JP's options journal

Discussion in 'Journals' started by jamespond, Jan 31, 2019.

  1. jamespond

    jamespond

    Hi there,

    The idea of this thread is to test my options system.

    In a nutshell: If I like what a stock is doing, I will start looking at the options of that stock. The only positions possible will be long calls & puts. No fancy options strategies and no volatility plays.
    So basically it's directional long/short stock trading with some extra leverage.

    Usually positions will be initiated at the start of the session. Positions will be held for a couple of day to a couple of weeks. (no intraday trading)
    No stop loss will be set. Positions will be a small % of the account and it could mean they expire worthless.

    Don't expect a trade everyday.

    JP
     
  2. jamespond

    jamespond

    To kick off:

    XOM - long 75 Mar'15 CALL @0.69 (stock price was ~72,28 at when I bought it at the open)
     
  3. Robert Morse

    Robert Morse Sponsor

    I like it. Simple and straightforward. What is your process for choosing the strike and time to expiration?
     
  4. Robert Morse

    Robert Morse Sponsor

    That is a .27 delta with 43 days to go. May I ask how many you bought?
    BTW, earnings are tomorrow in the morning.
     
  5. jamespond

    jamespond

    I will set a target that I expect price (stock) to reach as a minimum. Then I will pick a strike price between that target and the current price. So in case of a long I will buy a call (slightly) OTM and expect to sell it again ITM.
    Expiration is 1,5 to 2 months away. If it doesn't move the way I expect it to after a couple of weeks, the trade is probably bogus.
    So with Exxon I expect 75 to be reachable within a couple of weeks timeframe.

    The number of calls doesn't really matter as I don't plan to post the whole account only the trades. Allocation per position is about 5% of the account but that is still subject to change.

    I know tomorrow are the earnings. It's not part of the plan but just a coincidence in this case.
    It makes it riskier, hope the reward is better too.
    But thx for the heads up :)

    JP
     
  6. Ayn Rand

    Ayn Rand

    You did OK today because of action near the close but

    1. Buying options on the open often encounters a reversal. Also the bid/ask spread does not settle for awhile and is relatively large on the open.
    2. You are paying a small volatility premium since tomorrow is earnings.

    If things go well the above does not matter but nonetheless you need to consider.

    If I was long I would be expecting Exxon to hit $75 in a matter of days not weeks.

    There is a remarkable amount of open interest for the March 15 calls. Clueless as to why.
     
  7. cvds16

    cvds16

    following
     
  8. jamespond

    jamespond

    Yes, I agree on the bid/ask spread. I try to wait 5 or 10 min. after the open. But on the other hand ideally I would like to enter as close to previous' day closing price as possible (in the XOM case at least)

    JP
     
  9. jamespond

    jamespond

    JPM - long 100 Mar'15 PUT @1.30 (stock price was ~103.11)

    Expect to hold this for just a couple of days.

    JP
     
  10. jamespond

    jamespond

    I sold half of the position @1,16. (stock price was ~74,82)

    Tomorrow is ex-dividend for XOM. Some extra downforce is to be expected. Although I stay confident on it for the coming weeks.
    Also, indexes seem vulnerable today with DJ / S&P making a doji after their very strong run up last 1,5 month.
     
    #10     Feb 7, 2019
    cvds16 likes this.