Sunday, February 16, 2014
Hi all, good to see taxman and Ihaveoptions still trading. Sorry for you TAX as snow is pretty for a few hours, and then....
All of my last weeks options worked quite well. For the coming week I still like FACEBOOK (FB) They have proved that they can monetize the site and it should continue to move up.
For traders that want it easier... look at covered calls with FB
You can buy the stock for around 67.09 and sell the coming week either the 67's or 67.5 and make a nice return. I'm doing 30 or 40 in a margin account. So that can earn 3-4% in a week. Margin account have the risk of a major correction and a margin call if your stock of choice dives. But with the FED keeping interest rates low for the time being I like the risk.
For those with a higher risk factor FSLR reports at the end of this week. Most seem to expect good reports? For one of my accounts I am going to buy the FEB 28 at the strike of 50, cost around 4.90. 3.17 of that is in the money. I expect a jump of 5 or 6 points with the report. I'm not doing a spread with these as the up or downside is just to much to guess with. But maybe just 3 or 4 of the call options as a flyer. With a possible jump of 5 or more it could be a quick 100%+ in play. With FB for me I see it as a once every now and then pick. They make money, half the worlds population is on it and it keep growing. I will keep riding the stock until it slows.
Have any of you guys or gals been watching PCLN ? Pushing 1300...What is with that company? nearly 100 points higher than GOOG..! I keep trying to figure ways to jump on the train but up or downside risk is just to high. Someday a split will happen on PCLN or GOOG but until then I can't find a play.
I am going to get back into S&P etc. soon but the busier I get the more I rotate to easy stuff. At the end of next week we are heading to Palm Springs and then toward Phoenix for a week or two each. Sunshine is calling.. lol
good luck all and pass along some plays.
Jerry
Subscribe to:
Post Comments (Atom)
25 comments:
On that FB Covered Call play, if anybody wants to follow along and protect themselves, don't be afraid to marry up with a put.
Sell the 67.5c for 0.97 and buy the 61.5p for 0.06. You cap your loss at 7% for almost nothing.
Good point Strangle. For me with FB still growing I will avoid the put and if FB settles down some I just sell a lower strike therefore keeping the stock. I'm pretty confident that FB has more room to the upside even if an intermediate dip. I will just keep selling calls week after week and continue to lower my cost basis. But as you say for .06 it can prevent a major loss.
So SP: Is that called a Strangle?
No, in finance terms its called a Collar
My FB IC spread expired worthless Friday but Friday was pretty tense... much less comfortable than I like to be... that's what I Dont like about the weeklies... you can't get much cushion when the time frame is so short... I've also been doing well with Boeing (BA)...
Hi all, nice to see Jerry back and other folks like Taxman. I'd given up the blog for dead, so definitely nice to see it back and active. I'm with Tax - I've been sticking to index ICs on a weekly basis. I did get burned badly on when the market dropped a few weeks ago and when the spx first dropped to 1800 (I was doing great until that Friday!). So bad that it ate up all my previous year gains! So I've been slowly chipping back here and there, but am definitely gun-shy to not want to take any large positions. At least on the RUT, i get in now on tuesdays and only have to wait it out till Thursday PM - I love those Friday AM settlements. With the spx, you still have friday that can mess you up (as was in my case) and so I wait till at least wed PM or Thurs to get into a position, at which point the returns are measly. This year's market will def be a lot more volatile. Also as a related aside, have people checked their tax statements from their brokers? I got mine from Optionsxpress and noticed that the index option trades were not characterized as 1256 contracts and rather was all short-term trades which implies that I'll have to pay income tax rather than the 60% long term/40% short term rate.
My RUT ICs expired this week worthless. I'm probably going to hold out till Monday to see what happens today and if the market moves up further. RUT is closing in on 1200. My thoughts are to get into the 1230/1240 call spread and hope for a market roll over next week.
Also, have you guys been watching Slim on TT? He keeps making the case for the major indices to roll over, but it aint happening...let's see what he says today and his market views for next week.
Hey guys -- would anyone be interested in joining a private facebook group to discuss trades? The comments you guys make here are really informative and it would be great to share in a forum. If there is interest, I will create a private group and provide the link.
I'd be up for it.
hopefully rockstars like Tax and NA will join!
Count me in on the FB Group.
I've decided to switch back to my old routine. Been getting burned the last few months listening to TT and getting to close to the strikes. Going forward need to consider 90%+ probability of profit or higher. Although the lower capital would be nice, gotta love the higher percentages.
Super Trader Karen offers some good suggestions, anyone have a hybrid approach between her /Jerry? The thought of selling something 6 weeks out then cashing in at 50% is appealing, rather than 1 week where the options have teeth.
