Callmeput From my first reply hope you decided to short DCN instead of CISCO Like I said earlier this month Down over 15% today My only SHORT is rocking to the downside. I'm short over 40K back at $15 on DCN Swoosh!!! "Keep on knockin but you can't come in!!! " Is what I say to bull's of this POS stock
DOLLAR COST AVGERAGE HERE Want To Share Post is now under Forums--Trading For A Living--Journal--Want to Share Wow Look at DCN Fall apart today Man ol Man I love being right Read this thread and you will know why. I Hope You shorted DCN instead of CSCO Down 25% today
DCN losses again today Down 20+% Any body jump on this? Check out my January Anomaly @F Forums--trading for a living--journal--want to share
WOW 52% drop on DCN Hey Cisco short man... You could of been all over this... 3% on Cisco or 64.5% on DCN..Well keep charting institutionally owned monsters (You may hit one)..Fundamentals and an understanding of the bussiness and you'll know who to short next time...I have worked in the auto parts bussiness most of my life...I guess I should of mentioned that when i was screaming SHORT DCN at 4.25 I saw this when DCN was at 15 and made 80.6% on 40K.. you can see my other post at Forums--tradingfor a living-journal-want to share $Cost AVERAGE MAN
costaverageman, I only have a very basic understanding of options so can you please explain how the options will prevent csco from breaking 20? also, options expiration is in late march, I think, so will csco not break until then? I was trading csco today and it was unreal the size stacked at 20. the futures were bordering on 1300 and 20 was printing like crazy but the market makers wouldn't budge.
The big thing with option pressure is, Monster players in the market who have like 3% Cisco in thier portfolio are the ones who are selling covered calls.... Feb (for example) the price ran up real close to 20.00 just right before expiration...Big players were selling covered calls for Febuary to all the little people...Covered call meaning they owned the stock and were reducing the cost by selling calls on that stock...Now It is in the Big boys interest to have the price run as close to twenty as possible, but if it goes over twenty at expiration date lets say $22.00 in this example people can call thier stock away and buy it for 20.00 instead of 22.00 from the big boys or any one else selling calls for Feb. with strike of 20...Since they own so much stock they can manipulate the price by selling off large lots right before expiration to keep the price below 20.00 and having all Feb. calls that are still open expire worthless... Be careful when messing with institutionally owned monster's like cisco..Now for March they may not be able to keep the price down, but I bet we will see this same kind of action at 22.50 strike if it gets close to their. I'm sure you know most of this...Cisco I would probally engineer a reverse butterfly by buying the 17.50 calls, selling 2 20.00 calls, and buying 22.50 calls... and hope the price stays around 20 going into March expiration... Nice low risk strategy good for 15% and if the Volatility starts to rise you be making more money... ^VIX is also on the rise so a good time to do this...
thanks that was informative. csco broke 20 today. did the february options expire today? I assume they did since it is the end of the month. but the market makers weren't holding 20 nearly as strong as they were yesterday. thanks again.
BATS was buying like crazy today. They had bids shown and hidden all over the place after the stock broke 20.00. But there was a lot of money on the table today on the long and short side if you were trading it today. The lag on the level II was so long as the stock broke the $20 mark. my 20.00 long position didn't show on my blotter until the stock was at 20.03 x 20.04. It was scary but I'm glad it ended up in my favour. However, I got it out at 20.02 due to my panicking from the massive lag time. $ cost average man: your comments are VERY insightful. I'll be looking forward to any future posts you make.
If "Monster players" sell their stock they have to buy back their short calls too, so even if they bring down the stock they won't benefit (they have neither long stock nor short calls anymore). What am I missing here? Also: I don't understand why do you call it a "reverse butterfly", but anyway it doesn't seem to be appropriate now for the March 17.5/20/22.5 CSCO options. CSCO's IV is 18.46% in the lowest 3 month and 1 year percentiles, and (in my opinion) CSCO's chart doesn't support a "next 2 week tight range trading" hypothesis. If IV rises you'll lose money.
hi CostAverageMAN, your post is very insightful, but i dont think the institutional traders (the ¡°Monster players¡±) are stupid enough to hold CSCO under like 20. A few reasons for that: 1. the option expiry will affect stock tradings, it is true though, but options are much smaller market than stocks, it's not strong enough to hold certain price level 2. institutional traders are mostly "holders", which means they long the positions, only very few hedge funds doing shortings. so you are right that institutional traders sell covered calls to reduce long cost, but they have risk in downside, not upside, so they'd rather see stock up than pressuring it down 3. institutional players' most commonly strategy is to buy more CSCO or mostly likely roll over the covered call positions (buy back part or all of the 20 calls sell some calls at higher strikes) because they want to keep the long positions in theire portfolios Last but not least, even number price levels are psycological barriers, plus the effect of the option strikes on even price levels. so inevitablly the volumn is unusally high. Also the options that are just out of the money is traded the most, so when the price get close to the strike that options are getting more actively traded, it also increase the stock volumn, because option traders trade stocks against it just my 2cent HHHO