Hi all, been busy but catching up on the blog. Wow, many of you seem interested in the technical side and reading buy/sell signals. That certainly is what the bigger boys do so there must be something to it. For me I still don’t get it. Any knowledge gives an edge but years ago when I also tried to learn them and use them I was constantly confused with receiving opposite signals. Good luck and keep sharing the ideas.
Regarding my recent plays. I must confess that I, for the time being have ignored diversification as I am riding the AAPL coattails. I am long the Jan 490’s and some 495’s and selling the weeklies usually around 20 points over the stock price when I open the position. Right now I am doing the 520’s.
AAPL has been cooperating just fine as it has so much going for it, new I-Pad coming, new I-Phone etc. This now diversity is not for all but in this particular place in time I like it. It is returning around 5% a week. There are some great spread positions in plain vertical or Iron condors with aapl which of course gives a floor to your possible losses.
Regarding the general market I do want to caution all regarding the possible Israel attacking Iran. If that happens and I am pretty sure it will, who knows what will be next. Iran will try to shut down the straights and oil will go to super hi? So do be aware of these world events as the market will dive as soon as the word is out. Will we get into it also? I see no way that we can avoid it? But who knows.
61 comments:
Crushed on NFLX. I sold the 95 for .45 yesterday and bad news brought it to 2.30. I should have had stops set for about 1.00. Ilearned from mistake. I know wsith my luck however NFLX will now go back up, that I pulled out.
Hi Andy, I know you don't want any lessons now but for others out there.. There are good stocks that have not gone through the wringer like NFLX. Don't try to catch a falling knife or a stock that has seemed to drop 'far enough.' Give these stock a year or too to stablize and demonstrate that all is well. This business, and that is what it is, needs to be run as a business. No guessing. It is hard enough to make money on good positions don't add another wrinkle. Use your filters. Of the 6analyst that I look at for NFLX, 2 are reduce and one is avoid. this should be a heads up that, this stock is not for me at this time.
Folks, don't make this to hard. Use good stocks with good rating and a decent PE, no earnings coming etc. I love AMZN but I would never use them for option plays. a PE of over 100 is a heads up that bad news will hit them hard. Go with winners, it will pay more often than it disappoints.
Jerry,
Have you ever used or thought about using puts instead of calls for the AAPL calendar/diagonal spreads? long about a 2 month out put for margin reduction and then sell weekly puts against it. Seems like with puts you would have less of a need to roll out or adjust the trade.
Bill
Some good premiums today on AAPL before the shareholders meeting.
I must have missed something, being on vacation most of the week I just had a chance to look at researching trades and noticed there was still an opportunity for APPL (@$516) weekly trade expiring tomorrow. I’m just doing the weekly vertical spreads because I believe I understand it best, so I sold 10 of the AAPL FebWk4 505 Put for $0.34 and bought 10 of the AAPL FebWk4 500 Put for $0.15 giving a return of 3.8% for one day. Does this sound right? I checked the news and it seems that the decision not to give a dividend should have been priced in. I don’t think I’m being greedy the 510/505 would have yielded 10%, any thoughts?
Unknown
With AAPL closing at 516, the chances of AAPL dropping 11 points tomorrow is slim to none in my opinion. If those are the numbers, I wish I could have set aside a tax return or two and placed that trade myself.
Tax and unknown, don't forget that last week it dropped around 20 pts from its inter-day high. I am bullish on aapl but I would still go with the 500/495 and make a nickle depending of course on the opening. A .05 gain is 1% in a day trade ..not bad.
traderLux, yes i have looked at that many times and you can make money on that side also. But being bullish on aapl i make more by buying the Jan 2013 490 and selling the near term call ea week around 15-20 points above the current stock price. You get the prem and some appreciation in the long call also. So it can be a double win. AAPL is sitting on around 100 billion in cash? Probably should just buy the stock and sleep on it. Maybe a split 5 for 1.. I like that
Jerry,
Your AAPL play is really interesting. On your near term calls, what is your play if the stock spikes and nears your short term call strike price? Also, what was the stock price when you bought the Jan 2013 490's?
