"The only way to trade with Fibonaccis" journal
- Thread starter 1a2b3cppp
- Start date
woah, almost hit it there!
I see the next level would be 118.50 I believe.
Do you have a simple method for entering a position? I see you skipped the 28.6% level and 200 here at the 38.2 is a pretty small position. Do you do something like double or triple your purchase size from the previous level? IE 600 at 50% 1800 at 61.8%?
I see the next level would be 118.50 I believe.
Do you have a simple method for entering a position? I see you skipped the 28.6% level and 200 here at the 38.2 is a pretty small position. Do you do something like double or triple your purchase size from the previous level? IE 600 at 50% 1800 at 61.8%?
Also. have you considered selling weekly puts on SPY at the Fib levels to get into positions?
Yeah I've thought about that. Like right now, I'm gonna buy SPY at $121.06, so round down to $121. Dec $121 puts are $4.02 right now so that would be like $800 for two of them.
The only sorta problem is you have to wait until price as gotten sort of close to your price in order to get a good premium. Well, now isn't a good example since Nov options expire tomorrow and so the Dec options have lots of time value built in.
The other problem is Scottrade doesn't allow selling of puts. DUH. I even asked them specifically about cash secured puts and they said no, I have to open an OptionFirst account or whatever.
I'd change to IB but I recently found out they have inactivity fees. Sometimes I go months without trading. Plus, I refuse to do business with anyone who has inactivity fees on principle alone, even if they would let me trade for free.
But the short answer to your question is yes, I've thought about it, and I'm still kinda doing the math on it.
Ah okay. Another thought too of course is to wait until strike - Premium = Fib Level and do it on weeklies. Just making up numbers in this example to show what I mean.
Instead of selling the 121 put for $4 since 121 is the entry price you want, how about selling when the strike - premium = fib level.
Like here's a real time example
November 25 (weekly) SPY 122 put you can get 1.89 for. If you get exercised you get in for less then your fib level at 120.11 and if you don't get exercised you're picking up money while waiting for it to hit the fib level. Since you want to buy SPY at 121.06 anyways, this seems like a pretty favorable option for you.
In the above example we would have waited too long to sell the put based on my thought since our strike - premium is about $1 below the fib level, so in the future you would be selling the put sooner obviously, in which case you'd already be pocketing cash.
QUICK EDIT:
Forgot something though, if you truly believe in magical powers of Fib, then maybe this won't actually work
If you sell a put at 122 and have a purchase price at 120.11 if you do get exercised, let's say SPY closed at 121.85. You are in for better then your fib level, and you are technically ahead of the game, however one important factor is missing, it never actually hit the fib level haha
Instead of selling the 121 put for $4 since 121 is the entry price you want, how about selling when the strike - premium = fib level.
Like here's a real time example
November 25 (weekly) SPY 122 put you can get 1.89 for. If you get exercised you get in for less then your fib level at 120.11 and if you don't get exercised you're picking up money while waiting for it to hit the fib level. Since you want to buy SPY at 121.06 anyways, this seems like a pretty favorable option for you.
In the above example we would have waited too long to sell the put based on my thought since our strike - premium is about $1 below the fib level, so in the future you would be selling the put sooner obviously, in which case you'd already be pocketing cash.
QUICK EDIT:
Forgot something though, if you truly believe in magical powers of Fib, then maybe this won't actually work
If you sell a put at 122 and have a purchase price at 120.11 if you do get exercised, let's say SPY closed at 121.85. You are in for better then your fib level, and you are technically ahead of the game, however one important factor is missing, it never actually hit the fib level hahaQuote from Took2Summit:
Ah okay. Another thought too of course is to wait until strike - Premium = Fib Level and do it on weeklies. Just making up numbers in this example to show what I mean.
Instead of selling the 121 put for $4 since 121 is the entry price you want, how about selling when the strike - premium = fib level.
Like here's a real time example
November 25 (weekly) SPY 122 put you can get 1.89 for. If you get exercised you get in for less then your fib level at 120.11 and if you don't get exercised you're picking up money while waiting for it to hit the fib level. Since you want to buy SPY at 121.06 anyways, this seems like a pretty favorable option for you.
In the above example we would have waited too long to sell the put based on my thought since our strike - premium is about $1 below the fib level, so in the future you would be selling the put sooner obviously, in which case you'd already be pocketing cash.
QUICK EDIT:
Forgot something though, if you truly believe in magical powers of Fib, then maybe this won't actually work
The other problem with selling puts is that they don't guarnatee you a position.
For example:
Say you want to buy 200 shares when price hits $100. So price is a bit above $100 and you sell 2 puts and collect the premium. Say the next day, price drops to $99.50. But your puts don't get assigned. The next day prices rallies to $105 and never comes back to 100. The puts expire and you never ended up with your shares (although you did get the premium).
Now if a put was designed such that it assigned the moment it became ATM, then that would work perfectly
