Sold puts on VIVO for Sept Credit $0.30 Annualized % return.... 13% Earnings out yesterday, so no more surprises pending. Overall, the company has good fundamentals and is financially healthy. Issues pertaining to Europe are currently a bit of a drag on the company. But at this point, those issues should already be factored into expectations going forward. I like the tech support I see at my $15 strike, per the 5 year chart. http://finance.yahoo.com/q/bc?s=VIVO&t=5y&l=on&z=l&q=b&c=
<<< My particular problem with selling cash secured puts on my account is that I only have 20,000 dollars.... so therefore there aren't many options to sell cash secured. >>> I understand your situation. And i don't have an easy solution for you. However, I will say this,... but take it in the context that i know less about options than everyone else here: Seems to me that trying to grow your $20,000 via strategies that are centered around your stock staying either "inside or outside", of various trading ranges, is a lot more risky, unpredictable, volatile, and stressful,... than selling cash secured puts (with or without a little extra juice via a "reasonable" % of margin.) And I'm not suggesting that you use my year end % return goal of 13 - 19% annualized, as we all have our own goals and risk tolerance preferences. But if your % goal is a double of 30% or more, then you need to think more about the issues of "probability vs potential". As you know, the higher your % goal the lower your probability of achieving it. As for those one size fits all, "generic" probability formulas, that I see some individuals discussing,.... I think they're only somewhat useful for trades of about a week or two. Beyond that, they are useless, and may actually be putting investors at risk. Particularly if used to evaluate a period of months. The formula is way to "generic", and totally ignores multiple criteria that should go into evaluating a stock and the probability of a trades success... both technical and fundamental. All it does is sucker lazy investors into thinking they don't need to do any kind of "actual analysis" of their stock and trade, as they think it's magically been done for them. If you want to grow that $20,000 i hope you are not chasing high % return trades, using volatile stocks, based on them staying inside or outside of limited trading ranges, and being too quick to take losses, (because those losses are "limited") and because your trade does not allow for a temporary plan "B" to fall back on. I know most will probably disagree with me. And most know more about options than I do. But I'm just sharing my thoughts. Just because a loss may be "limited", does not make it a good trade or a high probability one,... even if the "one size fits all" generic probability callculator says it does.
you know a very good point you make... as probability distros go further out in time they exponentially become more worthless.. Nassim Taleb was a big pusher of that in his books.. I TOTALLY AGREE.. risk to reward ratios are something i follow heavy.. and trading volatility is exactly what you said .. trading stocks in or outside a range.. To be completely honest i am getting practice with the real juice "real money" instead of a paper account because i would like to make markets one day.. and i think i have what it takes to do it.. This is just how i do it.. if i model a trade.. send it through several different senarios.. then watch them play out live... I gain a sense of intuition as an active participant that i would never get if i had no money at all.... this i agree with George Soros.. he has talked about this in his books... Alchemy of finance.. Theres no substitute for trading with money.. So that being said.. I trade with money.... my risk isn't that i lose a little money here and there with trading.. my risk is that i never give it my fullest effort. learn how to do it.. and end up digging trenches and installing pipes along side mexicans the rest of my life... i'm fairly new at this and i don't expect to do anything but learn for a while.. this doesn't mean i'm lackadaisically and randomly hoping to get it through osmosis one day.. i read, then i read.. then i read.. then i read some more... i plan on finishing the class i started in visual basic to work with excel better.. learning java or some other lower level programming language.. i've learn web application languages.. php. coldfusion etc.. i like the idea of realizing how potientially wrong you could be in all situations and yet being confident that your going to win! as crazy as it sounds i know all the answers are sitting right in front of us as to how to make a good living at this.. it just takes alot of experience patients tolerance introspection, and resilience to stick to it.. not get burnt out and let yourself be human..
that being said.. i'm a firm believer in the ideas of Taleb.. and i liked Espen Haug as well.. i've read his book.. and he actually emailed back and forth with me.. this combination of behavorial psych, arbing unexpected events, and bleeding slow to make big sums, is what i'm after.. its counter intutive to us.. we want a paycheck style stock payout game.. income producing strategies... no option has a rare even truely priced in and its the one thing you can count on eventually happening.. stocks get cut in half.. stocks go on unexpected huge long runs and go parabolic.. i'm not a rationalist.. i think the market mean reverts back to some sense of rationality but generally speaking over reacts, panics etc.. what i mean by arbing unexpected events is.. putting yourself in a constant position to expose yourself to a tail event.. long a tail event.. meaning while everyone else is blowing up in a crazy your setting up to retire..
I will play again. Friday I bought the Sept 13/17 bear put spread on HPQ in anticipation of a decline in the price of the stock after earnings on Aug 22. 5 contracts. Debit 45 cents.
Some current positions: From 7/13: Long NDX AUG 2500/2600/2700 Fly @ 30.00 From 7/25: Long RUT AUG 760/800/840 Fly @ 15.00 Today: Long ZB AUG4 152/150 Strangle @ 2"29
Was a play on vol, which has significantly softened since initiation of the trade. I should have taken it off on 7/26 prior to the rally, now getting short too many deltas. Hopefully I get a pullback, but will close out and reassess on any further rally.
tomorrow, wed, aug 1, is the first day of the month and also day of fed statement release, both "should" be short term positive drivers for the market. i will look at a quick spec deal, in today, out tomorrow. i am thinking a call on either TNA or IWM.
Depends on how we finish today. Also, Fed may not ease as much as expected, given the better than expected PMI out today.