My Options Play

[cnms2]

Quote from Multioption:

cnms2,

Any update on Bernie Scaheffer's contrarian trade - VZ?

It was a paper-trade. It hit my $31.5 stop-loss. I didn't look at it anymore to see if / how last week signals changed. I noticed that today VZ oscillated around my stop-loss value.

Are you considering trading it?

I'm caught with other things this morning, so I might not be able to look at it until later .

 

[cnms2]

Quote from pinabetal:

My forecast for monday 31st October was:
BRCM-UP
VZ-UP
KCI-bearish
HUM-UP
CVX-UP
LYO-Track sideways but might in addition make a small higher high but still a sideways tren evident.

Results as of 10:20 A.M. Central Time monday 31st october

BRCM is UP
VZ is UP
KCI - showing bearish signs. I still maintain it is bearish and will indicate so before the day ends.
HUM is UP
CVX is UP
LYO-made a higher high but before the day is over I still then it will look like a sideways track with a small higher high however I could be wrong on this one

Impressive. Congratulations!
What's your forecast time frame, 1-2 days only or longer? Does it work on indexes too or only stocks?

 

[cnms2]

Quote from Cluseau:

HUM is ripe now. We may want to sell ATM options trading out 1-2 months that carry high time value.

How would you suggest to play it? What's your forecast: up, down sideways? My paper-trade on HUM went well so far, in spite of the unimpressive earnings report.

Quote from cnms2:
...
My stop loss would be for the underlying around $41.5 (risk about $1.4) and the exit target around $46-47 (return around $3.1). This seem a reasonable reward/risk ratio, and it is about the same for the spread too.

I would go for the spread instead of the long call because of the high IV. The next lower strike is 35. The Nov 40/45 (HUMKH/HUMKI) bull call spread outperforms the long Nov 35 (HUMKG; in a ratio 3/10 for even money) if I'm right on my outlook, with a maximum performance around $45 which is close to my exit target.
...

 

[pinabetal]

Quote from cnms2:

Impressive. Congratulations!
What's your forecast time frame, 1-2 days only or longer? Does it work on indexes too or only stocks?

Thanks. 1 to 3 days. It is harder to forecast indexes but can be done close enough to make money.

 

[Boy Plunger]

Quote from cnms2:

How would you suggest to play it? What's your forecast: up, down sideways? My paper-trade on HUM went well so far, in spite of the unimpressive earnings report.

I was under the impression that you trade with money. My mistake. ST humana trade is over or nearly over. Depends how you played it. I can't get specific about this one b/c of consideration of other parties involved. I thought you would easily see which ATM options had high time value to sell. LYO isn't getting the reaction as anticipated so a different strategy will commence this week, if at all.

EDIT: pinabetal, have a cigar, you're gonna go far. You are dead wrong about LYO. I would stand aside with that outlook.imo

 

[pinabetal]

Quote from Cluseau:


EDIT: pinabetal, have a cigar, you're gonna go far. You are dead wrong about LYO. I would stand aside with that outlook.imo

I could be dead wrong. I have been dead wrong lots of times in my years of learning the markets. I forecast for next day most of the time. So, after market closes I will take a fresh look at LYO and make a forecast for tuesday based on the new info. I don't smoke ...need to see the screen.. besides its bad for ones health...so how about I grab a cup of coffee and sit back while LYO heads north as I think you are saying it will do.

 

[Boy Plunger]

Quote from pinabetal:

I could be dead wrong. I have been dead wrong lots of times in my years of learning the markets. I forecast for next day most of the time. So, after market closes I will take a fresh look at LYO and make a forecast for tuesday based on the new info. I don't smoke ...need to see the screen.. besides its bad for ones health...so how about I grab a cup of coffee and sit back while LYO heads north as I think you are saying it will do.

Pink Floyd--your forecasts--mostly being correct--working the system. Good for you. I am working hard to take LYO down but to me, up, down, what's the difference. Risk-Time-Biggest bang for the buck are all on my mind right now. I want this week to be a good earning week so i'm putting in extra hours to find better trades--some are shelved for the time being.

 

[cnms2]

Quote from Cluseau:

I was under the impression that you trade with money. My mistake. ST humana trade is over or nearly over. Depends how you played it. I can't get specific about this one b/c of consideration of other parties involved. I thought you would easily see which ATM options had high time value to sell. LYO isn't getting the reaction as anticipated so a different strategy will commence this week, if at all.

I didn't put money on neither one of the trades discussed here. I looked at VZ because of Schaeffer's Contrarian commentary on Barron's bullish assessment, then I asked for Multi's opinion to compare results. I looked at HUM and AAPL as they were discussed on this board.

 

[novel20]

LOL

 

[cnms2]

Quote from Multioption:

cnms2,

Any update on Bernie Schaeffer's contrarian trade - VZ?

Weeklies show bullish divergences. Dailies trend up and the price broke the 22 day EMA, stopping today at the 50 day SMA. Stochastic and RSI are overbought. I think that all these plus the mixed shorter time frame charts indicate a temporary exhaustion. I don't see an entry point in either direction. In the near future it might form a cup and handle pattern.

In conclusion I would stay out of VZ. IV dropped to 18 (it was 24% before last week earnings) which is about the middle range of this past year. There is no much premium to sell ($.20 for Nov).

If I had any VZ positions I would look to close them with a limit order hoping for $.10-20 favorable swing, with a very close stop. Except of a market crash, I don't see substantial risk in trying to squeeze a few cents.