Hi all, Reading the comments from the previous post was interesting. Some bad stories and some good...
Regarding the bad, a common thread of the bad demonstrates is a common mistake.
a. Don't use stocks that have no history...especially chinese!
b. Leave lots of cushion.
c. Have rules and follow them.
d. Even with a spread you can use the doubling rule. If you think the stock will or might continue to fall, only close the sold put or call. leave the bought in place to capture some of the rising prem. If not much time left close both.
e. Research the stock you are using. i.e.: earnings etc. don't get caught without knowing what is common knowledge for all...
f. Don't take flyer's on unknowns.. know your stock
---------
These rules / guidelines are to help protect you when things turn against you. You want to minimize your losses, not watch them continue to run. The goal is to make a SMALL profit but a consistent one.
Hope the reminders help.
Jerry
111 comments:
In my opinion, now is the time to be looking for bearish spreads by selling some call spreads. The market has been long due for a correction. On the put side, LVS might be a good weekly play. They just had a big sell off based on missing analyst projections even though they had a big year over year increase in earnings.
I've learned my lesson after this week. Last few weeks I've gotten bolder and bolder thinking this was all like taking candy from a baby. Well the baby has struck back; I guess his name was Hercules.
Anyway, what do you think Jerry, or anyone else here, is a good solid cushion for a weekly spread? Since we say 20% for a monthly, does it make sense to say 5% for a weekly? Or is there some mathematical fallacy there?
I've come to conclude that weeklies are much less safe than monthlies. The cushion needed on a weekly to get any premium is much less than what you can get on a monthly. What us put sellers worry about are big quick drops. It's inevitable that the market wil drop big ... it's just unknown when it will happen. When it does happen, you'd like to have a big cushion AND you'd like to have time to react after the drop. Buying the put back after a panic is the worst time. A weekly doesn't give enough cushion AND it doesn't give any time before expiration to see what happens.
My opinion is that getting about a 1% premium per week on a monthly that's 3-7 weeks away is more prudent.
WOW .. PCLN earnings are out of the way and if i had maintanence available (still waiting for this past weekly's to free up) i would jump on the 515 / 510 put spread .. wow .. 10 points of cushion for 1 day .. and earnings out of the way !! WOW .. return of 4% ARE YOU KIDDING ME !! I don't think this will come close to dropping 10 points today its already after the bell and its down almost 5 and you would still have 10 points of cush.
Trading at 522 right now
Hi all, Regarding 'what is a good cushion for weeklys' So far what has worked for me is to take each stock situation on an individual basis.
such as today I put in an order for AAPL next week and with the stock trading around 349, I put in the order for nickle with the 315/320 put spread. So aapl has to drop around 5. per day each and every day during the coming week.
That is only an 8.3% cushion. A little scary but it is still 30 points with a great stock and nothing special coming i.e.; earnings etc.
But if I were doing a stock trading at 50, the 8.3 cushion means i could go with the 45 strike.. I don't think so..!! So again my evolving rule is 'what could happen to this stock in the next week. Again not what I am HOPING, but what is a reasonable safe number in a negative situation.
If I were opening the trade with AAPL on Monday or Tuesday I would still figure 5 per day. Of course the strike could come up as the number of days dwindle. But if I am getting over .06 in a weekly spread, something is amiss...It is a heads up that I am treading on thin ice. I could probably get a spread with aapl using the 325/330 at .10 or more...But that would be a 2% gain in a week. Or 8% in a month... Thin Ice..
Jim, Weeklys can be more dangerous for the reasons you mentioned, but it is not always necessary to move close to a stock (low cush) If using weeklys avoid the temptation of getting close. If there isn't a good (aka safe) trade, don't do one...
JBL, I also like call spreads as it seems that stocks do not have super high moves over night etc unless earnings etc are coming. But still caution must be used and avoid getting over .06 per spread. It doesn't matter if you are doing call or put spreads.. stay safe.
Jerry
Just discovered this site; I've been executing on a "sell put" strategy for the past 18 months w/great success but w/varriations from what's described in Jerry's book. Biggest difference is that I trade more with expirations 60-90 days out... and then trade more on news and earnings for short hits. As such, the % gain formulas don't seems to line up/apply. Thoughts?
Hi J. welcome aboard. Many traders here also use variations of put selling. The downside of trading 60-90 days out is, if you guess wrong and the stock takes a hit, you either take the loss or have to hold a long time to see what's going to happen. But one of the positives is the farther out you go the more cushion you can build into a trade. Many ways to skin an option
Jerry
Opened WLT monthly Iron Condor
105/110/150/155 ROI is about 4% for 15 days to expiration.
Sold to open TER May $16 Puts, It's at $16 now, 10 trading days to go, see where the wheel lands.