Thanks, BC
A move of 15+ points in one day is very possible with AAPL, a bit close for me. I sold the 475 - 470 for 0.05 today, could have got at least 0.10 if I had waited a bit.
Damo
Optionsense, yes I am a believer in the simple spread also. Not doing them at this time but still a great play.
BCG, if the stock reaches the sold strike it becomes a guessing game. The most objective way is to just close the position. and take profits. I have done it both ways close and then reopen at a newer and higher bought side. But it is hard to close when you have a stock running and so much time value in the sold one. So I play it by ear. I have not decided on a 'best' way yet. If close, such as tomorrow it bounces around 520/521 i will wait until an hour before closing before rolling into next week. But if it is Wednesday etc and it goes past the sold one, i close it all, both sides! Wait a while, maybe Monday and then reopen if my opinion hasn't change overall.
Wish I could give better and firmer 'rules' but the situation changes so fast with this dynamic stock.
I did look at the AAPL 500/495 weekly put spread but at the time the price wouldn't yield 1%. I believe the prices changed for the better just as I placed the order because when I first looked my yield would have only been 2.3%. Thanks Jerry and everyone for your feedback, I'll keep my fingers crossed tomorrow.
I've created a profile, Unknown is Dutch71. Takes me a while to catch on.
This is Linsane, the guy who started with $77 on Jan 20th, 2012 now has $22,128.34, Linsanity!!!!
https://docs.google.com/spreadsheet/ccc?key=0AuFHxYsQIP6ZdEJ0dVVHbUZNT29McXFpZDBUUXllWVE#gid=0
So here's a question. Many on this board had MSFT cal spreads when the underlying equity started moving up and past our sold short positions. At first, the spread was highly profitable, then premiums got tighter and tighter and the weekly roll was increasingly less profitable. I closed out a a very small gain, taking into account all the 'sold' premium but was overall disappointed. Now we are using AAPL in the same way, selling calls against the LEAPs. What is the difference between these two scenarios? Amount of premium available reflecting higher volatility? Will it implode like the MSFT trade? Thoughts please.
Nicky, Impressive performance indeed! What is the background, how did you discover it?
Jim
@ Jim, I have an account with Trade King, he posted on the forum there, that is how I found out about Jerry too.
http://community.tradeking.com/forum/categories/general/topics/8196-my-ledger-for-those-interested/forum_posts?page=1
Re APPL,
I ran a historical volatility calculation on AAPL. I was primarily interest in whether the Jan 13 leaps are relatively cheap or expensive. So I looked at the yearly volatility, calculated every day, since the stock was introduced. Interestingly, the range is 28.96 - 111.79, and the current volatility is 29.83. So the IV is more likely to go up rather than down. This makes the Jan 13 leap a good buy, on an IV basis. On the other hand, the HV has been decreasing in generally, so maybe it will continue to do so.
I also looked at the one week volatility over the past year. The range is 5.41 - 85.60. The 25th percentile is 5.41 - 25.46. The current IV on the weekly is around 20 I believe. The weekly is therefore cheap, historically speaking.
Is it a good time to buy a call? After the sell off at 526, the stock has come back nicely. It has been closing at near alltime highs. It is currently in a price channel that, if it stays in the this channel that started over a month ago, then the stock will end next week at between 530 and 560. Again, it seems like a good time to buy a call. On the other hand, the current price channel is way too steep to be maintained too long. Also, weekly options decay too fast to warrant purchasing generally.
Feel free to disagree with me.
Thanks,
Dave
Hennigiss, you have too much free time.. lol. How in the world do you transfer all that info into a trade? Certainly trading simple like I do isn't for everyone, but my goodness that is a lot of things to run through the brain. I for one certainly won’t disagree with you as I have no idea what all that means. As I have said in the past, this info works for some but for me, I have no idea what the 25 percentile or the IV channel means.
Jerry’s method, not for all and ignore if it seems to simple..
