Options scalping

traction said:
Great results!
How many days to expiration are you using?
More...
Thanks, it's still an uphill battle trying to build (maintain?) consistency and keep good habits. This journal helps a bit.

I typically trade the shortest expiration (I'll note otherwise in my log here), so that's usually 1-4 dte.
 
PYPL 177.5 calls
Entries: 5.20
Exits: 6.20
Time to scale: 3 mins
TiT: 3 mins
19%

Stray thoughts:
  • PYPL: There we go, the quick hit I'm always looking for. Another reminder to myself to how things can and should play out. I limited in (not at ask), it worked immediately (no heat), and hit my target within a few minutes.

  • I hesitated and missed TSLA. I was eyeing 425 calls at in the low 6s, and they ended up bidding over 8 within a few minutes.

  • Also hesitated and missed PLUG. I had an order queued up for the 17 calls at around 0.98/1.00, and they pumped to 1.25+ as I write this. Not knocking myself through hindsight bias, just more of noting down what I was considering but didn't take. I think I was just focused on the PYPL entry.

  • I came into the open with a "short the pops" mentality, which was too rigid. Trade what you see, not what you think. And, well, what I saw was the markets bouncing quite hard after the first ~5 minutes, yet I hesitated to jump into longs because of my short bias. Need to be more nimble. It's okay to have an opinion/market bias, but it's not okay to cling to it (and not execute your strategy) despite the objective observations you're making.

  • I will call it early today, on account of election day shenanigans, and also other things in my schedule this morning. Looking forward to the rest of this week.
 
AMD 82 calls
Entries: 0.92, 0.90
Exits: 0.80
Time to scale: n/a
TiT: 8 mins
-12%

SDC 10 calls
Entries: 0.26
Exits: 0.20
Time to scale: n/a
TiT: 10 mins
-30%

PINS 61 calls
Entries: 1.05
Exits: 1.30
Time to scale: 27 mins
TiT: 27 mins
23%

Stray thoughts:
  • Honestly everything felt really awkward off the open. Maybe it was all in my head due to the post-election night stuff, but in hindsight I suppose I should have just went long SPY instead of individual names.

  • I wasn't nimble enough to simply stop out and re-enter at the start on the bounce (I was eyeing NVDA, AMZN, and AMD re-entry). I'm okay with taking a small red day on an uncomfortable day like this. We'll look again tomorrow.
 
TSLA 450 calls
Entries: 2.00
Exits: 2.80, 3.00
Time to scale: 19 mins
TiT: 20 mins
42%

AMD 83 calls
Entries: 1.02, 0.88, 0.94
Exits: 1.12, 1.25, 1.12, 1.03
Time to scale: 13 mins
TiT: 29 mins
10%

Stray thoughts:
  • Not a bad minor bounce-back today after yesterday.

  • AMD kind of imploded right after that last trailing stop exit I had. In hindsight I could have simply scaled out more at the 1.25, but who would've known?
 
traction said:
Could you share a share a screenshot of the chart and your decision on why you choose the entry point for the trades?
More...
I appreciate your interest in my process, but the truth is that I'm still battling to figure it out. That said, it's a good challenge to have me explain my pre-, intra-, and post-trade thought processes here (the closest I've come to doing that is the TWTR short commentary from a few sessions ago).

I didn't start this journal with the intent to document that, but maybe it'll be helpful (for myself, at least) to write out the general idea anyway.

To summarize, I generally am interested in momentum, relative strength, and news (whether in real-time or observing reactions to pre-market news).

Chart
For what it's worth (probably not much), I chart equities on a 5-minute and a daily. On the 5-minute, I can see the previous low/high, and the 10-day average daily range (this gives me a rough idea of how much this stock usually moves, which is often useful in names I'm not super familiar with). Occasionally I may have some key price levels/zones (from the daily) for reference/context. Overall I try to keep it simple/clean.

This is an example of a 5-minute chart (the faint magenta line is VWAP; the gray rectangle on the top-left is the 10-day ADR; the light blue horizontal line is the previous high).

pYX2pAhl.png


Entry/Thesis
This morning, I saw a decent amount of momentum off the initial dip (similar to yesterday in tech). Buyers came in after that first minute, so I looked for longs.

