The Novice Stock Options Investor

I'm much calmer with the market open. I'm starting to feel in the "zone." Emotions are in much better control.

Some Lessons Learned and Mistakes:

I made a trade by closing trade of one of my BIDU 110 NOV short strikes for the wrong order amount. Effectively I locked in $30.

GAIN: $30

MGM was a learning experience, learning how to day trade ITM options. Messing with calls and puts. I think in the end I lost due to some volatility and poor timing. Also, I didn't do so well with setting plans or stops like I should have. At the close I ended up with an unintended MGM 14 PUT / 12 CALL strangle with 11 days to go. I lost $100 on that. Earlier I also day traded a 12 call. bought for 1.04, sold for .83, that's where most of my loss was from.

LOSS: $96

My ATVI closed out for a $100 profit as I posted earlier

GAIN: $100

I have to work in the morning tuesday and wednesday so I'm pretty much done with day trading until thursday and friday. It's probably best I take a break from thinkorswim and eat some lunch.
 
I have a small position (MGM) March 11, looking for 20 percent! Total 15 contracts, Hedged with puts, Delta leaning towards an upward movement. I just want to protect myself if a disaster happens.
 
Quote from nickdes:

I have a small position (MGM) March 11, looking for 20 percent! Total 15 contracts, Hedged with puts, Delta leaning towards an upward movement. I just want to protect myself if a disaster happens.
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With options, I'm learning to not trade with contracts so far out because they have very low gamma. You basically make less money for a big move and have a higher chance of getting killed by volatility crush.
 
IGT Earnings Trade 15 NOV 10 Call 1.35 x 2

Currently trading at $16.35 (close price). Looking for to enter on a pull back intra day at around 16.18 for this trade to enter at 1.35

Reason for Entry: Support at 15.60, Next level of resistance 17.50, Positive earnings play. $250 exit (100% roi) no stop loss. all or nothing trade. 2 contracts.

If stock stalls, may exit at a $100 loss technical level at the 15.70 level.
 
IGT trade didn't fill

Adding to positions:

AAPL 310-320 NOV Call spread x1 5.50 debit & AAPL 330-320 NOV Call spread 3.35 credit
Reason for entry: new short term support at 315, adding to position and buying weakness. Stop Loss: position closes at a 400 loss, adjustment at 320 per share

NFLX 180-109 NOV Call Spread x 2 1.30
adding to 180-190 call spread, reason for entry : bouncing of 20sMA 50% stop loss @ 0.73, time stop is Friday 11-12

PCLN 420-430 NOV Call Spread 4.10 x 1, 3.9 x 1
Reason for Entry: High probability that 420 will remain support. Stop Loss: Tight stop at $200, will exit at $400 profit on a day trade.
 
All long position filled from my previous post and they are all profitable except PCLN NOV Calls pread 420-430 for 4.1. It's around a strong area of support and had a max $135 draw down. But I'm in it to win it! until the trend changes.
And I just tried to add to the position, but accidently exited at 3.50.

Just took profits in my NFLX NOV 180-190 x4 @1.47 avg price. made $280 or 47% ROI or $2.17. I decided to because theta was too high for me to tolerate. I will re enter maybe today, don't know if it will pull back enough.

So far of closed trades

PCLN NOV Call spread 420-430 4.10 X 1 for $60 LOSS by accident CLOSED

NFLX NOV 180-190 X 4 @ 1.47 avg price exited for 2.17 $280 profit
CLOSED
 
1.) Anything Can Happen


2.) You don't need to know what is going to happen next in order to make money.

3.) There is a random distribution between wins and losses for any given set of variables that define an edge.

4.) An edge is nothing more than indication of a higher probability of one thing happening over another.
 
Plan for Friday

NFLX

Still betting on a higher close on the daily on friday if the market has an up day.
On the hourly chart, it seems to be to have a 50/50 probability that it will bounce
off the 20 period sMA. As of right now the that would be 174.05. Based on my trade
that would be a ~$153 loss. My technical stop on this thing is 173.5.

If after the first hour of trading I'm at a $200 loss or more I will exit this trade for a loss.
that would be 7:30am pst


MGM

On the daily chart, it has closed inside the upper BBand for the first time prior to the
last 3 days. I will play a reversal by selling the call on the open and hold the put to reduce
some of my lost planning for the posiblity of a reversal from the prior day. If the put exceeds
a $130 loss (currently at $98) I will take a bigger loss.

Exit trade today no matter what.

LVS

This is a longer term trade, with a bullish thesis. Position is small. On the hourly chart
it looks like it may hit the 20 sMA as resistance, or it could turn the 10 sMA as support.
There is short term resistance at 50 per share. Do nothing here. NO stop loss because the position is too small. a $200 stop loss will be in place if I ad to the position.

GOOG

My tech stop loss is at 612 per share. It's possible, but less likely. The stop will remain the same. This trade I'm okay with holding over the weekend. Tech stop has a theoretical loss of $75, assuming there is no change in volatility.

The 10 sMA looks like it could be acting as new resistance.

GLD

I sold half my position in this thing, so it's the houses money. Jan 11 until gamma becomes more sensitive. As of right now the futures looks like this thing will trade lower. Gold futures
are trading lower, but the 20 sMA hourly may act as support. No reason to get out since
this trade expires jan11. I'm considering selling half of the profit to lock in some gains.
If there is a big upswing in the morning, I may do so.

BIDU

Made a new high on thursday. 115 may have chance to be new support. As much as it would be favorable to me if this pulled back a little, I have a sense the higher probability that it will move sidways and may pull back next week. I have fear wanting me to sell here,
or maybe just take half my position off. However, the higher probability looks to be sidways, then downward slightly.It could pull back to the 10 sMA hourly.

Do nothing and sit tight for friday because time is on my side.

AAPL

Short term support at 315, it did trade intraday to 314.25. $400 stop loss. To high for me to stomach, so I will change it to 312 tech stop on the hourly chart
 
Took some heavy losses, but I stuck to my plan. No one ever likes losing, but all you can do is stay disciplined and minimize it.

Closed all my positions from my last post except for GLD, LVS, BIDU & GOOG
 
Quote from magix3d:

Took some heavy losses, but I stuck to my plan. No one ever likes losing, but all you can do is stay disciplined and minimize it.

Closed all my positions from my last post except for GLD, LVS, BIDU & GOOG
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My experience is there are certain time periods where no matter how you are doing you need to liquidate and avoid a black swan day. I think we're at that point and the risk in unhedged long option positions is massive right now ( especially November or December expiry ).

One strategy is to add some puts to your portfolio. Another is stay diversified by sectors which you are somewhat doing. I say somewhat because you are taking on "risk stocks" and if the risk trade comes off ( for example Ireland gets a massive bailout ) every single one of your trades may dive.

But the best strategy if you have a long bias is go to cash, wait for a significant drop in the stocks, then take on new option positions. Yes, the market could go up now, but as an options buyer you are overpaying with the threat of a massive drawdown being higher then normal right now.
 
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