1. Pick a good stock (the most important)
2. Make sure in is fairly priced.. PE
3. No bad new or downgrades by analyst
4. Nor major ‘things’ comings especially earnings
5. Is there enough premium involved to warrant your investment.
You can also check O-I and a few other things but don’t over complicate this. Options and the stock market in general revolves around emotions. It is a bidding game and I have learned over 15 years of doing this every single day through flash crashes and bubbles that it only takes a few minutes to check some facts and pull the trigger. Don’t use stocks like RIMM or NFLX or AMZN, these may turn out to be the best buy of all time but we are working in the here and now. I want something to happen in the next 5 days. Not the 200 day moving average or the channel or the IV related to the vortex of the common vix etc. If you enjoy doing the numbers and twisting the results, great but this really is pretty easy. Most of the number crunching will cause paralysis by analysis. There are just to many things to figure. Charts and all of that stuff look backward to previous results. I want tomorrows news. Is AAPL going up.. yes, ok how do I make money on that. See how easy it is.. lol Again, not criticizing as we all do it different, but I run 4 accounts and also golf four times a week. I for one do not have time to twist all of the calculations.
..Having fun reading as sharing. Jerry
Jerry, NFLX is great for selling calls on!
Also a quick question for you Jerry, when your main strategy was naked puts how did you deal with times of low volatility like we have now? Premiums are low so it's hard to get decent returns, I don't want to reduce cushion. Would you just settle for lower returns?
I hope we have a decent pullback soon so we can get some better premiums.
Damo
Jerry,
Thanks for your input, and your humor! I hear what you are saying, and sorry for being so geeky. I do like aapl to the long side, and believe it has great potential right now. So I must agree with you there. It may not matter, but I think now is also a good time to buy the aapl leaps as they are relatively inexpensive. This makes the position even more likely to payoff. I appreciate you taking the time to respond as you have. I'll try to slow down on the vortex stuff, but I find it difficult. I do like the simplicity of your method.
Damo, I continue to like NFLX on the short side as well.
Have a nice weekend,
Dave
to everyone
Interesting comentary above. I am heavy into AAPL in nakeds, weeky and back month credit spreads. I like the covered LEAP idea also, but would hope for a pullback in AAPL which may never come. I obviously missed the last one. This market is streched beyond belief. I also play SPX weeklies with 10 & 25 point spreads and continue to do it even in this low vol environment. I also like to take some lottery plays to go along with more conservative positions and that is where NFLX, CRR and IOC come in on the naked side. I also place weekly spreads on TMV and FAS. Spread the love around so to speak. I may have to adjust a trade or two, but overall the montha are very profitable.
Optionsense; yes lower vol sure equals lower prems. Sorry to say some of my bigger losses come at that time as in the past I have crept up on my cushion and that evolves into losses. So the long and short is, settle for lower profits during these times. When you have 'strike creep' you don't know when the vix is going to spike and then you are on the wrong end of the stick..
Henngiss; thanks for taking the comments as they were meant. I try to keep in mind that there are many many potential traders that read our blog. When they read about channel recognition and vortex of vix etc, they get turned off and might abandon the quest. lol. My mission is to let people know that options can be fun and done at home and it can also be a profitable business. As i often say there are investment houses and mutual fund companies with computers bigger than my house and they struggle to make 10% annually.
You can not just throw a dart at the stock market and make money. But, with just a few rules and guidelines it can work for smaller traders.
Great comments from all. thank you. (especailly mine..lol)
I didn't realize that everyone would go hog-wild over the Kevin O Brian link haha..... (was sort of AWOL for a bit after posting that--sorry I did not answer any questions about it)
But glad I could help out.
I like to use a combination between Jerry's good ole Crumbs methods for reliable weekly spreads and Kevin's DT indicators. I was a firm believer in Calendars and Diags for awhile but I guess I am just terrible at long positions. Ended up losing at about a third of my shirt there last year due to bad entry and exit on Longs and too much gambling on earnings and killer time decay.
As far as Kevin's stuff goes, I was able to set all 5 of them up on ToS. Learning to know when to *not* act I think is the most important aspect of the system. Sometimes a company can seem to look like a buy but it really isn't because of adverse news. The trick is sometimes the news isn't even out yet. Basically if something is going down all day long you gotta think at least twice before jumping in even if all indicators are met. Actually, my rule now is if I have *any* doubt whatsoever I don't do it.