Jerry, I'm still working on understanding what a constitutes a reasonable crumb so thank you for being so specific with .06 on the weeklies, which I assume applies if doing spreads. What would be your numbers on naked monthlies?
I guess I'm more than anything trying to understand what is a reasonable expectation. At .06 I would need 100 contracts in order to make $600 for the week. Not to try to nose in other peoples business, but it would be interesting to hear how much crumbs others are hoping to make.
Jerry,
Great blog post! What Jerry posted as “a.” has been huge for me!! Know the history. I use that as one of my final decision makers as to which weekly to pick. For example:
I pulled all 52 weeks of price’s (open and close) for NFLX last Sunday. I put that data in a spreadsheet and noticed that only 4 times all year had NFLX dropped more than 9%.
Weeks ending on:
Friday, April 29th (due to earnings) = -9.47%
Friday, July 23rd = -9.53%
Friday, July 2nd (due to earnings) = -10.82%
Friday May 7th (2010) = -9.74%
So in 52 weeks it only dropped -9% or more 4 times. That gives me 92.31% of the time it was above that.
So going in I knew I wanted to trade a put option that gave me at least a 10% cushion (I chose 12%). NFLX never hit 215 (210/215) this week and my trade expired today.
Again this is just one of my methods to vetting my options plays. I also use many of Jerry’s rules (never trading on earnings being one).
I also like for my trade to be at least 1.5 (2 is really what I look for) standard deviations away.
Once I find an option that meets all (or most if I can’t find one with all) my criteria, I pull the trigger.
As far as price, I’ve recently learned not to get greedy. I’m going to start trying to go for .05 to .08 that should keep me from looking at the screen every 30 mins.
Jerry has a good thing going here. Read his book, follow his rules and throw in a few of your own and good things will happen!!!
dr - good analysis - love it.
My cash secured puts I sold on POT 52.50 came up out-of-the-money today after closing at 52.27 yesterday. For me personnally, I like selling these puts knowing I have the cash available to take assignment. It allows me to run the full amount of cushion without needing to ever close them out due to a margin call due to over leveraging on the margin. Better sleep zzzzz.
I was looking at 70 OPEN at today's close but my .25 didn't trigger :( So I am in 100% cash over the weekend - not necessarily a bad thing.
@Nic, you asked how much people are making using crumbs. It all depends on how big your account is. Let's say you make 4% per month...
$10K account = $400/mth
$50K account = $2,000/mth
$500K account = $20,000/mth
Hope this helps.
That's just it, Mark. I'm trying to educate myself on the best way forward. Taking AAPL as an example, in order to make 4% on $100,000 I need .4 in premium on about 21 contracts as tk explained earlier, right? That return is first off tricky to find with 20% cushion, but regardless of that discussion it means that I'm maxed out on maintenance, so if the stock falls just a couple of percent I risk a margin call.
So my question is how everybody not only seem to be able to get a 3-4% on individual trades, but like you say, 4% on the whole account?? To me that sounds as if maintenance requirements must be maxed out with extremely little room for stock drops/premium increase. The point for me with a cushion is that a pick a level I'm sure it won't reach within the remaining time, but in reality the maintenance dilemma will probably generate a margin call way before that if the stock starts to drop.
Can anyone shed some light into this for me, I know I'm obsessing over it (tg this is a anonymous board :), but I feel I'm missing an important piece of the puzzle. How much maintenance buffer do you guys leave? Jerry?
Hey Nic - I am more conservative than most here so my monthly goal is 1.5%. Like Mark alluded to; I calculate 1.5% of my current account balance and start calculating weeklys and/or months so my total return at the end of the next monthly option period come to that. This month, I'm 3/4 of my way to my monthly total so over the next 2 weeks I can even go further out of the money with my put sells.
I've been doing Jerry's method since only December and I have 100% winners; no losers......yet *crosses fingers*.
Hi Nic and all. thanks for the good words I wish the IRS was as nice to me as your guys are.
Nic, don't confuse all of us with many that try to make bigger ROI. I try to double Mark's return and get 3% a month. In the real world that is an really super return. But possible if you pick up crumbs without getting greedy. When I say greedy i don't really mean it as a person that is greedy and piggish etc just traders that push the envelope to far.
Also unlike Mark i pretty much use all my leverage. When I say that, it is impossible to time it perfect so I always have a little extra for the stock that drops unexpectedly. I get maint calls often and shrug them off as part of the business. I don't ignore them or disregard them, I take care of the problem stock and move on. Part of the business.
If you use spreads you will get no maint calls. It is built into the equation when you open the position.
Also regarding a dropping stock and the maintenance. Often the dropping stock is offset by the declining time factor. If you open a position such as I did today..
PCLN trading around 535 i sold the 505 and bought the 500 for a net of .04 for the weekly that expired today.
