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Old Apr 5th, 2012, 07:04 PM   #1327
MBfromLA
 
 
Join Date: Nov 2003
Location: LOS ANGELES
Posts: 41
Hi guys, Trading Live Already, had a 10 day hold on a check...
Every comment, criticism and suggestion is highly appreciated.

I switched from day trading to options, I've traded options before, but mostly covered calls, now i'm doing reverse condors... here are some thoughts...


1. Outlook has to be 3-4 months out,,,,that's plenty of time for a stock to move in either direction.
2. Implied volatility has to be high,,that way options premiums are high as well.
3. Farther out of the money options must still have a decent value to lower your overall cost.
4. Options volume has to be high to avoid slippage on all 4 legs.
5. Exit strategy must be in place, either based on time or %, if i loose 50% on either side, i'll bail.
6. Simple calculations needs to be made:
Example: XYZ trading at 40 in April
a) August XYZ 45 call $3.00, 50 call $1.80=-1.20
b) August XYZ 35 call $3.00, 30 call $1.80=-1.20
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Max Loss if taken 1 side out at 50% loss and other one reaches max pforit
Max Loss $1.2 - Max Profit $5.00=$+3.8
--
Or if stock doesn't move in either direction, max loss will be $-2.4

Now, for the price to reach 50 or 30 XYZ has to move 25%, so it's better to select stocks that are trending strongly, likely parabolic .

I've been tarding these for a couple of months only, this is the plan i'm following so far, will see what will happen, I'm starting slow, only 1 contract per stock, then will increase if proven successful.
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Yesterday I did Reverse Condor on BBBY right before the earnings, and close the trade today for a nice profit, Planning to do the next one on NFLX. Those plays can be done placing a trade a day before the earnings announcement.

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Before sticking to this strategy, I've explored all the other once out there, in deep detail. Was considering credit spreads, but you never know when you will wake up to a large gap and see more money lost then can be made in a few months.

To those who compared it to straddles or strangles,
Unlimited profit does really sound good, but in reality, how often does that happen. And what exactly does unlimited profit mean, for a $40 stock to move to 300-500$ in a month or 2?
Lets say the stock is at 40, you expect it to move to 45, you can buy call and put for approximately $6 combined, now the stock has to move 6$ to either direction for your to b/e. But this way, and that is my opinion, you significantly reduce the cost of your trade, for a rational return..


Not considering my previous knowledge of option trading, i've been spending a lot of time to get as much information as possible, also not being afraid to put some creativity into it, I will highly appreciate all the comments, concerns and criticism ,,,Thank You ALL>...
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Old Apr 6th, 2012, 11:02 AM   #1328
Riffraffpatrol
 
 
Join Date: Feb 2011
Posts: 236
Quote:
Quote from MBfromLA:




To those who compared it to straddles or strangles,
Unlimited profit does really sound good, but in reality, how often does that happen. And what exactly does unlimited profit mean, for a $40 stock to move to 300-500$ in a month or 2?
Lets say the stock is at 40, you expect it to move to 45, you can buy call and put for approximately $6 combined, now the stock has to move 6$ to either direction for your to b/e. But this way, and that is my opinion, you significantly reduce the cost of your trade, for a rational return..


Fools game to play straddles/strangles dated out.

On contrary however, intraday returns are phenomenal every expiration Friday on weeklies in equites with $ 1.00 - $ 10+ daily ATR. Combine with knowledge of the specific chart patterns to filter on 15/5min charts in order to increase probabilities - unlimited profit well over 100% easily achievable within minutes
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Old Apr 6th, 2012, 12:03 PM   #1329
babutime
 
 
Join Date: Feb 2012
Location: Canada
Posts: 451
Quote:
Quote from Riffraffpatrol:

Fools game to play straddles/strangles dated out.

On contrary however, intraday returns are phenomenal every expiration Friday on weeklies in equites with $ 1.00 - $ 10+ daily ATR. Combine with knowledge of the specific chart patterns to filter on 15/5min charts in order to increase probabilities - unlimited profit well over 100% easily achievable within minutes
You had me at chart patterns..

next!
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Old Apr 6th, 2012, 08:28 PM   #1330
iceman1
 
 
Join Date: Oct 2002
Location: Chicago
Posts: 4,266
Quote:
Quote from jeffalvinson:

Iceman,

When a position is going profitable:
What triggers the closing of your open positions?
Is it an overall profit goal figure your looking for?
or is it time?


When a position is going bad with too much overall draw-down:
what level of loss causes you to close that position?


Jeff

when my girlfriend says "I'm leaving you if you DON'T CLOSE"!

actually I hold too long, and then tend to convert from bull to bear etc. Not the best strategy if your timing is off.
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Old Apr 6th, 2012, 08:32 PM   #1331
iceman1
 
 
Join Date: Oct 2002
Location: Chicago
Posts: 4,266
Quote:
Quote from iceman1:

holding SPY April 145p and 142p as I posted earlier / now short SPY 139p

just added a few April 136c (don't ask why) - may convert into bear spread. ??$@!??*&
every time I do not honor my 'gut' it never fails to haunt me. It's uncanny. I should just publish a newsletter called "gut feel" and maybe others will do better in following my "signals."
don't know why I bought ITM calls when I have been patiently holding ITM puts. Of course figured I'd create a bear call spread when SPY neared >141 to close some or all of 4/4/12 gap. Now IF I had sold calls Thursday before my 141+ target, soon enough, jobs report would have added 400,000 jobs !!!
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Old Apr 7th, 2012, 07:10 AM   #1332
falconview
 
 
Join Date: Jun 2010
Posts: 1,465
I´m getting discouraged.

I´m below in my account where I wanna be.


Been going over the index market, but it is just not making the moves in the time frame I´ve been trading.

Can get a profit, but at .18 cents with .10 costs. Not worth the hassle. There are not even .30 cent moves. Everything is too small, between .18 cents and .24 cents in the time frame I need to make a profit.

Tried selling with the CALENDAR this past week, going to close it out next trading day. I believe after talking with TOS help they covered the short end of the Calendar at a loss of $72.50, but their explanations are as screwed up as my own watching. Trying to make sense of it. At one point they told me I had a $6700 loss. Will close the long call, next trading day and see where I´m at? Start back at ZERO.

In looking at things and trying to price moves out, you need practically a whole month to make .30 cents to .50 cents. With options a wasting asset, that is not practical. Nor worth the effort.

Selling THETA seems to be the only way. I´m going to review my CALENDAR type trade again and see if there is anyway to make money with it? Straight buying is not cutting it.

Was playing with overlapping straddles again and even some sort of overlapping swing trading. The moves percentage wise are just not there to make it profitable.
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