I'm still struggling with the VIX. It's the only thing that seems to keep going down! Because I can't sell puts for a reasonable margin, I'm tempted to buy calls--does this make sense? I don't know anything about it, but when products are cheap, it's a good time to buy instead of sell. What am I looking for in buying calls?
Better yet, what naked puts are people finding premium and cushion with lately?
Dave,
FYI, Made over 4% overall on total capital on my weekly call spreads entered on Wed last week so they do work. Traded AAPL, CRM, CMG and AMZN. Friday made good money on 20 SPX call spreads in one day.
I'm afraid of a problem with topping indexes and oil shocks so I won't trade puts for a while and will try to avoid any stock I see associated with oil shocks if I can see an obvious correlation.
Regards.. Jim
Thanks Jerry,
I have no reason to take myself too seriously! Your strategy and your rules make a lot of sense, and they do make it easier for an average investor to succeed. There is no need to worry and indicators or chart patterns or option greeks or any other nonsense. However, your strategy does incorporate some of these things into it indirectly and very simply. For instance, if a position meets your other requirements, but it pays out too high, then I believe you would recommend more cushion. The position is paying out high because Implied Volatility is high. If the market is right about the volatility, and the stock moves around a lot, the extra cushion will provide protection. It is much easier and effective to say it the way you do, leave yourself plenty of cushion and don't get greedy!
Thanks again,
Dave
Has anyone had any experience with Uncle Bob's Money? Good or bad?
http://www.unclebobsmoney.com/
It appears that almost no one on this board is currently selling naked puts per the method given in Jerry's book, they have moved to spreads and other vehicles.
I still only sell naked (and cash-secured in my IRS accounts). I have lately been selling MSFT, AAPL and BRKB puts almost exclusively and have been acheiving returns in the 2%-4% monthly levels following principally Jerry's original method. Any one else following Jerry's book approach?
HI David, yes with the arrival of weekly options I have switched mostly to diagonal spreads (also called calendar spreads) I like the ability to get in and out within a week or less and keep exposed for as short of time as possible.
But plain naked puts are as viable as always. Still plenty of prem's even with the lower volatility. If you find it working, stick with it.
Jerry
David, I'm still using using Jerry's naked put strategy as my main strategy.
I'm also playing with day trading puts and calls.
Damo
Damo:
What trades have you made using the Obrien strategy, and what are you looking at this week for AAPL? Some nice premiums today, but I'm going to wait until tomorrow or wed. to get in on AAPL.
KauaiTrader, re O'Brien strategy – last week I traded a call on CF for 0.60 profit, the trade was open for 35 minutes. I also had an accidental trade on a VMW put, I was getting an order ticket ready whilst waiting for an entry signal that never came and hit the wrong button, I managed to get out for 0.18 profit – I got lucky!
I missed a few entries last week, it takes some work watching everything, I currently have a twin monitor set up with a 24inch and a 21inch, it would be nice to have 3 monitors 2 x 27 inch plus the 24inch, could have a bunch more charts running then.
I've not even looked at AAPL this week, I've got some March naked puts on NOV and EQIX and Weekly calls on NFLX and I want to save the rest of my margin to day trade, I'll probably look on Thursday to see if there is anything irresistible.
What are you looking at with AAPL?
Damo
Hi Damo:
I'll wait and see tomorrow or Wed. where AAPL is, then just give myself some room and sell a put spread. I keep waiting for the correction everyone is calling for, but it sure isn't showing.
I've been half-heartedly trying to find entries for the O'brien strategy, but haven't found much. Mostly I am going back through previous trading days using ToS to figure out all the signals. Not as clear cut as the book makes it sound.
Been working MSFT bear calls, and some naked puts on WYNN and FSLR over the past month that have done reasonably well. FCX also.
