Option trading for a newbie

Quote from Ben74:

Amazing, those JPM puts traded as high as $4.80, I missed a big winner by 1 day. Interesting. Well, I'm still holding IBM and DNA calls.
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Be careful not to let this trade (in which you made a smart decision to take a small loss) cause you to hold future losers assuming they will turn around. This mentality will eat profits every time (just might eat mine next week).
 
Quote from NoDoji:

Ben, buying options in front of earnings is risky and expensive. Just my 2 cents.

You say you are a newbie, so let me tell you just one of many similar earnings stories:

8/11: FLR, after having dropped from 101 in early summer to 76 the day before earnings, reports triple play earnings - beats EPS, beats revenues, and offers upside guidance. It rises to 83 in pre-market and you, the holder of calls you purchased when it was in the high 70's the day before, are excitedly awaiting your profits. Well, it opens at 80 and before you can sneeze drops non-stop finally reaching 67 that day, never to see your call price again. Once earnings are reported the value drops right away, so even if the stock had stayed in the high 70's that day, chances are your position would've lost value anyway.
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Bingo, looks like you hit the bull's eye again.

I've lost substantial amounts of money before wrong guessed earnings, it really is a guess, too many things come into play.

If you want to make some decent money, I'd suggest scalping/swing trading boring stocks, it's what I do. Especially large and bulky companies, don't move much (you can tell when your wrong quickly) and still capture sizable moves with the use of options (equities traders would be harder pressed to make large gains).

Example:
I cashed out of my 3 walmart calls for about a 5% gain and JNJ call for a 3.9% gain. All in the past 3 days.
My targets: 10 - 20% a week, and yes not obviously every week.

my .1/2 cents.

-troll
p.s.
good luck and keep us informed.
:cool:
 
Alright, here's an update since I'm still holding DNA and IBM calls. My account is now at $18,563.70. Not a big move from just above $19,000 last week. I still have 10 IBM calls and 10 DNA calls. Those IBM calls I bought at $2.60 are now at $4.3 for a gain of $1,700, but the DNA calls I bought at $2.90 are trading at $0.85 for a -$2,050 loss. Let's hope Roche sticks with their buy on DNA and IBM continues higher. I'd like to get out of IBM at $5.00 or higher and If Roche comes with a +$95 bid increase for DNA, my calls could be +$5. There's got to be news soon on this merger.
 
Quote from codetroll:

Bingo, looks like you hit the bull's eye again.

I've lost substantial amounts of money before wrong guessed earnings, it really is a guess, too many things come into play.

If you want to make some decent money, I'd suggest scalping/swing trading boring stocks, it's what I do. Especially large and bulky companies, don't move much (you can tell when your wrong quickly) and still capture sizable moves with the use of options (equities traders would be harder pressed to make large gains).

Example:
I cashed out of my 3 walmart calls for about a 5% gain and JNJ call for a 3.9% gain. All in the past 3 days.
My targets: 10 - 20% a week, and yes not obviously every week.

my .1/2 cents.

-troll
p.s.
good luck and keep us informed.
:cool:
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thanks for your 1/2 cent, anything is valuable when learning.
 
I bought 6 GOOG Feb. 370 calls at $2.35 for ($1,424.95). I also bought 10 SYNA Feb. 22.5 calls at $1.50 for ($1515.00). We'll see how those trades turn out tomorrow too. I also bought 8 PCLN Feb. 75 calls at $2.45 for ($1,974.95). Add the IBM calls and DNA calls, and I have invested $10,444.90 including commission paid. I'm hoping to cash out nicely over the next few days especially on IBM, GOOG, and SYNA calls.

Ben
 
Quote from Ben74:

I bought 6 GOOG Feb. 370 calls at $2.35 for ($1,424.95). I also bought 10 SYNA Feb. 22.5 calls at $1.50 for ($1515.00). We'll see how those trades turn out tomorrow too. I also bought 8 PCLN Feb. 75 calls at $2.45 for ($1,974.95). Add the IBM calls and DNA calls, and I have invested $10,444.90 including commission paid. I'm hoping to cash out nicely over the next few days especially on IBM, GOOG, and SYNA calls.

Ben
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I sold 10 SYNA calls at $2.45 for a gain of $920.00. I am still holding all the other positions. I now have $8929.9 invested. That investment is showing a loss right now with GOOG calls lower and DNA calls still low. Once I close all my positions, I will update my account.
 
I've sold plenty of positions today. I sold IBM calls at $4.4 anf got a gain of $1,770, I sold DNA calls at $1.20 and took a loss of ($1,730). I sold GOOG calls and took a loss of ($599.90). Along with the SYNA gains of $920, I now have a nice gain of $7,303.80.

I did buy 10 NFLX Feb. 32.5 calls at $1.60 and 10 VMW Feb. 22.5 calls at $1.90 today for earnings. I still have PCLN calls opened. Things are too bad now. I might actually hit a 100% return on my account by the end of next week.

Ben
 
Closed out NFLX calls at $3.30 and VMW calls at $1.30. My loss on VMW was ($630) and my gain on NFLX was $1,670. My net gains are now at $8,343.80.

The only trade I have open is the PCLN calls. Otherwise, I'm out cash now.
 
Quote from NoDoji:

Ben, buying options in front of earnings is risky and expensive. Just my 2 cents.

You say you are a newbie, so let me tell you just one of many similar earnings stories:

8/11: FLR, after having dropped from 101 in early summer to 76 the day before earnings, reports triple play earnings - beats EPS, beats revenues, and offers upside guidance. It rises to 83 in pre-market and you, the holder of calls you purchased when it was in the high 70's the day before, are excitedly awaiting your profits. Well, it opens at 80 and before you can sneeze drops non-stop finally reaching 67 that day, never to see your call price again. Once earnings are reported the value drops right away, so even if the stock had stayed in the high 70's that day, chances are your position would've lost value anyway.
More...

It may be an old saying...but here it is again so we dont forget...
"Buy the Rumor, SELL the news"
Buy those calls a coule days before the earnings release, then dump them before the market close the day before release.
Volitility dries up after the event and the price drops.
 
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