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. ??$@!??*&
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
I guess you are not counting commission and bid ask spread? I was just running those numbers the way you do. With a $2.50 premium and you make .24 for example, that is a 9% gross return. With taking out commission costs, that is 5% return. Yeah I did notice if I had bet on the short trend, but didn´t have the guts. I have figured out a way to kind of tell it is going to do that, but one thing in guessing and another in watching it unfold. I´m going to be back to trading one contract next week. Too much losses this week. The CALENDAR trade is driving me nuts. Can´t get out of it. Been trying for an hour, changing the limit spread prices, but nothing happens. Cancel and adjust the prices, still nothing happens. Must be too little volume? I´ve been trying to remember. I think the spread has to WIDEN not narrow??? Looks like my weekly first month in the calendar trade is going to end with some value of .73 cents or something? I have no idea what happens next, since I was unable to close the CALENDAR. I guess I will find out next week when I check the records and balance. For sure I´m going to lose money. Just a question of how much? The thing is out of my control. Don´t know what to do? I´m guessing they make a cash adjustment on the option contract expiring and leave me with one long CALL for the next WEEKLY?
____________________________________________________ I wasn't comfortable holding this many contracts over a 3 day weekend with so little time left before expiration on OTM options so I bailed at 1.40 in the latter part of the day. ( see attached updated excel results Its a shame because I passed up my standard +30% profit goal earlier in the day.
If you sold calls for the front week then on monday your account will be credited (on margin) the cost of buying the 100 shares at the strike price, and then you will be short 100 shares for each contract. If the stock doesn't gap and you cover ASAP monday it should be equivalent to covering for a $.73 loss on each share. IE you delivered 100 shares per contract at the 67 stirke and must buy them back at 67.73. You must cover the shorted shares the same day to avoid any margin fees/requirements. I haven't had that happen but I believe that's how it works.
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 -------------------------------------------------------------------- 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. ------------------------------------------------------------------------ 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. ----------------------------------------------------------------------------------- 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>...
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
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.