I made around .04% for a one day trade. Now if you look at PCLN and wanted a better ROI you could have done the 525 strike with 15 point of cush and only get had to get through the day and you were safe...WRONG.. the stock dropped to 519 so you lost money. Again err on the VERY safe side and pick up crumbs.
Hope i helped some
Jerry
Dr3z, good data analysis, by the way how did you pull out the 52 week data? curious and I want to try others.
Kenny, message me your email address. I'll aslo send you my example from last weeks nflx.
cycle87 AT yahoo.com. Thanks!
Well I had some good trade last week, with a little bit of a headache and heartache added as well. I held on to my weekly spread with PCLN through earnings (I did my research on prior earnings announcement of the company and looked at the implide option range as well, 9% up or down from Monday's price). I did a couple spread on SPX as well. Then came Friday, I did a spread on the SPX and tried to scalp a little being that the market was up. Well that trade ended up costing me my gains for the week. Note to self, do not do quick easy trades on Friday. They may backfire and bite you in the rear. Use your mistakes as a learning tool. There is always next week and beyond.
DR3Z,
I would be interested in seeing how you pulled your information on NFLX. Could you share that with me as well?
Gssound@aol.com
Chris
DR3Z, I've done similar to your yearly review. Were your search and findings based on "single day" declines, or were they weekly total declines? The reason I ask is that single day percentage figures could add up to a cumulative total more than your cushion percentage. What I mean is; say you sold on Monday of expiration week, and for whatever strike you sold, you were out of the money by 10%. A drop of say 4% on Tuesday, and drop of 3% Wednesday, and another 4% on Thursday would exceed your 10% level, but would have not registered on your 9% search filter. So just trying to find if you searched for daily 9% declines or cumulative weekly declines? Thanks, and good trading to all!
@JimN,
I look at total weekly declines (and gains). I wish I could attach my spreadsheet here.
If you go on google finance, select your ticker and click on historical prices you get the option for daily or weekly.
Simply export by downloading to spreadsheet and work your spreadsheet magic (color coordination etc).
Hope this helps others!!
I went back into the archives and was reading some blogs from December - the option screen site, PowerOptions was discussed - anybody using and what's your opinion???
http://www.poweropt.com/
Can someone tell me the right ticker symbol for SPX for use in Yahoo or Google Finance? I can get option quote from SPX ok from my brokerage quote system, but Yahoo and Google Finance don't seem to recognize the ticker SPX for s&p 500.
Thanks,
TK
HI TK, TRY $SPX.X THAT OFTEN WORKS
tk,
for yahoo use
^spx
^rut
its that little hat when you shift the 6 key
tk,
you can get quotes for the index at yahoo, but not options info.
Thank you all, option quote is what I am looking for spx without log-in into brokerage account.
tk,
use cboe for option quotes, but remember they are delayed.
looking at FCX this morning; copper futures up almost 2% after last week's huge drop; fyi, there is a special 50 cent dividend going ex-div on Thursday I believe.
Hey All, My GOOG expired last week. YAY
Just picked up PCLN for this weeks weekly.
Since I don't have alot of $$$ I used a vertical so i can trade the big blue chips.
Put Vertical - 490 / 485 - .15 premium. Currently trading at 527.
This is a 2.7% return before commissions and a 1.9% after.
After submitting this order I look back and say maybe 1 more strike price down may have been the better choice. I will have to sit in my error if this does start dropping. Lesson learned.
PCLN just reported earning, it was an ok report but the public didn't like it and so it dropped on Friday. I expect this to go back to where it was before earnings. This still gives me 37 points of cushion for 5 days.
What did everyone else do for this week?
Fulgore, you are lucky to get the .15 premium for the 490/485. I tried the same spread around 11 am,pcln was at 530, and there was no profit at all (only debit). By the way, are you sure you can go any lower than 490/485? That is lowest available put spread for this week. If you option quote shows lower spread, you might be looking at a different expiration date.
Hi TK,
I checked and that was the lowest for the spread you are correct. I guess thats why I didn't go with a lower strike. I must have gotten in at a good time.
Thanks Jerry (and Newport), that helped a lot. Not seeing maintenance calls as a total disaster actually explains a lot for me. I've looked at this the same way as Newport, I've calculated a certain percentage on my funds and how I can reach that every month, and felt that it was pretty tough with 25% of my funds tied up as maintenance backup. Being more agressive on the maintenance side lets me pick larger cushion and that's a good thing.
Hi all,
If you saw my somewhat frantic posts last Friday, you know I was biting my nails over PCLN. I had 490/495,500/505 and 510/515 spreads expiring. The rollercoaster on Thurs(after close) & Friday (~$508-545), ending at $519 was a welcome relief. My return was 1%, 2%, and 3%. This is a PRIME example where 'greed' can bite you. The 3% was not nearly worth the minute-by-minute fear of losing 10x the gain.