Thanks gang - trying to make it back to even
Wow the Blog is back. A FB page would be cool. TT has been tough sledding. But I have discovered a nice strategy that kinda works for me. I have been short SPY since 177 but have been selling /ES puts against, I am up on the year with short deltas. Just need to see how it reacts to a down move
Ed and Billy, I'm TOTALLY with both you! as much as I love to listen to TT and the analysis they do, no way can I fathom condors that go out only 1/3rd the width of the strikes. I understand their point of higher risk for higher return, but there's no way that I can see that succeeding, especially in a very choppy market like now. I also appreciate exiting trades after you've collected a % of premium. I thought I had sort of figured out the weekly index IC and started the year out well. But i got caught in the huge drop down to 1800 and below on the spx and ended up giving back most of my gains from last year.
So while I still believe in the weeklies, I'm even more conservative now. I'm sticking to the RUT mainly since at least you dont have to worry about trading on Fridays due to the AM settlement. Unfortunately with the weekly SPX, you have to worry about friday trading too (which is when I got caught when the market tanked during the EM crisis). I enter SPXs on either wednesdays or thursdays and this of course reduces your premium.
So I'm trying to figure out best ways for entry/exit. I think I may have to go back to my old strategy of going out 2 weeks on the weeklies and exiting after collecting ~50% of premium (usually after a handful of days of exposure).
I did see Karen super trader interview. I'm doing pretty much what she does - go out as far as you can (2 std devs, although she goes far much farther, so I'll have to assess that strategy for weeklies), stick with index options for the tax benefit. The one thing I dont have in my account is level 5 trading, ie trading naked index options. This is the big difference I think, than from doing ICs and also increasing your return - cuz you dont have to pay to buy the puts to cap risks. But my broker (optionsxpress) wont let me do that. That and having portfolio margin benefits can allow for good returns.
This year's going to be a LOT harder to trade due to the big moves on a daily basis. I'm with you Ed - may have to go out a long ways like 6 weeks or more and then cash out after 25% premium decay or something...
Hey Guys, I'm back
Just placed the following for Mar2
RUT 1140/1120 for .23
NDX 3550/3525 for.32
NDX 3525/3500 for .25
I try to stay below 5 deltas
Been doing fine when I stay with indexes. Got burned this year on equity positions with TSLA and NFLX on upgrades.
I to have a problem with TT placing IC's that close to the underlying. Like SLM and will take some of their recommendations but get a lot further away from the price
I think the same thing about TT. I have played with their ways and there is too much pucker factor. I think they try to scalp too much. I don't have the time nor patience to sit and watch the screen all day.
My trades are at 90% delta usually between 30-60days out. I do try to balance my delta's although right now I am heavy negative and really could use a market pull back. I look for positions that provide an annual return of at least 24%, chart "feels good" and there is no pending events or big news. Try to stay small, all trades are 2% of available portfolio and leave 20% in cash. Which means there are 40 positions going at any time. I take profit when I achieve 50-75% of max profit.
I did implement Jerry's 2x stop loss, which I moved to 3x last year, which I have done away with altogether. I had a 17% portfolio return last year and had I let everything ride, it would have been double (and yes there would have been some whoppers ITM).
I started playing with that FB CC trade idea posted here and kind of like the results. I entered FB on 2/18, sold the next OTM weekly strike and then on the following week if ITM, buy more shares and sell next OTM strike or if still OTM, then just sell the next week position. I haven't see huge results yet since FB has leapt up since then, but when it goes sideways or pulls back, I expect some things to come. One nice thing about the strategy is it helps you realize steady income from a position as it climbs rather then having it all tied up in the stock waiting to be cashed. For example, my original entry was 67.25. However, with CC my basis (including commissions) is 67.15. So really at the same exact point, except I have pulled all of that profit out into cash with each weekly option sale.
M, when you say you have a whole lot of positions open with no more than 2% per trade, do you have all kinds of different trades, or are you picking different strikes on the same underlying? some of us stick to just index iron condors and just committing 2% per trade will not yield a whole lot after you get done with commissions (unless of course you have a million dollar account). Would you mind giving examples of your positions?
Tax - good to see you posting again. I've definitely gotten very gun shy about getting in on a friday for the weekly. I go for either Mondays or Tuesdays for the RUT...a whole lot more careful with SPX entries.
w/re: TT, agree with you both about SLIM, although he hasnt been very right about the stock market predictions lately...then again, who is?!
Do you guys have level 5 trading clearance, ie permission to trade naked index options, ie naked index strangles, like Karen ST? YOu'd also need to have portfolio margin in order to do >1 index contract. I dont have either (level 4 only) and so HAVE to do spreads, at least for index options. Can do naked strangles on equities. Tax, also seems like you're sticking to put spreads...or are you waiting for an up movement to leg in to the call side?
In this trending market, I'm only placing puts spreads. Might put on a CS on Wed/Thurs after I see the primary trend to juice my roi a bit. Also been trading SPX spreads on Fri, for a 1 day kicker, again after I see the market trend. Then I place the spread counter to the trend. 5/10 point spread for .15/.20
The only things I don't trade are pharma and energy exploration companies. Pharma you have to be on-top of their calendar to know when they are releasing reports, have FDA meetings, etc. Exploration companies can release updates on their activities anywhere/anytime. I also don't trade anything that has an upcoming earnings report or some other volatile event. Example: PANW has been looking sweet over the last couple weeks but this lawsuit that got settled yesterday kept me out.
