My option trades

Interesting thread. I'd be curious to see how you bounce back from a string of losing trades, since you're so leveraged on each trade it will hurt massively.

If a trade goes against you in vertical spread, I am assuming you have to hold to expiration to collect the full premium of the short side of the leg, otherwise the R:R you've been using is irrelevant.
 
Quote from etile:

Interesting thread. I'd be curious to see how you bounce back from a string of losing trades, since you're so leveraged on each trade it will hurt massively.

If a trade goes against you in vertical spread, I am assuming you have to hold to expiration to collect the full premium of the short side of the leg, otherwise the R:R you've been using is irrelevant.
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leveraged? My risk is only $400-$800 per trade NOW, only because the account is sitting above $7500. I was only using $300-$500 risk when my account was below $5000, so I feel I'm not over leveraged on any 1 trade. As for a trade going against me, I considered it a 100% loss and not touch it at all. In these spreads, I have found that you must close the long side if you close the short when the trade goes against you. There's no legging out on the losing side of the trade.
 
Quote from ryanpatrick:

As for WFM, before that crazy rally to end yesterday, I was looking for WFM to push from $76 to $81 for a solid 5 point play. But we got this wild move towards end of day yesterday pushing it from $76 up to $78 (clearly someone big had inside info). For that reason, I closed out 77.5 for nice gain $300 pop in about an hour, and switched to 80 calls. Personally, I don't see any resistance for WFM here above $80 unless you do? The only downside risk I see is if the market fails here and my data suggest that is not the case JUST YET.
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Ryan,

I think your doing a great job this year!
I do have a past experience story from my years trading options that you might consider as the SPX (see attachment) approaches its 3 year high (1370):
Many years ago (1999) while in a powerful bull market, after having a terrific option trading run for 6 consecutive weeks,
I was holding about 10 open positions (all long calls).
Then one day in mid-July 1999 the market opened down with an
extreme down gap and continued to move down day after day for
the better part of 3 weeks!
I keep thinking it would find support at the 20dma, but know, and then I was hoping for support at the 50dma, but know.
It was hopeless and I lost about -50% of my account value on those call positions.
"Just think, something like that happened in a year (1999) when the SPX went from 1225 to 1465 (+20%)!"
My only point is, beware of holding too many option positions in the same direction. Particularly when the general market (SPX) is approaching a 3 year high and the VIX is nearing support levels
(16) in a 3 year trade range (16-45).


Jeff
 

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Whoa, just noticed someone setting up a spread on trlg feb 37/41 calls. can't tell if it was debit or credit, but based on price action of trlg and its recent earning history, I think they set that one up as a debit spread. I'm talking about 1000 options at a cost of about $1.45 for the potential of a $4.00 return if TRLG holds above $41. I highly doubt TRLG will hold above $41 for that long, as past earnings gap has been met with the shares falling right back into the trading range. Still it that person jumps out tomorrow morning, then it could be a profitable trade given TRLG's earning history of gapping up 14% before losing the entire 14% in the following days. That's $145,000 in the spread. That's leverage lol.
 
Quote from jeffalvinson:

Ryan,

I think your doing a great job this year!
I do have a past experience story from my years trading options that you might consider as the SPX (see attachment) approaches its 3 year high (1370):
Many years ago (1999) while in a powerful bull market, after having a terrific option trading run for 6 consecutive weeks,
I was holding about 10 open positions (all long calls).
Then one day in mid-July 1999 the market opened down with an
extreme down gap and continued to move down day after day for
the better part of 3 weeks!
I keep thinking it would find support at the 20dma, but know, and then I was hoping for support at the 50dma, but know.
It was hopeless and I lost about -50% of my account value on those call positions.
"Just think, something like that happened in a year (1999) when the SPX went from 1225 to 1465 (+20%)!"
My only point is, beware of holding too many option positions in the same direction. Particularly when the general market (SPX) is approaching a 3 year high and the VIX is nearing support levels
(16) in a 3 year trade range (16-45).


Jeff
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That's why I'm in these earning trades. At the first moment of smelling a correction, I have no emotions in these trades and I'm back to all cash, might even start looking at put positions ahead of weak stock reporting earnings. On the market's view, I only had this rally to 1320 on the spx. Beyond here at this price point, it's a toss up. My only real guess here would be to keep stoplosses right up to current price levels (1-2% below current position prices) and let the market stop you out. I'm not going to put any trades out beyond february options next week too.

Thanks for the input jeff, that does look like a nice double top chart. At best, we will at least need a pull back and have the chart form a low volume handle before continuing higher. At worst, the sell off starts around 1374 like you noted and 1220 is a nice round number for me in 8 weeks.

I understand why atticus took a short position in WFM, this market overall, is overbought here. I myself would have chosen a stock that had more downside potential like OPEN, AMZN, or any of those stock that had recently reported poor earning results. Heck, I'd bet GILD could make a mean short trade too, but WFM right here and now? Reminds me of some uninformed analyst that came on CNBC last week telling people watching CNBC to short Whirpool (WHR) at $61 the day after earnings :D :D :D . He could be right, but he was just too anxious to get into the short and is sitting on a 10% loss now. I bet WHR will find support at that $61 level too as some shorts there would like to close out at breakeven considering the shares now at $70.

Just wondering, but are you by any chance holding long positions now?
 
Quote from TraderBoy23:

probably halted for a little bit. They halted AAPL and GMCR after they reported too. just give it a few mins.


btw, loved how those qcom calls played out.. effin a haha .
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Still holding those qcom calls traderboy23? It's not guaranteed like I said about a week ago, but history repeats itself quite a lot doesn't it? History did say that QCOM shares were going to top 61.95 before feb expiration. The average move above 61.95 was 3%, but that's only average, so I'd say at most $63.81 if you really want to hold out on the trade. I'm going to try and get out of this if qcom can hold above $62. I had qcom set for dead like rvbd, but it's a nice rally into the highs today. I'll probably get out at $1.50 on the options if qcom can't hold it. Holding this position way too long than I initially planned.