1-2% per week may be 'crumbs' but that is *HUGE* on annual basis.
Good Hunting everyone!!
Hmmm...I thought 1-2% crumbs is calculated out of your margin requirement (=working capital here) Need 1/4-1/3 of your total balance/capital for allowing price fluctuation (price cushion means maintenance cushion too).
So making 25-35% out of your total beginning balance annually is hugh...
I'll have to smile at 10-15% beating mutual fund lol. Just my thought of the day.
Right now I have AAPL MAY11 315P that I sold naked at 0.62 and that now are down to .25 so that is working well. However, I'm getting a little restless with two weeks remaining and starting to wonder if I could use the maintenance more effectively? Any thoughts from my fellow commenters? The ROI on this huge maintenance is pretty low given I will have spent three weeks on it.
Hanna,
The ROI I mentioned above WAS based on the margin requirement. Ex: my PCLN 500/505 put spread netted me about $250. My margin requirement was $12,500 for 25 contracts...or 2% on the $12,500 'investment.' Also, when you create a spread (call or put) the flux in price will never create a margin call.
Going naked (Hi Nic) requires much more cash. Ex: Nic's current AAPL 315 put requires ~$9,800 per contract to collect $25 (as of today) or 0.255%. OUCH!!
The same $25 could be returned via 5 contracts AAPL May11 315/320 with a $2500 margin requirement... So, as you can see, going naked just leaves me cold :-)
IMHO, using a spread is always peferable to selling naked.
Slightly off topic -
What broker are you guys using and what pros/cons do you see???
I use OptionsHouse.
pros - $3.95 equity trades, $1/contract to 10, then $8.5 + .15/contract. I'm still using the first 200 free trades...
cons - platform is not great, but very efficient. It calcs margin req for trades (etrade did not)
E*Trade had a great platform, but was crazy expensive $7.95 + $.75/contract (active trader).
I also have a TradeMonster acct I use their paper trading. Their platform is pretty cool. I like the probability calcs. Fees similar to OH.
Who has the best tick-by-tick charts???
have been using TradeKing for 3 years - commissions are low but not as lot of useful tools - TK went through a conversion with their clearing house that they are still working with to get all the "bugs" out of - supposedly TK is looking to get more useful charts and tools but no time line that I have seen
did not open any positions today; mainly because I couldn't take a lunch break at 3:30 due to a server issue - the CME tightening margin requirements on oil should make for an interesting day tomorrow - the last time crude's margin was tightened was 3/4/2011; after that the S&P dropped 5% over the next 8 days. Consumer stocks like CMG, PCLN, OPEN & LULU fared good during that time.
Bald, that was quite an eye opener, much obliged. I've been swing trading AAPL for years but am painfully new to options, so I'm very grateful for all help I get.
As for platform I'm on ThinkOrSwim, which was a huge step up from Scottrade where I started. TOS software with ondemand simulation history and customizable interface both looks great and has an abundance of tools. I really like it although I've heard from buddies that they aren't what they used to be, but for my amount of trading I can't complain. I'm paying $1.5 per contract, which seems a tad high though.
@Harley
Yes, I was talking from naked put point of view. Getting $250/25 contracts/MReq$12,500 --> you have to get 10cents. Usually it gets 5-7 cents, and I feel it's pretty close to strike for 3-5 days exp.
I am at TDA $9.95+ 0.75/c. Besides the high cost, I like everything else for margin account...I was definitely not happy at TDK with margin account- much lower margin ratio than TDA for naked puts and calls. I am still thinking of moving non-margin/IRA account to TDK or OptionHouse. For spread - not TDA please.
One question here:
Making $600 using spread you have to write about 100 or more contracts. It feels kind of scary. Anybody feels the same way?
@Newport Somehow I also feel good trading cash secured put in IRA account (Just starting this year - slow and steady). May be I should move this account to TradeKing or OptionHouse ...since there is no margin to talk about.
I'm paying $1.5 per contract or $3 per spread, which is obviously high so I will have to renegotiate. What should I aim for??
@nick
Because of the high cost -a lot of time I just didn't want to do anything less than 10 cents. Still learning and thinking and optimizing....
hannah - i traded bull & bear spreads for a while before finding Jerry's 'crumb' method and I agree that trading, at times, 75-100 contracts was a little nerve wracking - I always felt I needed to either have a little wider spread to make for the second leg of commission I would have to pay or the STO leg a little closer to the current price - I am now very content with the "Selling Put Options My Way" method :)
with my return expectation being 1.5% a month, I feel comfortable with not using margin - really takes the stress out of this
Yes, very frustrating that 3 cents of a spread of 5 cents goes in commission. Embarrassed to say I didn't realize spread was twice the commission until I checked.
