I've held May 25 puts of OSTK for a number of weeks. Saw them double a couple times ... Sold out yesterday EOD, for nearly even money. I figured, if it rallies after the SEC annouces an investigation. Today, would have made it all worthwhile ... Either I hold on too them to long, or sell too short. My trades have been profitable,... I'm beginning to think this is much,much more difficult than first thought, but then again I think, perhaps it is much easier than I'm making it out. I left a months pay on the table yesterday ... and I am really bummed out about it. I targeted this stock at 18 when it hit 31, AND I MIGHT NOT MAKE A CENT IF IT DOES!!!!!!!!!!!! Any encouraging words, or should I just go get a real job?
There is nothing wrong with your trade or probably the way you trade. This is a numbers game, and it seems you are placing too much weight on a very small sample of trades.(like in your example of OSTK) Solution: Trade smaller, place more bets and always use the same parameters. Then only then, will you know what you need to change or fix in order to become consistently profitable. There is no other way around it. Good luck !!
Switch to futures. You don't have to worry about delta (rate of change relative to the underlying) or theta(time decay). In fact, play index futures. Super liquid with plenty of trading opportunities. Most option players who are buyers instead of writers, tend to blow out. When I first started, I started out in options. Sort of wish I hadn't. But the tuition paid (read:losses) was a valuable part of my education. I had a small account of about $3k at the time and options was the only thing I could afford to play. But today there are so many more instruments available like eminis and Forex, that small account players can participate.
i am no expert, but all liquid stocks correlate with the market to some degree in the short term. yesterday, people were hoping that the fed was going to hint at stopping rate increases. instead of saying something along those lines, Bernanke let the market down. just a day or two ago, the market had run up to multi-year highs, so the market should react strongly to this letdown. that's my 2 cents.
I would suggest setting a target before putting it on and sticking to it. Take the emotions of the moment out of it. If it's a double you want, put the limit order out there as soon as you get the position on and get first in line. Then don't fret when it goes to 5X, because many will go back to zero. It is the nature of the game.
are futures effected by the news to the degree that equities are? Any links to historical/data, jump-start information? OSTK is fricking bizarre, (you understand if you've been following it), pretty interesting story actually. I developed, what I consider a kick-ass DB for equites, I can rank trend strength, trading ranges, etc ... Pretty good at calling bottoms/tops. Been looking for spikes outside of the trading ranges, Strong upward trending stock, look for those trading at bottom of their range, and vice-versa. Time decay eats me alive ... I can't stand buying time-premium, I've been looking for fast moves (high,high HV) before IV adjusts. It's worked, ... but it's fricking diffcult. I pull real-time quotes from INET, (which leave gaps) in the DB... blah, blah ... I NEED TO START MAKING MONEY!!!!!!!!
Thanks for the comments, My problem, is probably my thinking, "Cut your losses, Short and Let Your Profits Run...." With options, there is very little time to let your profits run ...
Well, take the Emini-s&p futures for instance. To see how they move just look at the S&P 500 cash index. They are affected by news but usually not becuase of one or two stocks. If it's sector or economic news, then yes. But they lend themselves very well to technical analysis. If you need historical data for it, check this link: http://finance.yahoo.com/q/hp?s=^GSPC You can DL it into a CSV or Ascii file. To see intraday movement, check Bigcharts.com enter symbol sp500. Info on emini contract at the CME: http://www.cme.com/trading/prd/overview_ES702.html MArgin requirements are found under the link "performance bonds" on that CME page. Margin req: $4000 initial, 3200 maintenance. Though, most brokerages give you a day trade margin which is $2000 initial, 1600 maintenance. Every 1 pt move in s&P gives you $50 per contract w/ 4 Increments of $12.50. Time decay(theta) coupled with rate of change versus the underlying (delta) which varies depending on if the option is in the money, or out is the enemy of all option buyers. Let alone the sometimes relative illquidity of options. Emini fultures on the other hand, have none of those extra problems so you can focus on being right about direction and magnitude. Plus they are the most liquid equity/index based contract in the world with an avergae daily volume in excess of 800,000. And open interest over 1 million. I would recommend that you look into it. I did and have never regretted it.