Hi all, Wow to figure this market is tough. First down and then a big turnaround. I am not sold that all the bad news is out there. Between oil / gasoline and unrest in the Mid-east-Africa and ?? There is potential for more bad news. One caveat is that there is always bad news just around the corner. So that said I am fully invested, but nervous.
My 180 NFLX still have 15 point of cush but i got near my double point today. As I was watching and aware that there is only 3 more days of trading i would have violated that rule a little bit. But all in all most of my positions are doing ok.
I would advise all to leave more cushion and expect lower returns until the world settles down some. It is one thing to worry about earnings and your CFO heading to Brazil but having the US oil supply cut off etc is a real market killer. So be careful, leave lots of cushion and less profit for awhile.
Also after March comes our major April earnings season. So tread lightly for awhile.
Jerry
74 comments:
Jerry, I'm holding the 180 weekly NFLX as well, however the put I sold (probably later in time than yours) has already doubled in premium. I'll wait it out a little longer before exiting the position.
This brings a question as to what doubling of premium really means. We both sold the 180 weekly, at different times for different premiums. One has doubled and one has not. So the premium value doesn't seem to tell enough of the story with regard to safety.
I notice that your trades (at the time I research them, not when you place them) often show (on ThinkOrSwim platform) a Probability of Touching under 10%.
No conclusions here - just thinking out loud about how to better nuance our trades.
Hampton
Another day more puts sold, HK Mar 19 2011 21.00 Puts for .60, HK closed at 21.12, these by far are the riskiest puts I've sold, could this be this be the first time I'm "put on"?
A bunch of contracts open, very close to the money, I've been on a hot streak, hopefully with 8 trading days it continues, I'm loving the ride, this months premiums were enough to cover my rent+.
I'm also going to be watching NFLX closely over the next week as I couldn't help myself and picked up some more March 18 170's.. the premium was too good this late in the month with still 25pts cushion.
The technicals don't look pretty for NFLX with spiked volume on a big down day and a gap down close below the 50sma.
We have the clock on our side though!
Nicky, congrats on your recent success. Not to be a downer but, as a full-time trader, I have found that when I start factoring in "I'm on a hot streak" into my decision making process I immediately stop, and take a quick break. That is where many get in big trouble and take on more and more risk. And if you're right and win again, that's even worse than losing, because you are susceptible to taking on even more risk the next trade. What has helped me over time is really not caring whether I won or lost the previous trade or trades, but to treat each individually. I've been on a "winning streak" for the past couple years but the market could care less, and will gladly take all that money back if I rely on my past success for present success. Sorry to sound preachy, but just sharing what I've learned.
No bid on JOE 21's. Good for my current position but I'm on the ask at $0.15 and would like to sell a bit more. Hardly any chance that will get filled but if somebody out there wants to give me free money I'll be glad to take it :-) For the record, I'll probably be adjusting that ask throughout the day and, depending on how the stock and market acts today, will be inclined to sell 'em at $0.10.
Hey Mark, I'm curious, how does one go about being a full time trader? Are you mainly using the crumb method to regenerate monthly income?
Hey Henry, the foundation of my portfolio is made up of value investments. I believe someone has to have a sizable portfolio so that you are not relying on trading to make ends meet. I have known traders that "had to make $X per month" and that influenced their trading decisions, which is never a good thing. If you're able to trade without the pressure of trying to make ends meet it might be something to consider.
I do use the crumb method, or at least aspects of it, as part of my strategy. I am a fan of selling puts and I think Jerry has a lot to offer on the subject. I also short penny stock pump and dumps (not for the faint of heart), and I do a lot of value investing.
Hope that answers your questions.
Yep it does, thanks for the insight Mark!
I think NFLX wouldn't need too much encouragement to pop back over 200. Of course it is one of the top shorted stocks right now.
NFLX is sure bouncing around. Who is going to win, the shorts or longs? Even though the prem is close to my double point. I will hold on and watch it.
Mark; I have never got into penny stocks. Sound like the way to go..the pump and dump theory. they always had the 'sucker' label so i have never given any thought to shorting them...Hmmm
As I mentioned at the top of this thread. These are tough times for the mkt. It sure looks like the bull is stumbling some. Be Careful with your selections. As Mark said to many wins in a row can be a dangerous situation. We all want that, but you can start feeling bullet-proof but ca-ca can hit the fan-fan.
Settle for less profits until things settle back down. The tired bull and the long run of the mkt is scary (to me).
