There can't be stop loss on Long Nov 65 Call and there's no need for it on the short leg either. Trade is hanging! I love options; the game is now intriguing! Let's wait and see how it pans out!
Well I've read most of the messages posted over the past 127 pages. I cant belive theres been 127 pages with only about 5 trades~. I'm real interested to see how you do multi; enjoying reading your trades. Keep up the good work and there are people that enjoy reading your posts trades without being a player hater. oh one question; you mentioned in one of your earlier posts that you have only had 3 trades expire worthless. How do you accomplish that? I've had 2 in the last month lol. bought AMZN calls before earings (crash) bought CHK calls last week (granted I should of sold but was away and couldnt - dont really matter didnt spend much) - but still its at 0 for the bid now. I was in EBAY earlier - but bought and sold and lost out on much $. <<< need better trading plan. I did have one winner in the recent past; bought intel for cheep and sold it for $. (ie sold on friday). I just bought IBM calls on friday; going to see how it pans out. oh almost forgot I bought some SHLD friday and sold that same day; didnt like it. anyways just sharing some of my recent adventures (I've really enjoyed reading yours). good luck
A "rather" safe trade on DELL: Sell Dec 27.5 Put and buy 32.5 CALL for December with the credit of 10 cents. If DELL stays between 27.5 to 32.5, you will get 2% profit in 5 weeks. and if it goes above 32.5, you are the king and if it goes below 27.5, you will start to lose. This is not a screaming trade but a safe trade and you can sleep. You can find lots of trades like this.
100% loss on three trades does not imply that some trades didn't post losses; they were just not 100% of the preimum. How many trade(s) per week/month do you think is/are ideal for an option trader?
I am also a directional option trader. My personal experience is that there are very few option trades per month that I would take. Perhaps 0-5 trades per month at most. Perhaps I am a little conservative, I only like to take the A+ trades and keep a very concentrated portfolio.
hajimow's position is equivalent to: (synthetic stock) + (bear vertical spread) or sto Dec 27.5 put (b/a .2/.25) & bto Dec 27.5 call + sto Dec 27.5 call & bto Dec 32.5 call (.1/.15) It might be opened for $0.10 but the natural price is only $0.05 less $0.025 in commissions at oX, with a margin requirement of $560 per contract. This means about 0.5% return on margin. To size this position I have to firstly decide on my stop loss. As no support is in sight and DELL closed Friday at $29.4, I'd put my stop loss at $28.25. Considering a worst case IV increase of 25% (from 25.7% to 32.1%), my options position's R (risk) is about $0.60 ($0.05 commission to open and close both legs). Note: the maximum risk of this position is much higher as DELL could gap down. See attached this position's graph: today, in 9, 18, 27, 36 days.
DELL's both weekly and daily charts show a bearish trend, but both exhibit bullish divergences for a bullish setup. See attached weekly and daily charts.
It might be opened for $0.10 but the natural price is only $0.05 less $0.025 in commissions at oX, with a margin requirement of $560 per contract. This means about 0.5% return on margin. Disclosure: I will not do the trade that I mentioned because I am already loaded. If I could do the trade, I would not change my credit from 0.1 to 0.05 to make the order a market order. I will pay 1.5 for commission so credit will be $8.5 per contract. I have to have (20% 29.5 - 2.5)x100=$340 per contract. So the profit will be $8.5/$340 x100=2.5% in 5 weeks. If the market goes down and the stock dips, you can get more than 10 cents from the spread. My broker is IB. Another disclosure: No trade is safe. We just believe they are safe and profitable. Once we enter the trade, time might prove we were very wrong.
When I trade daily charts my forecast time frame is about 10 trading days, and I close my positions in 1 to 3 weeks from opening. This means an average of 2 turns per months. I size my positions for a maximum 2% risk (R) of my trading account. At any time my total risk doesn't exceed 6% of my account, so I can open about 3 positions at the same time. When an open position goes my way I tighten my stop loss, so I may have enough room for a 4th or even a 5th open position. This makes 2 turns * 3 positions = 6 positions / month when trading daily charts. If I sized my positions for 1% risk, I would trade about a dozen positions a month. Going to a lower time frame, i.e. 60 minutes or 30 minutes, my forecast becomes shorter and I can have more turns, but the limitation comes from the reduction in price swings. These smaller swings have to be still large enough so that they're at least 5 times larger than my cost to put on a trade (slippage and commissions). Considering a cost of $0.20, the option position targeted swing needs to be at least $1. For a delta of .67 it translates in an underlying swing of $1.50. This restricts the pool of stocks that I can trade, and limits how low I can go with my time frame. For a 60 minute chart trade my forecast is for about 2 days, and for a 30 minute it is only 1 day, and my target swing has to be possible in that time frame.