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For Directional traders
- Thread starter palawan
- Start date
Quote from oraclewizard77:
I use thinkorswim for option trading. I am currently selling the apr out of the money vertical calls on AMZN. My goal is for the options to become worthless.
The problem is that there will be an earnings report before the expiration. My goal to decrease earnings related risk is to buy straddles sometime before earnings.
However, instead of an exact straddle, it will be for 5 points higher and 5 points lower than the market price of AMZN when I purchase the straddle to decrease the cost of the straddle.
As an option trader, I will sometimes do directional trades, straddles, and sell verticals or even naked options.
On that straddle, are you worried at all about the IV crashing once the report comes out? My experience with straddles on ER days is that more often than not the move isn't big enough to make up for collapsing IV, aspecially not when used to hedge against loss on an existing vertical. What's your prediction?
Cache Landing,
Finally got my first trade in for 2006. Got in
DLP QE (dlp) today at $2.90 and 5 contracts. Starting slow as my last couple of trades in 2005 turned into large ugly losers. Also, have stock positions on XTO,
BMD and ZOOM (more speculative) for my 401K. Sort of feeling my way back and seeing how it goes.
Not much activity for me now. I will ease back into trading gradually.
Finally got my first trade in for 2006. Got in
DLP QE (dlp) today at $2.90 and 5 contracts. Starting slow as my last couple of trades in 2005 turned into large ugly losers. Also, have stock positions on XTO,
BMD and ZOOM (more speculative) for my 401K. Sort of feeling my way back and seeing how it goes.
Not much activity for me now. I will ease back into trading gradually.
Quote from Cache Landing:
On that straddle, are you worried at all about the IV crashing once the report comes out? My experience with straddles on ER days is that more often than not the move isn't big enough to make up for collapsing IV...
You got it. Straddles always look very attractive on paper, until you're watching a move in the underlying that doesn't show a profit in your position. Not a good use of time, or money, in my experience.
Quote from Cache Landing:
Looking at AAPL and RIMM. Both broke through resistence Friday. Might make a pretty good bullish trade. I'm a little concerned that they were carried by a bullish run in the overall market and that once that momentum dies out, they will reverse quickly. They are looking pretty strong though. If they will drop back down a bit to give me at least 75% potential ROE then I will make the jump. I don't have enough bullish plays right now, so I could use these to balance out a bit.
There goes AAPL today! Blast off!!! Nice!!!! RIMM is getting down to the point where I am about to trade it. The company is plagued by litigation, which I normally shy away from, but I'm taking this one anyway. We'll see if that turns out to be a bad decision.
Quote from smallfil:
Cache Landing,
Finally got my first trade in for 2006. Got in
DLP QE (dlp) today at $2.90 and 5 contracts. Starting slow as my last couple of trades in 2005 turned into large ugly losers. Also, have stock positions on XTO,
BMD and ZOOM (more speculative) for my 401K. Sort of feeling my way back and seeing how it goes.
Not much activity for me now. I will ease back into trading gradually.
Just wondering what is attracting you to DLP?
No, it's just that I bought on the edge of my margin, and minutes later, the call dropped in value a few cents, sending my acc't into negative margin, triggering the sell. My discipline is not right and I am now dead in my acc't. Every single mistake and misfortune I could possibly suffer has visited me, even though the vast majority of my opportunities has been golden. All I can say is, don't do as I have done.Quote from Don87109:
I would have guessed that IB prohibits you from drawing down margin requirements and therefore would not have let you buy the call.
Am I misunderstanding something?
Don
If one is trading daily charts, then one must not look at them intraday and get distracted. Mistakes are then inevitable. If one can't find an intraday pattern, then trade daily candles at day's open or close. The hardest things are to stick to a swing plan when the underlying is reversing, and to not look at the intraday charts during a daily or swing play. One has to go with the original assessment if it was a confident one, and let the alotted time prove it wrong or right. Play one's expectations, not one's hopes! This is to be treated with discipline as a job , not a hobby as we are inclined, otherwise we'll be paying for the enjoyment of it.
When, if ever, I play again, I will play more conservatively in a safer fashion, entering more distant expiry options and only slightly OTM or ITM.
Happy Trades to You...
Quote from Rob on Business:
No, it's just that I bought on the edge of my margin, and minutes later, the call dropped in value a few cents, sending my acc't into negative margin, triggering the sell. My discipline is not right and I am now dead in my acc't. Every single mistake and misfortune I could possibly suffer has visited me, even though the vast majority of my opportunities has been golden. All I can say is, don't do as I have done.
If one is trading daily charts, then one must not look at them intraday and get distracted. Mistakes are then inevitable. If one can't find an intraday pattern, then trade daily candles at day's open or close. The hardest things are to stick to a swing plan when the underlying is reversing, and to not look at the intraday charts during a daily or swing play. One has to go with the original assessment if it was a confident one, and let the alotted time prove it wrong or right. Play one's expectations, not one's hopes! This is to be treated with discipline as a job , not a hobby as we are inclined, otherwise we'll be paying for the enjoyment of it.
When, if ever, I play again, I will play more conservatively in a safer fashion, entering more distant expiry options and only slightly OTM or ITM.
Happy Trades to You...
What I can say to you ROB is that it seems from my perspective that most of your problems could've been solved by using a similar method to mine. I also like the way that TOS sets up a margin account. I will NEVER be automatically sold out of one of my positions. Anyway, if you have any questions about using spreads to eliminate some of your misfortune, let me know.
Cache Landing,
I got into DLP QE (DLP) due to the following reasons: 1) This is a weak stock in a weak industry, 2) the stock is below the 20 day moving average, 3) the long term trend of the stock is down.
Of course, not even the very best analysis will guarantee the stock moving the way you expect it to!!!
From my own experiences, whip saw movements are pretty common short term.
I bought more time with this option to give it time to move----hopefully down.
Had the same problem with my JBLU trades which went up and down in short order resulting in losses instead of a gain.
I got into DLP QE (DLP) due to the following reasons: 1) This is a weak stock in a weak industry, 2) the stock is below the 20 day moving average, 3) the long term trend of the stock is down.
Of course, not even the very best analysis will guarantee the stock moving the way you expect it to!!!
From my own experiences, whip saw movements are pretty common short term.
I bought more time with this option to give it time to move----hopefully down.
Had the same problem with my JBLU trades which went up and down in short order resulting in losses instead of a gain.