Selling naked calls might be coming on line for me?
Jerry, shorting pump and dumps is a pretty good money maker. If someone is looking into that I would recommend studying up on them thoroughly first. You will be surprised how high these things can get pumped before crashing. 1,000%+ increase in share price is not all that uncommon... so those shorting once it has risen 100% get demolished. I typically wait for the first red day on low volume before considering any short of a pump. Anybody wanting to know more will learn a heck of a lot more about it from Timothy Sykes than from me. He is basically the inventor of "pennystocking." www.timothysykes.com
It's a simple strategy but one MUST do their homework and study up on shorting pennystocks before jumping in. Many think "this stock is obviously being pumped so I can short it right now." Wrong. You will get squeezed like you never imagined if you don't follow some simple rules. That website I mentioned above is a wealth of knowledge.
Jerry, if you're interested you might want to invest in one of his DVD's and see if it's for you. It's certainly not for everybody, but therein lies the opportunity.
Thanks Mark, good info
"He currently generates the majority of his income through his stock alert service, TimAlerts and several instructional DVD packages."
His fund collapsed in 2007. Avoid! Just my 2 cents.
Hannah, check out profit.ly. He earns about $200K per year pennystocking. The fact that he makes $300K-$500K on other products, well, good for him! :-)
He sucked as a hedge fund manager and he details that in his book "An American Hedge Fund." I wouldn't give him my money to invest for me (like a hedge fund), but I do use his techniques and they've proved valuable to me. But it's not for everyone as dealing in penny stocks is dealing with the gutter of the stock market. The beauty of dealing in the gutter is the 'investors' often have pipe dreams of getting rich from penny stocks. To me, that's a pretty simple bet playing the opposite side.
GMCR up 6% today. Some of that short interest is most likely covering. Shoulda sold more of those puts. JOE up nicely, too (3%).
Another Example of the Power of Cushion
I have positions in AAPL Weeklys MAR2 330 and 335 (both expiring this week).
AAPL is down nearly 5 pts today. Yawn...the premium on my two positions still eroded by a few cents each....ahh, the power of cushion, especially on Weeklys like AAPL.
hi jerry
i would like to know your views on OPEN.I did sell the 70put for march.However now i am thinking about reselling it for april.But its PE ratio is fairly high at 149 and i think you like to stay away from stock with such high PE.Yesterday,i opened a PCLN put spread 405/400 for 0.40 cents which will be about 8% return.Lastly this blog is turning out to be a great place for sharing option trades.thanks
Hi Doc. I like OPEN for puts, but I would do it different. Maybe sell the April 65, If you get .45 (maybe more?) it is at least 6.4%
If you sell the 60 (what I would do) and get .25 that is 3.9% with 27 pts of cush. With these stocks that have high valuations I hesitate to give away to much time. I have found generally if you wait another week you can then move up one strike and make about the same and you took a week off the table.
Like you say, a high PE but decent Open Interest. Long time till earns...I like it and will probably do some myself when this month is gone.
GMCR up about $12 (27%) pre-market as of 8am EST on deal with Starbucks. Nice.
GMCR... actually this is a good example of why cushion is important. Let's assume this trade went in the other direction (either you sold calls or the stock dropped 20%+). You would not be having a fun day, but the pain would be minimized (at least a little) by the large cushion you gave yourself. Just a thought.
By the way, a little early (2 days away) but congrats to those that sold NFLX puts... sitting at 192 right now and looks like it will work out for y'all. I'm a chicken. :-)
Well I am one of those NFLX holders and keeping an eye on it for sure..lol It is one of those positions that i mention in the book "When you get that gut feeling that something isn't right,it is usually time to close it" But as I am a slow learner i will watch and wait. MY GMCM is doing great.
NFLX is holding up well under all the selling pressure. A little good news, and it will jump back over 200 quickly.
Dave
This is the kind of mkt that has mid-day turn-around written all over it? Just a guess but still, keep your powder dry. What a reverse for NFLX
Jerry
Maybe the Dow will bounce up off of 12K and the NASDAQ off of 2700.
Jerry, yes I believe so. Down big in first 30 minutes on jobless claims that weren't all that horrendous. These are the days that emotional traders lose their money to the logical traders. Some really nice premiums out there for those that still have maintenance.