Right now I have positions in:
UNP, DAL, HON, YHOO, FB, WYNN, QQQ, YELP, DNKN, RAX, SPY, EEM, VXX, PRLB, TSO, RH, Z, IRBT, IWM, X, CRM, SHLD, DECK, T, DDD, P, OCN, HLF, LAMR, IBB, AFSI, ZU, SSYS.
33 symbols. Some like VXX I have a Mar and Apr short call positions. Z I have an iron condor (bad margin req at my broker for naked). WYNN I have a strangle on.
I didn't open any new positions yesterday except new weekly calls sold on that FB trade. Thursday though:
14 x AFSI APR 22.5P @ 0.20
6 x ZU APR 40P @ 0.25
7 x Z APR 110/115CS @ 0.20
I have a rule, on any given day take profits from as many positions as possible but enter no more than 3/day. I usually have a position or 2 selling off during a day and entering a couple positions in the morning.
M and Tax thanks for your comments. Tax - when you're trading SPX's on fridays, how close are you to the strike price when you place the trade? also do you place the trade in the AM or afternoons? If you're getting 0.15-0.2 for a 5-10 pt spread, then my guess is that your spread strikes are going to be fairly close to the underlying price ? Arent you concerned about the SPX reversing direction, as it has seemed to do on many of the days prior to breaking out >1850? Actually even yesterday, it was very choppy.
M- wow 33 positions is a lot! kudos to you. I like to keep things simple. My strategy is basially just index weekly ICs or ICs that go out to 2 weeks with an exit after 50% premium capture. I netted 50% ROI last year (~1 to 1.5% per week), so I figure I'm doing something ok. It actually worked well in the trending, non-volatile market, but with a choppy, somewhat bullish market, I think it'll be much tougher to do that this year.
I also like the FB trade that Jerry mentioned. I also looked into an FB collar (with april long put, june short call) which I also like.
Does anyone know whats the lowest amount I need to sell naked futures options. i want to open a second account with some friends would want to try Karen on a super small scale under 10k. Would a brokerage let me trade that way. I know on equities you need 25k..
So nice to see so many options sellers and traders here! Amazing!
Hi Billy, to sell options, you should have a level 5 trading and sufficient cash to avoid a margin call.
Sai- I place the SPX around 10:30-11AM on Fri about 10 points away. I do keep it on a very short leash. Would love to know how you got 50% roi last year. Did the call side of the IC's give you much trouble. Seems every time I went with CS's, they got threatened.
Billy - no idea about futures - sorry
for this week: 1140/1120 PS on RUT for 0.84 with march 21st expiration - will exit out on Friday or when 40-50% of premium captured. Also got into a FB collar with 70 april put and 77.5 june call. Got a nice bump in premium due to today's upgrade, so this trade is risk free with enough premium to pay for the put AND cover the difference b/w the stock and the put (~$1.76). So let's see how this goes; havent placed a trade of this sort before, so this will be my 1st go at a bullish play.
Tax - as for the ROI, I started out with doing equity put options ala Jerry and then switched to weekly ICs on the RUT and SPX. I legged into trades. Also was successful with several AAPL/GOOG earnings plays. As for the weekly index ICs, I'd go 2 weeks out (as I did today) on the indices to have enough cushion on the call side. However, I did get burned a couple of times by the end of the year with the santa rally and during the september taper fake. Had it not been for that, I'd hit 70-80%. I started out this year netting 1.5% per week and also raised my portfolio size. Did well for the first 3 weeks in jan and then got caught in the correction in the SPX and resulted in giving back my entire gains for last year. So I do think its possible to get greta returns with the weekly index IC strategy as we would discuss last year in the other comment log in Jerry's blog, but with a choppy market like this year's, I think it'll be a lot harder. At least I didnt have to worry about big pullbacks last year due to the massive bull run, but this year will be much much harder...I think you have to leg into ICs this year. Also will have to go out longer durations (several weeks, ala Karen super trader)...I'm scared s*less with the SPX which is why I'm very gun shy. that index can reverse any time and fridays have shown to be very volatile already.
Has anyone played with the 3x leveraged ETFs like TNA (small cap 3x)? I'm thinking of placing a collar trade on this to capture any bullish movement on the RUT. The problem with doing this on the RUT etf IWM is that the premiums suck for calls. But given that the TNA is more volatile and moves more due to its 3x leverage, the upside is much better with much better premiums on the calls.
Hi everyone. This is my first post but I've been following Jerry's style for over a year paper trading and have been live for about 4 months. Im 100% self taught and have read almost everything available on the subject of options. I'm glad this blog is back because it's hard to find a place where there's like minded traders. I'm looking forward to being an active contributor and learning as much as I can. So since it's a Sunday and I'm not in the market, I wanted to see if anyone uses any different strategies during earnings seasons for high volatility stocks. I've paper traded short condors and reverse iron condors but recently read about ratio back spreads. I love the unlimited upside and controlled downside but have hard a hard time structuring a trade I can open for a credit or small debit. Any thoughts?
Post a Comment