So my buy AAPL Mar2 525 Call actually worked out! I was nervous about the price dropping, so I closed the position. I am still bullish though so I bought a Mar2 540 Call. This locks in a profit for me, but lets me take advantage if AAPL continues up. Selling puts is easier though!
Have a nice day,
Dave
KauaiTrader, there is some discussion on Kevin O'Briens blog regarding ToS giving off false signals when using his indicators, seems there is variation with indicators between platforms. I've compared IB to OptionsXpress and there is definitely a difference.
AAPL has an event next Wednesday 7th for the new iPad. Anyone have any experience trading AAPL over these types of events?
Damo
I sell naked puts and also do calendar spreads (or LEAP surrogate covered calls). My problem right now if finding anything that is not grossly overbought. Any suggestions? ORCL is pretty neutral and CLF is oversold.
Account started with $77 is now almost $34,000!!!!!
The guy says his win rate is 53.85%, so basically with buying options if you're right 50% of the time and don't risk all on any one trade, bank profit as soon as you have it, you can come out on top??
I have to try this with a little funny money.
I planned to see if AAPL would bust through 550 later today, but my gut couldn't take it. So I closed all of my positions and locked in my profits. I hope to wait until at least Friday to see if AAPL cools off at all. If AAPL goes into the 520s again, I'll look to reestablish a position, but I'll won't be punching the gas. I'm feeling like I'm drunk on AAPL cider. My main goal now is to practice, learn, and not lose money.
I'm going to look closer at NFLX on the short side, while I figure out what to do with AAPL.
GOOG also has my interest going long.
Dave
Dipped my toe into long call waters BTO BSX May $7 call for $0.19, open interest is at 14,000, and open interest for the May $6 put is over 16,000, smells like something is cooking, hopefully something good.
What is the consensus on Priceline (PCLN)? I did a small (2 contracts) 610/605 put spread weekly on it to test the waters. I think I might not have left enough cushion, but hopefully my Apple put spread (15 contracts) 510/505 will cover any losses. I guess my first mistake was trading in a week with a Fed announcement.
HI all, I’ve been on a three day get-away. Wow, I closed all of my many AAPL positions mid-day today. Just too much volatility with the coming new I-pad. I had some embarrassing profits in the last couple of weeks just buying long calls in Jan 2013 and selling short around 20 points over the current stock price. AAPL ran up and through them so I just closed rather than rolling. A danger when rolling is the stock makes a turn and then the cost of rolling is lost money. I generally try to force myself with the positions, if the stock goes past the sold strike, (or real close) it is usually best to just close both sides. It hurts to leave TV (time val) on the table but safer and you are never wrong to take profits.. Be careful with AAPL as it might not like the new I-pad and traders start taking profits. The magic day is scheduled to be the 7th of march. I would be very cautious to hold past the 6th !! Remember the old saying ‘Buy on the rumor - sell on the fact’
Update on weeklies expiring Fri.
I played the lack of vol in the markets for the past several weeks. Yeah I took a chance that Isreal wouldn't bomb the heck out of Iran, but I placed many weekly bull put spreads on SPX, RUT, NFLX,
TNA, AAPL and am making a bundle. Todays vol will make me a bit more cuatious on next weeks spreads. I'll see what Mr Market gives me on Thurs, but if vol returns, I'll wait till next week to place a trade. As my credit spread letter writer says, sometimes you get the bear and... it gets you. Great counting those dead presidents.
Hi all, I have had request from some new readers lately asking for me to go through a process of picking a plain naked put that I might choose to use.
As I am fan of AAPL and like all that I see regarding them. I will use them.
1.Some concern with a coming March 7, announcement regarding the new I-pad.
2. But no earnings or down-grades in the works
3.Plenty of O-I
AAPL now trading at 542 with only 2.5 weeks left in the month, so I can shorten my required cushion. I will use the 480 as this gives me 62 points of cushion in 2.5 weeks on a strong stock. The prem is $1.22
Maintenance required is one of the two- Either 10% of the strike you use + the premium. = 48+1.22 = 49.22
Or 20% of the stock , minus the cushion, plus the prem-- 542 x 20% = 108 -62 = 46 + 1.22 =47.22
Looking at that I now know I will have to use the larger in this case the 49.22
My ROI will be 1.22 div by 49.22 = 2.4% for a 2 ½ week trade. This seems like a pretty safe trade and will make decent money and it will let me sleep.