Agree about the high number anxiety, would be interesting to hear Jerry´s take on this, given his long experience.
well after reading all the comments im not worrying anymore. after i read the book i thought this idea works well and there will be to many understanding how to sell puts. im relieved to know others are selling credit spreads and complaining about the market, becuase paying attention comes easy to myself. i guess im gonna write a book on focusing. still making money selling puts. sorry for the hard love but there is money everywhere if your patient.
Hi all,
When you guys and gals are talking spreads, are they bull spreads or bear spreads...calls or puts?? For example,where Bald Harley says,
"Going naked (Hi Nic) requires much more cash. Ex: Nic's current AAPL 315 put requires ~$9,800 per contract to collect $25 (as of today) or 0.255%. OUCH!!
The same $25 could be returned via 5 contracts AAPL May11 315/320 with a $2500 margin requirement... So, as you can see, going naked just leaves me cold."
Thanks
Typically puts, but could be applied to calls as well I think.
Thanks Nic,
So in Bald Harleys spread Appl May11 315/320 example above, is he buying to open the 315 and selling to open the 320???
I actually think he meant 315/310 as that was my strike, but otherwise he would have sold 320 and bought 315.
Bald Harley, I've studied alternatives to TOS for the last hour and come to the conclusion that Optionshouse seems to be a very valid alternative. Their rates are considerably lower (even lower on stocks where I had a deal with TOS) and in particular on options in volume, which obviously matters when doing crumbs. Right now 100 free trades and they throw in a Dell monitor.
Any disadvantages? Do you have margin restrictions above the ordinary? I already know I will miss the TOS software, which is really great. Do you have a CNBC live feed? How is the iPhone app?
To All, your all so lucky as we just got TOS in Canada. I have been using it for a few months and really like the software, but the commissions are really getting to me.
There are other traders that are better but to trade options I would need over 10k in my account and since i am very new and starting out and still young I am not using that much cash. so I will stick with TOS for now until I build up my portfolio.
To Jerry and everyone who trade option on SPX,
I just found out a surprise in my account activity that Tradeking (and some other brokers) charges $.35/contract on top of the regular fee and commission. I had 350 spx spread contracts last week, I lost out on .35x350x2= $245 on top of the normal commission. And that is just one way! Maybe i will use SPY as the substitute for spx from now on?
Index options with extra charge with TradeKing:
http://content.tradeking.com/wiki/download/attachments/1819/IndexOptionWithFees.pdf
@Fishchampion
Have been wondering where you hid lol
tk,
you do know spy is one/tenth the "size" of spx, so you need 10X as many contracts? think i got that right, but double check me.
Hi Hannah - $600/wk is no big deal, but instead of 100 contracts on one stock, you might consider using 3-4 different stocks. There's safety in diversity :-)
Call spreads (bearish) work just like puts but are placed ABOVE the current price. I used them last week when the market was headed south.
Tip 1 Take a look at the S&P index options SPX (not SPY). They offer juicy premiums, even on Tuesdays!!
Tip 2 Stocks like PCLN have enormous spreads between bid/ask price. I try to find spreads with the market around $.06, and I enter a limit order of $.10-.12 and they usually fill in 10-15min. When I get an insta-fill on PCLN I know I left $$ on the table...
Tip 3 Look for stocks trading between $50-$100. They offer $2.5 spreads vs. $5 spreads on AAPL, AMZN, PCLN, etc... i.e. ($92.50/95). The margin req (with most brokers) is only $250/contract!! You can sell twice as much, or increase spread to $5 ($90/95), and get twice the premium. Look at FFIV, CLF, DECK.
Tip 4 I always look at a chart to get an idea of the near term direction for weeklys. Or if earnings have just come out and the stock tanked... The chances are decent it won't go down another 10% the following week.
Tip 5 I've read Jerry's book 3x, but I'm not a pro, so take my tips with a big dose of salt :-)
Good hunting!!
Nic - I've been very pleased with OH. They offer great promotions. I recently opened an IRA acct, and just like the margin acct, their promotions department called. Very nice. With each acct they offered me multiple promotions.
Their iphone app is plenty adequate. I was spoiled with etrade's apps. I understand TOS and ops xpress have great apps...but big fees.
Take a look at trademonster too. I only use a paper/virtual account, but they have some cool research tools, and the trade window gives you an analysis button to see the probability of success... The Najarian brothers (CNBC) started the firm, and are option pros.
Actually, Google and Yahoo finance offer fantastic charts, tools, etc for free...but it is nice to have it all within one platform.
ps - Put some clothes on dude :-)
@Bald, thanks for the tips, this is very good to know when i pick for next week. I will look into those 3 stocks (currently on my watchlist) even if the premium is less i may be able to grab 2x the contract and make up for more then the difference.