Tradeking lowered their options costs, and made it more favorable for spread traders.
fyi - somebody just sold JOE puts at $0.10 with share price $27 and strike $21. 22% cushion and 3.45% return. Pretty good. I'd jump all over it personally but I'm already short as much JOE puts as I am comfortable with. Could be an opportunity for those of you looking at JOE puts.
Dave,
About TradeKing - when you sell/cover and cash in, do you have access to the cash immediately? I tried the service in 2005 - I had to wait for a day to two. Didn't like it.
Employment may not sound bad as we are so used to job loss. We have $46.3 billion trade deficit for the previous 2 months. $46.3B in RED in just 2 months!!! US government & media really know how to con its subjects lol. In 2008, 65-70 cents to buy one Aust dollar, now $1.012. Cancel Aust trip!
Hannah,
I haven't had any trouble in that regard. I have had other issues with Tradeking, but overall am satisfied.
Dave
Hey henngiss, what are Tradeking's new rates on option costs?
Henry,
The new part is for more than 8 contracts. The base amount is 8.95, but the per contract charge is 15 cents. The big news for spread traders is that the base amount is only charged once for the whole spread, instead of once for each leg. Also, short options of 5 cents or less can be purchased commission free.
Dave
If you switch to tradeking by 3/31, and use a current tradeking account holder as a referral, both of your accounts will get $100. They will pay $150 of transfer fees as well, I believe. (I'm not asking you to use me as a referral)
Dave
Thanks henngiss, I'm currently with tradeking. Did they mention this anywhere on their site?
Covered all GMCR at $0.01. Sold LO puts $65 strike, price per share $79.20, 17.9% cushion, 3.0% return, 6+ trading days to expiration. Support at 74, double bottom around 71-72ish. Would have sold LO puts earlier but CNBC had a tv special last week including them and I thought that might make the stock volatile, but didn't impact it much to the downside.
They sent me an email. It is also on the main page.
does anyone have any thought on lo the tobacco company. the premium looks to good for 8 days.
closed out my NFLX 3/19 170 for a small profit - got the margin call I was expecting - but happy that I got away with a profit - oddly enough my premium never double by day's end through this recent down turn in NFLX just sold too many contracts
BTW - TradeKing has reduced their option commission pricing some - more cash in the account ever trade; WOOHOO!
.........as I read older post; a little late to the game on TK commissions........
Hannah - when I bought to close my NFLX today; my available cash/option margin was updated immediately.
Dave - I also have had other minor/nagging issues at TK. But TK is the first & only broker I've ever had so I can't say much about how they compare.
Henry - http://www.tradeking.com/why-tradeking/best-discount-broker shows the new commission along with the forum. After logging into TK it has a spot where it is displayed about the referral program.
Mark, i like LO also and did 50 of them. So if i lose money can I send you the bill?
I don't like the news from Saudi A.
Jerry, I don't like the news from Saudi either but oftentimes markets overreact to things like this. Keeping my eyes open for more opportunities during the sell-off.
CNBC mentioned this "day of rage" that is suppose to happen tomorrow in the Middle East. Does anyone know anything about it?
I did the GMCR puts also, but also placed a few call 55 when the stock was at 41.So a cushion of about 34% for a few weeks.
And what happened...today it opened at 56 and my calls went for 2,62.
I am an expert in selling options...but making profits is another chapter!
Former post was from me..Wim
fyi, got out of LO with a loss just a few minutes before the bell. Weird prints on the put and call premiums... both were up big with the stock essentially flat. I'm guessing some type of FDA news leaked. I'm probably being waaaaaay too cautious though and will most likely kick myself when they expire worthless.
Mark
I saw the same thing and took advantage of the "anomaly" Couldn't resist but am nervous as a deer being track by a lion. I'm in a strangle 70-90, either one will be challenged or nothing will happen
"short options of 5 cents or less can be purchased commission free."
Dave
Do you have a link to this I can't find it on Tradeking.
Thanks.
Found it:
http://community.tradeking.com/members/bigdog/blogs/78786-tradeking-s-new-pricing-even-more-savings-for-traders
Tradeking is simply awesome for lowering their rates! I've been doing credit spreads and they're commission fees were forcing me to go a bit higher in strike price. Now I don't have to!
Completely unrelated to the crumb method, but I added a boatload of IGOI stock during this sell-off to my long-term investment portfolio today. $3 is a joke but I'm sure glad it's trading down there!
Still nothing to explain the odd price action in the LO options Both increasing with a week to go.
Anyone have a clue?