I hope this clears up some of the ins and outs of selling a naked put. They are still a viable way to make good money.
Jerry
Hi Jerry
Thanks for your excellent blog ( and book). learning quite a bit from it. About the margin it's diff for me. I am with tradeking (have been with them for past 3 years). For me the margin is
The greater of: 30% of the underlying MARKET price plus the premium minus the out-of-the-money amount
OR
15% of the underlying STRIKE price plus the premium
It is common for diff margin req for diff people?
Jerry,
You said, "I generally try to force myself with the positions, if the stock goes past the sold strike, (or real close) it is usually best to just close both sides. It hurts to leave TV (time val) on the table but safer and you are never wrong to take profits.". Wouldn't you get assigned the stock if the stock price goes past or hits your strike price? I've been setting up a contingency order to close out the short position if the stock price comes within $0.25 of the strike price. Im afraid of getting assigned or put to, since I can't monitor my positions much, am I being too conservative?
Hi Dutch, this is a common question and misunderstood my many. The rule of thumb is; if there is any TV (time value) left then you will not get assigned. You can take that to the bank. But it is still possible to be assigned the minute after you open any position, even if it does not make sense..
An example is today with AAPL The stock closed at 544.50 If you had the 540 strike you would be in the money 4.50 but the option is still selling for 5.50 so there is a dollar in TV left in the option. The mechanics are as follows; why would someone assign me the option? Yes they could get the stock for 540 and sell instantly and make 4.50 But, and this is the important part they could instantly sell the option and make 5.50 So there is a dollar more in the option (TV) And this is with only one day left in the option! If you look at next week’s 540 it sells for $13 so that option with only a week left in time has 8.50 in TV. It is in the money and yet no one in their right mind would exercise it. Now the important part is to be aware of when the TV is nearly gone. That is when assignment is about to happen. I usually close mine if the stock passes the sold (short) option as at that point the sold and the long start moving together at a much closer pace. The TV still has to leak out of the short side but there is usually more money in different positions. I had the
490’s long and the 540 short. I closed them and reopened with the Jan 2013, 510 long and the 550 short for this week So I can do more as moving up to the 510’s cost less than the 490’s so that put money in my acc’t. The jumping up (rolling out and up) is how I continually make profits grow.
But to sum it up, seldom is an option exercised before the date of option expiration. Also you should be aware that exercising an option can only be done after the close of trading. So if in doubt and you are watching a position, you don’t have to worry until trading is nearly done for the day. When I feel like the TV is about gone and assignment is near, I have my trade ready and entered 30 minutes before closing.
Hope this helps clear it up some.
Jerry
Dutch, Jerry is talking about diagonal call spreads.
Damo
Interesting article regarding time decay over weekends.
http://www.optionpit.com/option-education/how-option-time-premium-decays-over-the-weekend
Damo
Damo,
Thanks for the link. I have been wondering about this lately, and I like that explanation. So basically, decay accelerates at the end of the week. It still seems like that info can be used to our advantage. That is important knowledge to have anyhow.
Dave
Thanks Jerry,
That's valuable information regarding time value (TV). That should help me from exiting a trade too early.
Also want to thank you for all the information and guidance you provide on this blog and helping out this newbie, never thought I would get so much out of a $10 eBook. It's really a lot more than I expected.
Dutch
Jerry--With Apple's big announcement coming up next week what changes if any would you make in your spread choices? How do you play the uncertainty? Thanks. JerryK
Jerryk; I have just finished closing all of my positions. I am heading out for my Friday golf game and don't want to be surprised when i get home.. I am all cash at this time. Well I do have some naked calls on aapl for next week at the 580 strike.
This next week with aapl should be interesting. Not a bad time to sit it out. You will probably miss some profits but you might miss some losses. I will reopen after the announcement. When in doubt regarding a major meeting such as the coming aapl one, take the safe route. Try to resist the feeling of "I need to get a trade in as things are happing" There is plenty of time to trade, watching isn't all bad.
