USO

O

oldnemesis

http://finance.yahoo.com/news/us-stocks-join-global-rally-153102948.html#

http://stockcharts.com/h-sc/ui?s=uso


Bottom?

Trade:
With USO at 9.27
July 8/6 bull put spread for a net credit of $46
Yield = 46/154 = 29.9% in 174 days or 63% annualized
Prob = 55%
Expectation = .55(46) - .22(154) - .23(77) = 25.3 - 33.9 - 17.7 = -26.3
Price.......... Profit / Loss.......... ROM %
4.00............... (154.00)............. -71.00%
5.00............... (154.00)............. -71.00%
6.00............... (154.00)............. -71.00%
7.29............... (24.80)............... -12.40%
7.54.................. 0.00 ....................0.00%
8.00................. 46.00.................. 29.90%
9.00................. 46.00.................. 29.90%
10.00............... 46.00.................. 29.90%
11.00............... 46.00.................. 29.90%
 
I recently moved from a deep OTM to an ATM in the intermediate term Though, I would like to speculate on a long term flipping of the skew. Not sure how yet.

Would you mind disclosing (to a level your comfortable with) your system? How automated are you? Are you using canned software with your own parameters? Did you build it? Thanks.
 
oldnemesis said:
With USO at 9.27
July 8/6 bull put spread for a net credit of $46
Yield = 46/154 = 29.9% in 174 days or 63% annualized
Prob = 55%
Expectation = .55(46) - .22(154) - .23(77) = 25.3 - 33.9 - 17.7 = -26.3
More...
Can you explain these calculations in more detail ?
 
I have detailed how I come up with these trades and the meaning of the calculations several times on this board. I really cannot do it again right now.

Sorry
 
In the posting you reference I showed both a bullish and a bearish trade... depending on how you felt about IBM at that time. How do you know I didn't take the bearish trade??

Actually I have not done well with IBM in the real world:

Date........... Action.... ...Qty.... Symbol/Description ....Price.... Commissions.... Net Amount
03/26/2014 Buy To Close 3 ......IBM Jan15 215 Call ....$4.38 ....$7.48 $0.11 ...($1,321.59) 03/26/2014 Sell To Close 3 ......IBM Jan15 220 Call .....$3.38 ...$7.47 $0.14..... $1,006.39 11/22/2013 Sell To Open 3 .......IBM Jan15 215 Call.....$3.92... $7.47 $0.11..... $1,168.42 11/22/2013 Buy To Open 3....... IBM Jan15 220 Call.... $3.27... $7.48 $0.09 .....($988.57) 11/16/2013 Buy To Close 2....... IBM NOV13 210CALL $0.00 ....$0.00 $0.00 ..........$0.00
11/16/2013 Sell To Close 2....... IBM NOV13 215CALL $0.00.... $0.00 $0.00.......... $0.00
10/20/2013 Sell To Close 3....... IBM OCT13 225 CALL $0.00 $0.00 $0.00............. $0.00 10/17/2013 Buy To Close 2....... IBM Nov13 175 Put.... $3.92.... $7.47 $0.06..... ($791.53) 10/17/2013 Sell To Close 2 .......IBM Nov13 170 Put.... $2.12.... $7.48 $0.07....... $416.45 09/25/2013 Buy To Close 3 .......IBM Oct13 220 Call.... $0.02.... $4.95 $0.09....... ($11.04) 09/20/2013 Sell To Open 2 .......IBM Nov13 175 Put.... $1.07.... $3.73 $0.07....... $210.20 09/20/2013 Buy To Open 2 .......IBM Nov13 170 Put.... $0.63.... $3.74 $0.06...... ($129.80) 09/20/2013 Sell To Open 2 .......IBM Nov13 210 Call.... $0.33... $3.74 $0.07.......... $62.19 09/20/2013 Buy To Open 2....... IBM Nov13 215 Call.... $0.15... $3.74 $0.06......... ($33.80) 04/22/2013 Buy To Open 2....... IBM Oct13 225 Call..... $0.64... $7.48 $0.07....... ($135.55) 04/22/2013 Buy To Open 1....... IBM Oct13 225 Call..... $0.64... $0.00 $0.03......... ($64.03) 04/22/2013 Sell To Open 2....... IBM Oct13 220 Call..... $0.95... $7.47 $0.08......... $182.45 04/22/2013 Sell To Open 1....... IBM Oct13 220 Call..... $0.95... $0.00 $0.03........... $94.97 11/02/2011 Sell To Close 4....... IBM Apr12 120 Put...... $1.32... $7.47 $0.09......... $520.44 11/02/2011 Buy To Close 4....... IBM Apr12 125 Put...... $1.67... $7.48 $0.08........ ($675.56) 10/19/2011 Buy To Open 4....... IBM Apr12 120 Put...... $1.84... $7.48 $0.08........ ($743.56) 10/19/2011 Sell To Open 4....... IBM Apr12 125 Put...... $2.19... $7.47 $0.10.......... $868.43
Total .............................................................................................................($365.09)

(I'm sorry but I just can't get the whole table to post correctly).


So...since 2011 I have lost $365.09 on IBM, and I have not made any real IBM trades since 2014. because trading IBM has not been profitable for me.

While I may or may not post IBM trades as situations arise I do not actually trade IBM. The reason is that I frankly don't understand IBM as a business. While I think WATSON is a tremendous advance I don't really know how that will or won't make money for the company. If you read the description of what IBM does for a living you will find a bewildering array of services and even cloud computing services. Too bewildering for me.

As for the "hard grind" in making up a full loss.. that is inherent in doing credit spreads. Thus if you trade credit spreads you must try to avoid a full loss if at all possible. Usually you only have to take a full loss when there is a full fledged black swan event that was completely unexpected. This is very rare in larger well followed companies. I would say considerably rarer than 12/1.

On bull put credit spreads I always exit the trade if the stock contradicts the assumptions of the trade. Whether this would have been before the max loss or not for IBM I cannot say since I don't follow the company.

On looking at IBM in retrospect I posted the trade with IBM at 166...I HOPE I would have pulled the trade at 135 (P&L = 0) or before as the bull put trade assumptions were certainly violated by that point.

As I have said many many times what I post are trade IDEAS. I do not post trade management or portfolio management... which are far more individualized.

:)
 
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