Fully clothed, I won't do anymore naked trading for a while. ;-)
Trademonster seems to offer $.50 per contract compared to OH at $.15. Since we're talking spreads that is $1 compared to $.30 which is substantial.
I've mostly been trading one or two stocks because I've felt that it is just easier to keep track and be fully updated on that those, instead of following a mixture. Since a flash crash on naked puts would have been disastrous even if only one tanked it felt safer. Spreads are admittedly a bit different and dividing on 4 stocks would mean 25% loss of funds if one tanked before opening, so that makes sense.
Does anyone use Interactive Brokers? I am considering switching to them due to fees. I am with TOS and pay 1.50 per contract, and they will not lower their fees to be more competitive with IB. I do like TOS and what they have to offer but when it comes down to fees and the amount I am spending I would make the switch to save money. Any thoughts?
Chris
Nic,
OH charges 8.50 in addtion to the .15 cents per contact. There are alot of other places that are cheaper and do not charge you an initial fee per spread.
Chris
Hi Chris,
I started to open an acct with IB. Their platform is for very serious pros with a bent for futures & currencies. It did not look as user friendly as I like. They also require $10K to open and I am not ready to commit that to a 2nd broker that may be have a steep learning curve.
When I chose OH it was because of their 1.5% margin rate, and super low fees. I could not find ANY one cheaper. Options are 75% of my investments. OH is $3.95 for stocks, $5 for 5 option contracts, and $10 for 10. The $8.50 + 0.15 is still only $23 for 100 contracts. Please elaborate on "alot of other places are cheaper." Help a guy out :-)
I'm certainly not shilling for OH. Their cs is great, but the platform is just above average. I'd jump ship to save some serious $$$, especially with a top flight platform.
-Rick
PCLN spreads are deceptive!!
I just sold 500/505 put spread for .15!! market was ZERO with huge bid/ask spreads. AND, I got an insta-fill. Dang it, shoulda tried .20. Probably get.30 for a 505/510. It fell to 519 last week after earnings. No way it cracks 515 in three days.
3% in three days is a gift. I hope..
@Bald, I have the PCLN 490 / 485 put spread right now and i am liking it. 40 points cushion for 3 days HA.
BUT I will remember the change for the spread next time. I got .15 for it and it was insta fill. I will try a .20 next time and work my way down. Thanks for the tip
Online Broker Review.
I found this very useful. They rate most every broker and includes user forum for great feedback.
http://www.brokerage-review.com/
- Rick
@ Bald - Rick, PCLN is making a ralley at the end here almost up $2 WEEEE the wave is fun to ride
Thank You @Bald Harley. Stocks like NFLX, AMZN, PCLN, AAPL...were our darlings when the blog started. Since then my list has got too long...
SINA earning tomorrow after hour. Hmmmm...
@ Hannah, thanks for the earnings update. I like keeping an eye on stocks after earnings. There is alot of money to be had after announcments if you are careful.
opened "in-the-money" covered calls on FCX; sold the 50 strike at 1.91 for 3 days - will hopefully get 1% gain from the dividend and 1% capital gains when called away.
Fulgore - PCLN is definately a rollercoaster. I had three spreads last week and almost lost my mind... Was down .70 at the Bell when I started this post, now UP $1.55. Wow!!! We're making $$$
@ Bald, ha I saw that you are a dare devil!
I think im ok cause earnings are out of the way. It has to drop 30 points in 3 days for me to start to worry. We will see where the coaster takes us.
Hi Furgore, Just wondering when did you place your pcln 490/485 spread to get $.15? I have been trying to get the 490/485 spread filled for .05 since yesterday 10:30 am without success. Could it be that your broker works harder that mine?
Thanks,
Sold 10 more TTWO May $15 Puts, premium was only .15, since the stock is now above $16, finished at $16.18, I now have 30 of these open (20) $15s and (10) $16s, I'm might sell 10 of these a day, if premium holds up at .15 or goes higher.
I tried to make my first foray into weeklys today, place an order to sell $80 V puts, but my limit order at .85, was not executed, might try that one again tomorrow, hopefully the premium will be decent with only 4 trading days to go.
Rick,
I have used several different brokers over the years, OptionsXpress, TOS, Etrade, TradeKing and others. With the amount of trades that I make a month I want the lowest fees. If I am reading OH's fees correctly they will charge you 8.50 per spread and then .15 per contract. Is this correct? That is what OptionsXpress, TradeKing does as well. TOS charges me 1.50 per contract period. IB seems to be the lowest I have found. The initial funding of 10k doesn't bother me, they do have an account min you have to have and ten trades a month.
