Keep the info coming Ryan. It is interesting even if I cannot yet duplicate any of it. I am however seriously re-considering how I trade here. I´m curious what are the major stocks you trade with the biggest daily average percentage swings? I´ve noted AAPL and GOOG. Any others? When you mentioned watching the one minute chart. I went to take a look at different time frames. I always trade hourly charts, as in the indexes, you don´t necessarily get enough of a move to make something in shorter time frames. Or pay commissions. In just looking through Aapl on shorter time frames, I can see perhaps that because the daily percentage swing is larger on some stocks, than on indexes, that a shorter time frame would enable more trades to be consummated. I´d like to follow up on this, and it would save me a lot of beginners research, if I had a list of stocks that move with wide swings. Stocks are brand new to me in option trading.
Ryan, Speaking of CREE, later in the day yesterday I added CREE April 30 calls at 1.50 to make a strangle out of my CREE 29 puts at 2.00. But just like with any of these straddle/strangle positions the same old dilema occurs, "how is this stock going to move enough to make me profitable?" For instance the calls have easily hit a bid of 2.50 today making the calls worth +66% more than what I paid for them, but then the put bid was around 1.40 ( -.60 under cost). So 2.50 (calls) plus 1.40 (puts) equals 3.90 pair minus a 3.50 pair debit = +.40 profit. It just not worth trading for +11% profit (around +9% after commissions). I haven't done a straddle or strangle in a long time and now I remember why! Jeff
Jeff HA! HA! HA! I see I´m not the only one with a faulty memory. Was looking up some largest % gainers. Turns out they are based on earnings reports. So did some paper trades and we shall see what happens afterward. Looks like this bunch all came out today? SCHL, AIXG, TWER, ONP, NUVA, STP, CSX.
Also bought SPY April 140 calls at 2.14 this morning. Looking for 2.68 (+25%), but if it goes the wrong way then Buy No. 2 at 1.60 and sell all at 2.30. Stop: 1.45 Reward to Risk per Pair: 1 to 1 Profitable: .70 + .16 = +.86 Loss.......: -.69 + -.15 = -.84
Falcon, as an experienced options trader, I have noted that the posts from Ryan the last 24 hours are not making sense. I would warn you there is a strong chance he's making it all up. Even if we were to give him the benefit of a doubt, the AAPL trades as quoted are a horrendous strategy.
Yeah, I'm testing AAPL puts again.....I'm making it up too....but just bought 1 AAPL March 23 2012 $585 puts at $14.00. I just feel like the correction in AAPL is coming, putting a stop at $8.75 though and going to watch it closely again.....Funny you mentioned that they don't make sense, hell, they still don't make sense to me too....but I would have bet my house yesterday that AAPL hits $600 by end of week. That's how strong the intraday tape was showing in the afternoon. Things look different today. AAPL is struggling, and I can almost see that large funds are locking some profits here. Dare put your money in AAPL puts now Nine_ender? I don't have a guarantee, hence the stop loss, but we'll see if I'm right about AAPL falling back to at least $550 by end of next week.
Ryan, That swing is because I just bought my wife airline & hotel accommodations to Hawaii for the niece's wedding! (ggg...gg...g) Jeff
Hey Jeff, Optionsxpress allows a strangle to be played with 1 commission cost only.....saves half the commission cost right there. But, you're right. The stock has to make a strong move in 1 or the other direction, and with something like CREE, I don't think we'll see that in 3 days. It might have to be a 2-3 week trade to make it last. Even had trouble with earning trades making enough of a move.
I haven't done a straddle/strangle in 12 years and I already see why I stopped doing these things. "Its like watching the grass grow! First the puts are up.....but the total debit doesn't change much, then the calls are up.....but the total debit doesn't change much. This takes time and patience and at my age I no longer have those qualities. I set my limits and stops for either a +25% overall profit or a break-even plus commissions. Ryan also take a look at the attached 5 year chart of the SPX. I see smooth sailing to 1440-1450. If I was a betting man, I would bet no correction > -2% to that level. Jeff