My Options Play
- Thread starter Multioption
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Although most of his posts are not helpful or positive, I'd have to agree with this one.
My virtual accounts I have often times let positions run so I can retrace to see whether I can adjust my exit strategy, in real time. With my real account fear plays a much larger role than I am willing to admit, but hey I'm still learning and learning when to feel the fear and do it anyway.
I do lots of stuff with my virtual account that I'd never do with real money, and I learn lots doing that.
well it certainly is bullish as far as price itself goes. But that price was made without alot of gasoline on the fire. I have never used DMI. Enlighten me, does it measure only price in it's calculations or does it also incorporate some sort of volume analysis in conjunction with price in it's calculation? I suspect it is purely price driven.
If your time frame is only one week you'd better play the front month options one or two strikes in-the-money. As you go further from the money the LEAPS delta increases / decreases much slower than for the shorter term options. It means that the underlying price change might not suffice to even cover the high slippage of the LEAPS. Also, LEAPS having substantial higher premium (time value) your investment will be much higher.
I want to emphasize once more the IV increased effect on the LEAPS premium. If IV changes against you (decreases when you're long, increases when you're short) it is possible to lose money even if you're right about the price direction.
If it is pure price driven and a viable way to confirm trend then as long as volume confirmed what it was saying then it possibly could be useful. However, I would always look at what volume, range, and close is doing and correlate that with any reading. Nevertheless, there are times when the market goes up on lower volume. But I would argue that most of the time rallys are accompanied with a volume increase but of course not always. So MOST of the time uptrends need volume to be sustainable. And this is a game of probabilities. In this particular case I would risk saying that volume probally isn't confirming DMI but tommorrow we will know for sure!
This stock has low option opened interest. I think that Cluseau mentioned it from the beginning, and it is better to trade the underlying. Otherwise its IV is 35%, just came down from 45%, so long calls / puts would be ok.
My analysis shows that the stock should probably go up once it gets out of the 50/200 moving average squeeze. Very long term seem to be completing a cup-and-handle pattern, weekly is flat, but Fri Oct 28 Kangaroo tail should push the price up.
I would go long at market open tomorrow with a stop at $25, once it hits $28 take half of the profit and put a trailing stop for the rest at even money. Time frame one to one and a half weeks.
I don't follow LYO or its sector, but I checked and its earnings were reported on 10/27.
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