Chris
Hannah,
I was thinking of pulling the trigger on a SINA play, but could pull my self to do it. The calls look pretty juiced, but I just don't know where it is headed. Options point to high after earnings, but how much. Do you think 20% is safe on a spread?
Chris,
I opened an account with E*Trade 5-6 years ago bc I liked the baby commercials. I've been an 'active trader' on/off for 20 years, and most recently ON last fall when I realized ET was killing me with the commissions. Thus I found OH. Actually I opened 5-6 accounts to see what I could learn about their platforms. I hear great things about TOS. I like their commercials too. LOL.
Do they offer any referral promotions? If so, let me know, and I'll use that to open an acct.
NOTE TO EVERYONE - most brokers offer good promotions for referrals. OH gives both parties $50 and/or 5 free trades (in addition to new customer cash, Dell monitors, etc...)
I AM NOT SHILLING FOR OPTIONS HOUSE!! but if you want to give them a try, use this link, and we both win :-)
http://oh.tellapal.com/a/clk/Nt3zz
- rick
Chris,
20% up and down between 145 and 95. Don't believe it will be going down straight for this hot stock except for exceptional poor earnings and weak outlook??
The chart/trend looks bearish but when this stock moves upward - it moves fast. Highly volatile with no news. Exceptional earnings will cause it to gap up further pushed by shorts covering.
Drop? Support at around 116 then 109 If it breaks through 116, it will be around 102 (61.8%) then 95? Just some figures in my mind - listen to me on your peril haha.
Have a few 95 and more of 90 naked puts. I got them when SINA was 116 - follow Jerry's lead.
I think it is safer to wait till after earnings unless you are like some guys playing earning report strangle like SINA tomorrow.
Rick,
I am going to call OH tomorrow and see what they can do for me regarding my trading style and amount of trades I make. I like a straight flat fee. If I open and fund an account I will make sure I use your referral.
Hannah, I do like trading the earnings with spread, due to the build up in premiums and deflation of them after earning are out. I have not had SINA on my radar, but there is a potential trade there tomorrow. I was looking at an iron condor trade 95/90, 150/145. I may move that out a little more tomorrow if I do make a move on it.
Chris
Re: brokers
I've had an account at IB for years. I think they are the cheapest for commissions. I've tried different platforms, ToS, Trademonster, and others. If I had the choice, and the platform was the main criteria, for doing spreads I would use Trademonster. (I can't because Trademonster isn't available to Canadians.)
I think IB's TWS is great for doing equity trades, CC's, or naked puts/calls, plus you can trade futures, equities around the world, FX, etc.
Many times with options I've received a price improvement from what I entered. For doing spreads, it is a little more complicated than Trademonster, but still straightforward.
@TK, I opened them around 11am on Monday. Let me know if it goes through for you. Just to let you know Bald has been changing the spread to get more premium out of it earlier in the week and it has been getting filled. Just something to note for next week.
I use ToS.
Thanks Fulgore.I will have to check out ToS.
@TK and Bald, Careful PCLN is down almost $5 today. I still have alot of cushion for the rest of the week, but just be weary of any closer strike prices, don't get greedy.
@Jerry - Can you please start a new thread :)
Fulgore -
PCLN has been in freefall for sure. Down $8-9 at the low. I'm still OK for another $15. Spooky!!
SLV - I thought my 29/31 weekly puts were a gift yesterday. Not so much today. Gulp!!!
NFLX - is UP while the sky is falling. Wowee!!
- Rick
Opened another 10 May $15 TTWO for .15, I can't stop with this stock, also opened 10 May $25 MSFT for .25, 7 more trading days to go, where will the wheel stop? Hopefully not on bankrupt.
@Nicky - I will have to look into TTWO for next week when my maintenance comes free.
@Bald - I am still not worried although I have 490 / 485 and PCLN is trading at 520+ So this still gives me 30 points of cushion for 2 days (after today). Not going to happen. This crumb method is like free money haha.
WOW SLV down 9% today CRAZY!!! might be good to pick up for next week for a put, as it won't fall too much lower (I hope)
PS JERRY ?? stop golfing !!! where are you? haha
Where do you see 13/14 for .75?
As far as this company goes there is no stopping them.
They report on May 24th, so your safe there, they have the best game portfolio in the business, they have a new game coming out on May 17th, they have another one coming out in June, everybody is waiting on the announcement of the crown jewel in their game portfolio(GTA), last year they turned down a buyout offer of $26 from ERTS, I know it sounds like I'm pumping up this stock, but this is not a penny stock, I say good things because I believe in the stock, not only do I write puts every month, but I own the stock, it's my biggest holding, I'm all in on this, if it goes down, I'm done, but I don't see that happening, I see this stock taking off after earnings.
