Thanks for the support. Your post means a lot because I am the one posting on this thread the most and have actually considered stopping my posts because there may not be anyone reading them . But other people have posted encouragement as well and I see the views increasing, so... Victor Niederhoffer vs Nassim Taleb, who would you rather be? ok, that's the extreme of it, but i consider myself towards the Taleb side if there was a range. Good luck with your trading, too!
I'll have to get back to you in a couple of days, visitors just arrived for the weekend and won't be able to ET. Cheers !
optionpro, when you get a chance could you lay out some of your trades that helped you do that great perfomance last year? Just a little about your system and trade setups, targets, adjustments, etc., could be very helpful to other traders. Thanks! Regards. C
Hi Palawan and Chagi! I'm just a newby on the block and want you to know I've been looking for someone to talk to about options trading for months! So yes, someone IS reading your input! I've just registered this evening and haven't digested or looked up the data you've discused yet, but plan to since I have A LOT to learn! I've been trading realtime since February and am coming here with big ears since I've lost a ton of $ with only a few dollars left to turn around with. I've been trading GOOG, ECA, EBAY, which are usually good movers, but my timing is terrible as is my patience and discipline. For example, I've noticed GOOG lately has been forming predictable cup patterns with the stock price correcting back to the average price line whenever a market fluctuation has caused it to deviate from it. all the deviations have been up, not down. So when it spiked Aug.2 I expected the upward swing to continue after the corrections Aug.3+4, buying an Aug. 320 call yesterday for the expected upswing today, yet for the first time the stock price closed below average! Being an Aug. call, I've not much time to beat the decay to break even. I don't even have enough money to buy the Sept. call! Same deal with EBAY. Recent history shows to sell positions at doji's, which I faithfully did Aug.3, whereupon I bought a put to ride the dip. Only I got anxious because of its crazy rise since its last E.R. and traded it in for a call after only one day, losing money on today's dip. I know the Nasdaq's 38 point dive the last couple days is a great excuse to use, yet had I stuck with the put til candle shaped near day's end to indicate otherwise, I'd have been in the money. Another Aug. call to have to ride...! And so it goes. You mention valuations - I've noticed options pricing higher at day's open than intraday, likely because of higher volume, so I consider it an advantage when I'm selling in the first hour and buying intraday. I've found with good volume, the bid-ask spreads for the options on the stocks I mentioned are pretty good, even standing even sometimes. I was hoping to be able to trade full time in the winter months here in Canada come this winter as I'm tiring of wrenching in the cold and tree removal is pretty dead then. But unless I get some good help real soon, that dream will die a sad death. So, for any of you successful traders out there, consider this a humble cry for help! God be with you, Rob
It would be great if someone else can comment on this observation (I honestly haven't looked at Options pricing on an intraday basis at all yet), but I would speculate that the increase in options values that you are seeing at the open are due to the higher volatility (implied volatility?) of the underlying securities at the open of trading? Some of the biggest volatility tends to happen within the first 15-30 minutes of a trading day. I hear you, Canadian winters are one of the reasons that I'm interested in eventually doing trading as my full-time living, nothing like a few monitors to keep you warm on a cold winter day (beats commuting...). I'm firmly at the "trading newb" end of the spectrum, I've had a small trading account for about a year now, been slightly net negative (commissions are eating me alive). I'm a university business student, so I don't have the cash (yet) to throw into a more serious trading account, but I'm absorbing as much as I can from every source possible. Ironically enough, I don't get a lot of useful info about the financial markets out of my classes, and I'm a bloody finance major...
May God be with you, as well. Rob, my trading style is not really close to yours. you appear to be a technical trader, and i consider my trading methodology to be at the most 20% technical. you also seem to daytrade options. i gotta tell you, i used to do that and i eventually blew up my account. i lasted for a little bit with some nice winners, and that was because there was so much volatility at the time. nowadays, the volatility is not really there, at least not like the ones in late 2000/early 2001, which would make me think that daytrading options successfully would be so much harder. i cannot do it... as far as advice, i don't think i'm qualified to give any. i've had a nice run the past few months but i think luck has played a good part. i just tried to be really selective before putting the positions on. if you have call options on ebay, i would keep them. earnings has been released and ebay didn't disappoint. the problem is you're really playing the short term options. it's tough! there's so much noise coming from everywhere and it's hard to keep focused. like you said, you get impatient because there's not too much time left on your options and time decay is killing you. it's so much more relaxing to have longer term options. you can ride-out and stay put even when the short-term fluctuations coming from market-related movements are taking place. the past couple of days, the markets were reacting to the possible rate hike based on strong jobs data. so what? last time there was a rate-hike, the market dipped, but that dip turned out to be an opportunity to be long. my opinion is that it's still a buy-the-dip market, until the downtrend lasts for a couple of weeks. having said that, it's a little discomforting to see the CFTC Commitments of Traders report showing the commercials are short on the nasdaq 100 index about 19,000 futures contracts (full size and minis combined). it's been a while since i looked at the CFTC data, but the last time, the commercials were long... my real advice, and this may be too late , is to pick longer term options. you can still use your techinical methodologies but you'll have a better chance of being right. i think it's easier to predict the movement on the underlying given enough time. i'm able to sleep well at night, go to work, and just not worry too much on the daily movements of my positions. i still think about them constantly, but i'm able to discipline myself to be patient because i can afford to be with longer-term options. if you had 3-month options, you could give it about 2-3 weeks to go in the direction you thought it would go, then if it doesn't (but hopefully it does) you can close it out for profit or loss. hopefully for profit. I can't think of anything else... I wish you the best of luck and I hope you make it.