I'm out of SWI though, so DIS is the only recent one left not mentioned....there are losers like rvbd still in the account.
 
Quote from ryanpatrick:

That's why I'm in these earning trades. At the first moment of smelling a correction, I have no emotions in these trades and I'm back to all cash, might even start looking at put positions ahead of weak stock reporting earnings. On the market's view, I only had this rally to 1320 on the spx. Beyond here at this price point, it's a toss up. My only real guess here would be to keep stoplosses right up to current price levels (1-2% below current position prices) and let the market stop you out. I'm not going to put any trades out beyond february options next week too.

Thanks for the input jeff, that does look like a nice double top chart. At best, we will at least need a pull back and have the chart form a low volume handle before continuing higher. At worst, the sell off starts around 1374 like you noted and 1220 is a nice round number for me in 8 weeks.

I understand why atticus took a short position in WFM, this market overall, is overbought here. I myself would have chosen a stock that had more downside potential like OPEN, AMZN, or any of those stock that had recently reported poor earning results. Heck, I'd bet GILD could make a mean short trade too, but WFM right here and now? Reminds me of some uninformed analyst that came on CNBC last week telling people watching CNBC to short Whirpool (WHR) at $61 the day after earnings :D :D :D . He could be right, but he was just too anxious to get into the short and is sitting on a 10% loss now. I bet WHR will find support at that $61 level too as some shorts there would like to close out at breakeven considering the shares now at $70.

Just wondering, but are you by any chance holding long positions now?
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Ryan,

This morning around 10:30am et I bought the SPY FEB133 Calls at 2.35 and they already sold about 1:30pm et for 2.94 (+25%).
The last several years, I have only traded SPY options using a computer program of straight buying and selling of calls and puts.
My orders are all placed as OCA (one cancels all) semi-automated buy limit, sell limit and stop combined. That way I don't have to be involved in either the trade decision or the buying and selling (no constant watching).
The computer program tells me if the signals are "Weak" (lower profit goal) or "Strong" (higher profit goal), or "No Trade." It also gives me the exact entry price and the exact exit price.


Jeff
 
Quote from jeffalvinson:

Ryan,

This morning around 10:30am et I bought the SPY FEB133 Calls at 2.35 and they already sold about 1:30pm et for 2.94 (+25%).
The last several years, I have only traded SPY options using a computer program of straight buying and selling of calls and puts.
My orders are all placed as OCA (one cancels all) semi-automated buy limit, sell limit and stop combined. That way I don't have to be involved in either the trade decision or the buying and selling (no constant watching).
The computer program tells me if the signals are "Weak" (lower profit goal) or "Strong" (higher profit goal), or "No Trade." It also gives me the exact entry price and the exact exit price.


Jeff
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That's nice, especially a 25% option return on the SPYs given the low volatility on that index. Different trading technique there, but it works for and that's good to know....

If I was going to play puts, it'd have to be these internet related social media type stocks. After watching GRPN get hammered (in fact opening put position at start of this morning on GRPN would have been profitable by now as it went from 22 to 20.50). I put a 1 contract spread on lnkd feb 75/70 put at 2.00. What are the odds of LNKD surprising to the upside? That's the question for this trade. Nothing else would matters here. I believe we get lnkd matching estimates and shares testing lows again. These are the weeklys, which is why its a $212.95 risk using some of the profits from AKAM for the trade and nothing more.
 
Jeff That was interesting. I am more or less doing something similar but without a program. Just observation. With VIX low, in QQQ the ATR is too short. though I was just looking at it, about 50 ticks. So I do not enter unless it is after a correction. A minor one of course dealing in 5 day or less trades.

But yes, everything I have says we have topped out and going sideways, the price action though is not agreeing. I´m reminded of the Easter Bunny, it just keeps going and going. Still I´m a nervous nelly and wont enter again until there is some minor correction.

When I trade this Low Vix I also want to just scalp a 30 cents or so. I found it interesting you had an order that will do that as to entry and exit. Going to have to look that one up?
I simply keep entering my sell order each day and let it run.

I´m enjoying this thread.
 
Quote from falconview:

Jeff That was interesting. I am more or less doing something similar but without a program. Just observation. With VIX low, in QQQ the ATR is too short. though I was just looking at it, about 50 ticks. So I do not enter unless it is after a correction. A minor one of course dealing in 5 day or less trades.

But yes, everything I have says we have topped out and going sideways, the price action though is not agreeing. I´m reminded of the Easter Bunny, it just keeps going and going. Still I´m a nervous nelly and wont enter again until there is some minor correction.

When I trade this Low Vix I also want to just scalp a 30 cents or so. I found it interesting you had an order that will do that as to entry and exit. Going to have to look that one up?
I simply keep entering my sell order each day and let it run.

I´m enjoying this thread.
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falconview,

"I am also really enjoying this thread, nice thread Ryan!"

As to your comments about the VIX, you hit the nail on the head!
I have been trading options since the 1990's and the most difficult thing to figure out.....the thing that made me say, "what the heck has happened to the markets?, why isn't anything working like it worked before?"
The long sought after answer to that question is:
"Volatility." Luckily Volatility is easy to monitor with the attached chart of the VIX.
I trade programmed mechanical option systems and when the VIX is high, the program outputs totally different trading systems
then when the VIX is < 20.
For instance when VIX 20 >, my systems have 40% profit goals.
When VIX < 20, my systems output 25-30% profit goals.

Jeff
 

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