and if it goes above $10.50, it is a buy to the upside (call) for a 3 to 5 day swing trade. What people miss is that a stock might be headed down (longer term trend) but, it can have periods where it goes up (short term trend). You can trade those moves, swing trade it and make money when it goes up and when it goes back down and continues the longer term trend.
 
Hello Everyone. I would call myself a directional trader but have settled into a strategy that seems a bit different from you all. I haven't read all of your posts but many of them suggested that you are in support of long calls/puts. Good on you!

In the past I have played that strategy quite a bit. Though after many years of riding the capital gains/losses rollercoaster I have started to shy away from strategies that don't involve hedging of some kind. I'm sure many people would say that options have an automatic hedge (built in stop loss at $0.00). I'm not ok with that hedge though. That strategy prevents me from playing all of my money. People always tell me that I can set a stop loss. I agree, I could set a stop loss and in theory it would work. But to me the reason to play that strategy is for the unlimited gains potential. This requires volatile stocks which results in less efficient stop execution. I am forced into holding a significant cash position just in case. I don't really like that.

Anyway, I don't want to ramble but to make a long story short, this past year I have played a certain strategy involving vertical spreads. My gains have since been much more consistent. Of course, there is not unlimited gain potential on every trade, but I try to get into positions that allow for at least a 75% gain within 6 weeks. My losses have been fewer and farther between and result in a maximum 25% loss on that position. That gives me a P/L of 3/1. But more importantly has turned my 50/50 winners/losers record into about 70% winners, 10% losers, & 20% break even. I do still have to hold a cash position but it is relatively small in comparison.

Anyway, don't want to write a novel, just thought I would give some background on my style. I look forward to any thoughts you all might have on some developing trades.
 
Cache Landing,

Good to hear you are doing well. I play directional trades mainly buying calls and puts. Both short term and long term. You are right in the that your strategy of vertical spreads is less risky. Have a win/loss ratio of 1.6/1 on my 22 trades, 13 winners and 9 losers. My last trades have not been as good but, on the plus side have had some good winners. One over 200% and others in the 40%-100% range. Working on my swing trading game now and believe that is the key to profitability in directional trades. Still have errors to correct and hope to trade more efficiently if I manage to cut my mistakes.
Wish you the best in your trading.
 
Good job on you trading. That is the part I wish I didn't have to give up by doing spread trades, those great trades that end up making a couple hundred percent. Oh well, I figure I have been doing well enough this way that I had better give it some time to see how it compares to my past trading years. So far so good.

I am also a big advocate of swing trading. Problem is I don't think that the average person has what it takes to swing or day trade. At times when I've been asked to teach someone how to trade options they always end up learning "how" to execute trades, but they don't have the emotional ability to execute good trades. Directional option trading doesn't allow any room for the hold and hope mentality that so many people switch to when a trade goes bad.

Just to let you know-
I'm only in three positions right now all verticals
DJX
COF
PAAS
Give me your take on each if you'd like
 
I've been busy the last few days, and not posting as intended. Tha QQQQ puts went well, as expected, but playing the bounce the last 2 days did not - as I expected. I still expect the rest of Dec. to be down in the markets generally. Tried a play on another recommendation by Cramer - SIRI (Sirius) but that died before it got started. That makes 3 dead plays in a row I've had the misfortune of having faith in - AX, ISE, SIRI. BBY has also fallen out of action. My acc't has hit an all-time low of $170 the other day as a result. The last of Cramer's trade plays is UARM, which is very jumpy intraday and volatile daily. Made 80% profit on a 2 day call play on it today, am holding an overnight put on it, and holding a DNA call I bought late today. DNA is presently strong, a favorite of mine, am wondering if $95 will be a resistance point or not, but I tend to think not. It may depend on how weak the Nasdaq is at that point.

DJX, like the qqqq's, looks weak - don't think you'll see much favorable option price action in the next few days unless it tanks. COF looks nice, but I think the major move is flattening out - maybe a low open tomorrow and low intraday action that may close high.
PAAS looks like a nice find and poised for a good upshot.

Happy Trades...
 
I should clarify my positions a bit.

DJX- I am on a bear call spread. Yesterday the dow tried to show some strength due to the GDP but lost most of that strength. A trend that I think will continue into January.

COF- I am in a bear call spread on that one too, however the other day it broke its resistance quite handily so in the future I might have to buy back my shrot calls and let the long calls run to make up the difference. I also think it is rounding off and I'm willing to stick it out through the first part of Jan (and another FOMC announcment) before I really react. That's the nice thing about verticals. The further they go against you, the easier it is to come out smelling like a rose in the end.

Paas- Bull Put Spread. Silver retraced a bit recently which is why I placed the order in the first place. I'm up on it so far although it hasn't made the bounce I was expecting yet. In placing this trade I was looking for something bullish and was having a hard time finding one to meet the criteria. Had to pass up some really sweet bearish plays for this one, but I like to have a nice mix.
 
I can't really give you a read on UARM. Not really my kind of play. In regards to DNA. Two great setups in Oct. that I wish I had known about. Hindsight I guess. Right now I think they are gonna see a lot of resistance at about $95. If I was long calls, I would be cautious if it drops below $93. If below $90 I would switch to a bearish position.
 
Quote from Cache Landing:

Right now I think they are gonna see a lot of resistance at about $95. If I was long calls, I would be cautious if it drops below $93. If below $90 I would switch to a bearish position.
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You were right and I was wrong about the $95 resistance point. What made you think it was that strong, seeing it had already passed it recently? And how do you arrive at the $93 and $90 figures? I would like to be able to do that.
By the way, is the spread trading you're doing referred to directional trading? And in what way does a vertical spread work for you?

Happy Trades...
 
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