Nicky,
I like the commission free closing of short options. Now I can close a worthless position on Friday afternoon and open a new position without paying extra fees.
Hey blogluser, LO recently won a court decision, which ruled that their tobacco products are safe for consumer use. I don't see how tobacco can be safe, but after the ruling the stock went up in price. Maybe this is causing all the volatility in the option premium?
So I should take up smoking again, now that it is safe? The courts are jokes sometimes.
Courts didn't rule that smoking was safe, they ruled that the menthol in LO cigarettes was not harmful. Rumors on message boards that FDA will reverse that decision, which would hurt LO because they pump out a ton of menthol cigs. Rumors are probably false, but that premium pricing scares me and if there's anything I've learned in my career it's that trading scared is a good thing.
Again, I'm probably wrong on this and most likely took an unnecessary loss, but that's just what I was comfortable with, that's all.
hmmm earnings? or their legal case maybe?
Safe or not, menthol cigs are disgusting. I quit 15 years ago though.
Never all clear but LO is not budging and the options are responding properly now. 5 days to go!
bloguser, nice! I'm not back in LO yet but I'm watching it very closely. Somebody shook me out quite nicely yesterday afternoon. :-)
With NFLX going up so much yesterday, as most everything was going down, and on such high volume, I expect NFLX to have a good week next week. It won't touch 195. (Of course, last week I said it wouldn't touch 200).
I like AAPL for the next week and expect it to not touch 340. I was right (sometimes I am right) about AAPL not touching 370 this week, but now I think it ready to go up again.
For what it's worth...
I'm thinking out loud more than anything.
Dave
Starbucks CEO on GMCR:
http://www.cnbc.com/id/15840232?video=3000009712&play=1
FYI, I covered all my GMCR puts yesterday at $0.01 from $0.245-ish.
TradeKing, the new pricing looks good.
Guys what are the general complains/imperfection about TradeKing? Thanks.
I opened an account in Jan, haven't had any problems, got reimbursed for my initial wire transfer, got a free copy of The Options Playbook, all trades seem to go through fine, I was reading reviews before I opened and I kept seeing an issue with getting money out, I did a transfer for the max ($10,000 in 1 day) and it showed up the next day in my checking account, they have great customer service, live chat, and I like that the opening process is entirely done online, no need to mail anything.
Hannah - charts suck but per the CEO they are working with Worden to integrate their charts with TK. I don't use a mobile device so I can't address that part; but their BB platform is fairly new. Shorting stock is really expensive. Response time on trades seems slow.
oh yeah and DRIPS went away with the new clearing house when they moved to Penson in September 2010. Supposedly, that will be re-instated some time.
Hannah, if your happy were your at just ask for a better rate. If your an active trader they will want to keep you and they will deal.
I'm at TOS paying .85 a contract and 3% for margin. My YTD commission is 6300
plus I pay on Av. 450 a month for margin.
If you have TOS e-mail Scott and ask. All they can do is say no.
SOLD 30 LO YESTERDAY AND TOOK THE LATEDAY RIDE. GLAD I DIDNT GET OUT.CMG PUTS AND FIRST SOLAR WORKED NICE AGAIN THIS WEEK.
Hey guys thanks for the input on TradeKing.
I have been with TDAmeritrade for many years.
$9.99 per trade 0.75 per contract option
It's kind of too expensive to cover with 1-5 cents or roll up or down.
But it's fast and it has tos chart and StrategyDesk chart. Customer service is just so so. Well Account holders with half a million or more will have different pricing structure and treatment....
Thanks again and appreciate it.
Good work, fishchampion. I'm glad many people acted upon my LO recommendation and will likely profit, just wish I had... lol. That's my game though, risk management. Congrats again, fish.
Hannah,
Is it a 9.99 ticket plus .75??
I think TOS base rate is a 4.99 ticket plus .75
I would ask TD to at least give you that.
Your correct the ticket charges kills ya.
again I'm .85 no ticket.
Hannah,
Maybe you should check Interactive brokers.
It is a tough week for me and 5 more days to go.
I wish everyone have a nice weekend.
Hi all, some great points regarding different brokers. I am also thinking about switching. The newer on-line brokers are leaving the older brokers in the dust.
But it is time for a new post to shorten the list. Great comments all. I must give all of you great kudos for the general feeling of being helpful and friendly to all levels of traders. Maybe put sellers are just good people..Yeah, that's it..
Jerry
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