My Options Play

[Boy Plunger]

Quote from cnms2:

Would you mind sharing a little about your trading philosophy: technical / fundamental, trend / swing, system / discretionary, iv / directional, etc.?

Also, could you write a little about your entries, and maybe exits?

Thanks.

Sure. But this is Multi's journal. If he/she allows it and when i have time. I try to not reveal too much about myself and my trading for obvious reasons. A lot of technical but with a fundamental foundation. I trade all time frames but specialize in 3 hour and 3 day trade setups in NYSE stocks and ETF's. Very directional but i will buy and/or sell neutral volatility. I am trying to master derivatives trading to supplement underlying positions and income. This is all i want to say about myself for now other than yes it is pretty rare to do this full time for the duration of your life and yes there are others here that can hand me my walking papers but knowing this is half the battle. Put thy ego aside to learn and put it on when you put it on!

 

[cnms2]

Quote from Cluseau:

Sure. But this is Multi's journal. If he/she allows it and when i have time. I try to not reveal too much about myself and my trading for obvious reasons. A lot of technical but with a fundamental foundation. I trade all time frames but specialize in 3 hour and 3 day trade setups in NYSE stocks and ETF's. Very directional but i will buy and/or sell neutral volatility. I am trying to master derivatives trading to supplement underlying positions and income. This is all i want to say about myself for now other than yes it is pretty rare to do this full time for the duration of your life and yes there are others here that can hand me my walking papers but knowing this is half the battle. Put thy ego aside to learn and put it on when you put it on!

Thanks! When you open your own thread please let me know.

 

[uninvited_guest]

Quote from iceman1:

curious... do you have anything to offer of value besides a lot of carping and criticisms of others'?

Are you sure it shouldn't be 2 1/2 per week genius? What about 1-7/8 trades average per week. Maybe 4?

It's interesting what you can discern from posts on message boards... ! In your case you "sound" totally inflexible in your views... thus, we can assume you take the same posture with reference to the markets and always are telling the market WHAT it should or should not do? Just like you're telling multi_option.

Am I close!?

Ice

I know from experience that the MM's will NOT fill LIMIT orders unless they are at the ASK price, they won't even budge $0.05.

So why risk having your order NOT filled over $.05? Unless you are unsure of your order to begin with.

 

[Boy Plunger]

Quote from cnms2:

Thanks! When you open your own thread please let me know.

I get the hint. Do a search. I had a few threads this summer when work was slow but lately my work load does not permit it. This week is an exception because of the type of trades i took and i did make a personal commitment to try to give to others what little i have been able to master in my years trading. Stick around, the get is getting good!

 

[pinabetal]

Quote from Multioption:

Bailed out at 1.25 for a loss of 0.56/contract. Loss = $3,360!

Multi,

I really don't understand why you bought BBY. Even though the price was going up on 20th, 21st, and 24th it did so on LESS volume on the 20th and of course less on the 24th. That should have showed that the steam was running out. Next day or two it will track sideways IMO

 

[Multioption]

Quote from pinabetal:

Multi,

I really don't understand why you bought BBY. Even though the price was going up on 20th, 21st, and 24th it did so on LESS volume on the 20th and of course less on the 24th. That should have showed that the steam was running out. Next day or two it will track sideways IMO

Pinabetal, ...I could have held on to BBY trade but had to swallow my pride to avoid, foremost, waste of time as I might have to hold forever to see BBY climb to 48. The stock is likely to get there before expiration but might take some time, I just decided to save my fund for better trades which I'm working hard to get.

By expiration, and at $48, intrinsic value would be $3 and gain would be $1.20 but time would have been lost. There's no way possible I could reach my goal by December ending should I hang on to BBY. So many factors to consider!

I hope to switch from daily to the intraday rules if my next two picks are profitable.

There's high probability that I would make 0.56 more than thrice before Nov expiration. So, holding BBY for the prospect of making $1.20 would be a waste of time.

 

[cnms2]

I'm suggesting VZ for a short play:

bto VZ Nov 32.5 put VZWZ
sto VZ Nov 30 put VZWF

It can be opened now for $1.6 (VZ ~$30.5).

Source: Tue 10/25/05 Schaeffer's Contrarian commentary on Barron's bullish assessment triggered my looking at VZ's charts.

Reason: down trend; retracement to 20EMA completed; short term bearish divergences give an entry signal.

Comment: weekly bullish divergences show possible trend change, but it doesn't look imminent.

IV: ~24% in the highest readings over past year, recently as low as 16%; seems better to open the vertical spread selling the ATM put.

Quarterly report: Oct 27; makes this play riskier, but probable subsequent IV collapse gives upside to this spread trade; also, my analysis shows no short term market upside

Stop loss: underlying at ~$31.5.

Exit target: underlying at ~$29.2.

Time frame to exit: 1-2 weeks.

 

[Boy Plunger]

Quote from cnms2:


Quarterly report: Oct 27; makes this play riskier, but probable subsequent IV collapse gives upside to this spread trade; also, my analysis shows no short term market upside

Stop loss: underlying at ~$31.5.

Exit target: underlying at ~$29.2.

Time frame to exit: 1-2 weeks.

Why open this position the day before earnings? You want to trade a stock with a small consistent and measurable trading pattern such as VZ but why allow yourself to open a position the day before earnings and a possible divergence from the norm. Don't you want to see where institutions and inventory holders line up when earnings hit in order to get a clearer picture and more bang for your buck?

 

[cnms2]

Quote from Cluseau:

Why open this position the day before earnings? You want to trade a stock with a small consistent and measurable trading pattern such as VZ but why allow yourself to open a position the day before earnings and a possible divergence from the norm. Don't you want to see where institutions and inventory holders line up when earnings hit in order to get a clearer picture and more bang for your buck?

I completely agree with your comment, especially in the light of GOOG's recent spike up.

This is why I mentioned the quarterly report in my analysis, but I think that the risk is reduced by the already high IV that makes the ATM put expensive. This high IV is also the reason for which I preferred the vertical spread instead of the direct long put play.

Also, my market view is bearish, at least until the Fed's next week meeting. In these conditions, except a stellar report and future guidance, I expect a sell off on the news, or at least no significant positive action.

But again: usually I wouldn't play the quarterly report news.

 

[Boy Plunger]

I'm getting a different read on the underlying. Depending on opening print tomorrow $31.50 is likely before there is another test to the downside. Which leads me to believe that perhaps the long put spread will be cheaper to establish if the underlying completes this crater. However, i can see why you would anticipate and setup such a construct--your risk is limited at $1.60--you just had high IV--underlying is testing lower--you believe earnings will be sub-par and dealers will consolidate positions. You could be considered dangerous with such insight.