Your statement reminds me of a quote from Reminiscences of a Stock Operator. I'm going to mangle this a bit, but basically a trader is talking to another trader and says, "I'm holding so much cotton that I can't sleep at night, what should I do?" The reply? "Sell your cotton until you're able to sleep at night" I agree with your approach to options, in that you have the ability to walk away from them without too much stress (due to limited loss/risk). I don't imagine the same would be easily possible if you were shorting GOOG overnight.
Thanks for the input guys - I'm not alone in this cave after all!! I notice this format doesn't respect paragraph indentations... Yes, I admit Aug. options are too close, and all I can do at this point is ride 'em. I've never tried selling them outright, although that sounds like an interesting idea, especially when one is low on funds for buying! Maybe sell some close puts on GOOG! Another thing I noticed, with GOOG calls in particular, is in looking up the option price changes for a given day on BigCharts, the percentage rise for options of different strike prices changes quite a bit. For instance, when the stock price is moving well, the options with strike prices $30-$40 above the underlying gain in value a much higher percentage as compared with those $10-$20 above the underlying - as much as twice the rate of return. Of course, as expiry approaches, decay dwindles it even worse the farther strike price is from actual. Is this a bit about what you refer to when talking about greeks (of which I know natting)? As I become aware I must be raising some eyebrows, let me say where I'm coming from. I attended an intro session to swing trading options from a brochure I got in the mail, last September, and subsequently attended the follow-up 3 day seminar in Nov., put on by Star Trader, a div. of Whitney Education Group. A crash course in the subject, just enough to whet my appetite. Started paper trading on Simvest Corp.'s simulated site, lost money, and promptly started my own real acc't with IB, the one they'd recommended. Can't beat their commissions, that's for sure. Talk about an Odie leap before looking! And besides my stewing over data and candles, the Stock Market Genie program, and lots of guessing, that's my experience and education. I've found that it's my gambling instinct that got me in and keeps me going, but doesn't determine my strategies. You mention I'm more of a technical trader than you, but you still must use something other than market cap and E.R. to determine your intent, don't you? I'm really surprised you guys gamble so much on E.R.'s One thing the seminar taught me and I find hard to resist disobeying (gambler instinct) is stay away from E.R.'s about 3 days each side. I can understand why. Yahoo's last was very good but still under analysts' expectations, causing a surprise drop. Usana Health Sciences (USNA), a top-notch health products company consistently turning out record-breaking E.R.'s each quarter, has dropped the last 2 E.R.'s because of too high expectations - so that the stock reaction categorically does not reflect the quality of the E.R. Same happened to GOOG. And who's gonna know where the analysts' guestimate rates to actual? You obviously have a trick I don't! I don't have the req'd $25k USD min. in my acc't to daytrade US markets (I can daytrade Cdn ones as much as I want but the spreads are often too wide - hard to make money) so I only buy at day's open and sell intraday for entry and exit points or if I have a day off at home and have entered the pos'ns at least a day previous. Do any of you think it wise to hope on the runaway oil prices and go with the likes of CHK and ECA for distant calls? As a hedging strategy, I would like to be able to count on buying puts on different companies than I do my calls, as next to my calls, to cover in the event of market crashes, but haven't found any, probably because I'm naturally bullish. I would like to find a site to follow streaming oil prices as they have such an effect on the market these days - do you know of any? All the news I access is on Yahoo Finance - are there any others? Even though I've lost my financial shirt doing this, and it hurts, I still wait for the weekend to be over, to get back in the markets! Imagine that! And for most of my life, when I was working for someone else, I never heard of anything but working FOR the weekend! I take to heart your recommendation to hope for Ebay's bullish recovery - I still stick by a bullish performance by GOOG as well real soon! Jim Cramer on Mad Money is strong on CAT, TEX and CHK for the long run - what's his track record like? Regards and success to you all!
Good point, I always look forward to the markets reopening on Mondays, can't say that I particularly look forward to going back to work each Monday. For example, I took a small long position in TMTA mid-week at $0.96/shr, not very good timing, but I'm currently very excited to see how this week turns out for the stock (earnings release after the close on Tuesday). Probably one of the reasons that I'm wanting to trade for a living at some point in the future, I'm very, very interested in the financial markets.
What makes you want to get in just before E.R.? Something must make you confident of a good move, something traders haven't known to already factor into the price. You mentioned earlier I think that commissions are killing you. Have you tried Interactive Brokers? I'm with them and I've not seen lower commissions. Rob