@Newport Watch out for all commodities stocks(always my interest too - esp POT & FCX). Believe the hedge fund managers are unwinding the dollar shorts. Till these market makers are done, they may fall more?? Just wonder.
Today did not make me a happy camper. I had no choice but to close out a couple spreads, OIH 140/135 and EWZ 70/68. Took a little loss on both. I just don't know where oil is going to go. Oil reserves up because gas prices are up and people are driving less. But you have the Summer driving months. Im done with that play. Time to roll and play something else. I am thinking of a May SPX 1290/1295 put spread and 1380/1385 call spread. Also like the talk on TTWO and others. I did not do anything on SINA, after how the market was today, no thanks.
Chris
Odd, the new thread you started was deleted or something Jerry?
Lets get it started again?
Dang Blogger crapped out on us...
so I did some research for this weeks weekly's
My Options Are:
CLF -Trading Price 84.35
- Sell Vert - 75 / 70
- Premium 0.10
- Return After Commissions 1.2%
- Cushion For 7 Days 11%
FSLR-Trading Price 126.13
- Sell Vert - 110 / 105
- Premium 0.11
- Return After Commissions 1.4%
- Cushion For 7 Days 12.7%
GOOG-Trading Price 529.40
- Sell Vert - 500 / 495
- Premium 0.10
- Return After Commissions 1.2%
- Cushion For 7 Days 5.6%
Not Sure about this one the cush is a little low
NFLX-Trading Price 247.48
- Sell Vert - 225 / 220
- Premium 0.15
- Return After Commissions 2.2%
- Cushion For 7 Days 9%
TCK -Trading Price 46.31
- Sell Vert - 42 / 41
- Premium 0.05
- Return After Commissions 1%
- Cushion For 7 Days 9.3%
WLT -Trading Price 119.00
- Sell Vert - 105 / 100
- Premium 0.06
- Return After Commissions 1%
- Cushion For 7 Days 11.8%
FCX -Trading Price 48.77
- Sell Vert - 44 / 42
- Premium 0.07
- Return After Commissions 1.5%
- Cushion For 7 Days 9.7%
PCLN-Trading Price 523.80
- Sell Vert - 480 / 475
- Premium 0.10
- Return After Commissions 1.2%
- Cushion For 7 Days 8.3%
what do you guys think?
So my PCLN Expired today, but i have to wait until monday for my maintenance to free up.
2.2% return on PCLN in 5 days. not bad
Thanks Fulgore!!! you saved me 2-3hrs of weekend work.
I took my weekly profit ($10K) and sent it to TK to give them a try. Their order entry is a bit slow/clumsy. I hope somebody can tell me what I'm doing wrong!!
ps My weekly profit was NOT $10k.. LOL!!!
Great list Fulgore, thanks! Lots of good tips.
@Bald & Nic, I may go with
FSLR-Trading Price 126.13
- Sell Vert - 110 / 105
- Premium 0.11
- Return After Commissions 1.4%
- Cushion For 7 Days 12.7%
I like the Cushion Vs Return. I am not sure this will be available on Monday but we will see.
I still have to check this against a few rules I have but I think it should pass.
I've been making 2-3% on SPX (1295/1300) put spreads the last two weeks...with market going up each week. With the big drop today, I may look at a call spread next week 50+ pt UP.
Otherwise, the names above are always on my short list. I can't believe how strong NFLX has been on DOWN days. Strong!!!
Cheers all!!
Rick
@Bald, I can't do the SPX because of the amount of maintenance it takes. I will have to wait a few years until i can trade SPX
Hello Fulgore. If you can't trade the SPX you can trade the XSP. This is mini S&P options and tracks the S&P divided by 10. Only thing I am not sure is, because indexes and ETFs are european style, if the market goes down can we liquidate them before the expiry date?
Bald,
For the past couple month it NFLX has been doing the opposite of what the market has been doing. Market up, NFLX down, ext. I am betting that we will be having a bit of choppiness in the market for the remainder of the month, then a bit of sideways action. There is some money to be made on the SPX just like you noted.
Fulgore,
Thanks for the list of possible trades. New options to use makes the game a little more fun.
Chris
avid_kris,
What ETF's are you referring to that are European? All the ETF's that I know are American style. The answer to your question on liquidation is -- yes you can. The right to exercise a European option only applies to the buyer of that option. As a buyer or seller of a European Style Option, you may close out that position any time you wish to do so before expiration. The buyer of those option premiums may only exercise them on the last day before that options expiration. If you are a seller of a European style option premium (i.e. selling puts or put spreads), you may BTC that option position any time you see fit, i.e. you can liquidate them before expiration if you want to exit the position.
Dave G
Dave - Thanks for the details and clarification on ETFs. Only other thing, brokerages charge an additional 35 cents/contract in commission for index style options that includes SPX, XSP.
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