I see TSLA briefly blipped up to try to break upward out of yesterday's range (but not quite). I entered with the thesis that we had strong buying momentum on my side across the board, and TSLA would search for value above. Whether it continued bursting upward (in hindsight we see that it didn't) was not my concern; I'm just looking for a quick hit. In other words, my target was just above the previous high.

Exit
It stalled out a bit, so for a few minutes my trade was slightly underwater. But sure enough, it found its way up and over. I exited because for two reasons:

1. I know stocks (especially TSLA and other "whippy" names) can reverse hard in a matter of seconds, so I try not to overstay my welcome.

2. Generally, to preserve my mental capital, my style tends to be quick to take profits.

ADR
Now let's talk about the ADR stuff. We can see that by hitting the 440 high, TSLA had already made a range roughly as wide as it usually does, as indicated in that gray rectangle (note: the rectangle turns bright yellow if it's >100%, almost like a "caution" light for myself). So if I were considering a long right now (at the time of the chart screenshot), one reason not to is that TSLA has already made a typical move for the day.

Previous High/Low
Another reason is because I can see from the light blue horizontal line that the previous high is sort of putting a lid on upward movement (some might call it "resistance"). In other words, the marketplace is clearly having trouble accepting prices higher than they were yesterday. So I definitely would not initiate a long right now, barring any other information (news headline/whatever).

General: Looking at tape
Once I'm in a trade (and sometimes when I'm carefully considering a trade), I am looking at reactions around psychological numbers (whole/half/quarter) and VWAP. I have to say, I'm not very good at reading tape, but I try my best, because a lot of activity isn't portrayed on a standard candlestick chart (e.g. buyers keep stepping in at 38.25 -- this would be very difficult for me to see on a 5-minute chart as a bar just sits there for a few minutes before moving up).

General: Time of day
So momentum/relative strength to me is focused around the first few minutes off the open, and typically I find that my edge slowly shrinks as we go past the first hour. By then, usually the "easy" move is made, and I'm left either chasing (which I foolishly still do sometimes) or waiting around (often impatiently/anxiously) for a pullback. I don't like my mental state in either of those situations, so ideally the earlier I end the day (whether I'm up or down), the better.

To recap, my thought process is: Given a particular name, where is it opening relative to its previous session? How is it doing relative to the market? Relative to its industry and industry peers? Relative to pre-market levels (if applicable)?
 
AMD 84.5 calls
Entries: 0.60
Exits: 0.71
Time to scale: 2 mins
TiT: 2 mins
18%

ROKU 240 calls
Entries: 3.20
Exits: 4.78
Time to scale: 5 mins
TiT: 5 mins
49%

SPY 350 calls
Entries: 1.11
Exits: 0.75
-32%

Stray thoughts:
  • Solid green day to end the week.

  • I could have dip-bought AMD after that dump and re-entered at 0.30 and got out in the high 0.40s but hey.

  • I don't want to talk about the ROKU exit. Don't ask me why I looked at it just now. They're bidding in the 12s.
 
CCL 20 calls
Entries: 1.14
Exits: 0.98
Time to scale: n/a
TiT: 5 mins
-14%

Stray thoughts:
  • Small hit here. I had platform and other web service issues all morning which threw me off, so I took the rest of the session off.

  • I had been eyeing TLRY calls, but realized I didn't want to hold into earnings tonight.

  • I was also eyeing AAPL calls for a small-size scalp just after 10am, but obviously didn't do anything based on the rocky technical issues.
 
BABA 270 puts
Entries: 4.60
Exits: 6.00
Time to scale: 1 min
TiT: 1 min
30%

Stray thoughts:
  • BABA: Now that's the kind of trade I like. I see these bidding 7.20 now but I really don't mind, because my entry was actually quite late. Some call flow came in as well during my trade, so I wouldn't want to see it pop up in my face and turn this winner into a loser.

  • Hindsight is 20/20, but good thing I stayed out of the TLRY ER.
 
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