Jerry--Thanks for the advice. I knew that was your approach to an earnings announcement but I wondered what you would do with this kind of a situation. I like the safe approach! JerryK
Re Weekend Theta,
I sold an AAPL 575 Mar. 9 Call at 3:45pm ET on 3/1/12 for $1.82. AAPL was at about the same price, same IV at 8:15 this morning. The option price was $1.30 at 8:15. The 7 day theoretical price is $1.45. So some of Saturday's TV was already taken away. The 6 day Theo is $1.10 and the 5 day Theo is $0.77. The expected theo, if the stock price and IV remain the same, is between $0.77 and $1.10 at the close of trading today. This would leave 5 full days and one overnight left in the option value. Interesting.
By the way, I am long AAPL again. I'm not recommending this given the advice provided by Jerry, but I am taking a longer term approach. If AAPL drops, I will just stay in the position and keep selling weekly calls. Although I plan to keep an eye on IV. If IV drops, I will consider buying an OTM put as a hedge, or maybe buying a cheap call if I am very bullish. Incidentally, I plan to stop out of my sold call if it doubles, I don't want to sell my LEAP position. Again this is not a recommendation of any kind, just a comment. There are different factors to consider if you buy options, than if you sell them.
If any of this is nonsense, please point it out.
Have a nice weekend,
Dave
Forgot to mention,
I have switched from 75% of capital in AAPL/ 25% in cash to the opposite. I just want to keep it safe and feel more comfortable with all possibilities. If AAPL blows up, then I still have safe cash. I also want to play it safe as I gain experience.
Dave
WOW Dave
I've been trading options for 20 years and never got close to the type of analysis your into. I do use delta when I place credit spreads and as I've said before, I try to stay below 10 and as close to 5 as possible and still take in decent premium.
i think you are over thinking this type of trading. I don't even know what that stuff means. If it works for you then by all means use it.
Every trader has their methods.
Does MSFT have more steam? I guess I'll find out STO MSFT $32 Puts for $.45.
Thanks Taxman,
I'm sure you're right, and I am overthinking all this. I do enjoy looking at the details though. Maybe I'll pull a thing or two of value out of them, and maybe not. I looked at delta as well, on my AAPL Mar 9 put I wanted something less than 10, as I want a very high chance of worthless expiration. The option ended the day at $1.31 which was higher than I expected, but AAPL was up about $2.00 from where I entered, thus increasing the price by about 0.16. Maybe the volatility was up a bit as well. But it seems that there was about 6 days left in the option, not just 5 days plus one overnight. There was certainly less than 7 days left though.
Dave
My Mar 9 option is a call, not a put as indicated in the previous post.
My Delta rules of thumb.
In all credit spreads, I try to stay below 10 and close to 5. I start to get nervous and plan an exit when deltas get to 35 on weeklies with 1-2 days to go and
25 on monthlies with 2-3 week to go. A monthly turns into a weekly when there is 1.5 weeks till expiry. My guidelines. My credit spread newsletter guidelines also.
Henngiss & Taxman; Tax you took the words right out of my mouth. What to heck does all that mean? An interesting thing is to look at the same info a week from now and then decide if it told you anything. Monday if aapl moves 7 points, none of it is correct, if the move is up or down. Those Greeks and delta's only relate to what has happened. Oh-Oh Greece, just defaulted on it debt.. what now? Absolutely none of that helped and possibly misled you. (just an example) Many traders love to use them and I might be missing a boat?
But like you Tax. I trade three of four times at least every day for 15 years and not once has it helped or was correct. This stuff is a bidding auction. Greeks-theta, beta, Yom Cruise, Tom Selleck. etc --is it a good stock? If so it will go up and the option will make money. If junk and bad news it will go down. For me I always think of large mutual funds and the like. If it helped them a bit they would make money all the time> It is mumbo Jumbo that looks backwards..
But Dave i do like the 575's for aapl next week.
Nicky, you are a thrill seeker...
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