Do you refer to intraday "dips"? All three did open higher today... Best of luck, because you're loaded!!
Yes, the drop this morning is the dip I was talking about. I think it was a 200-300 point swing (I saw the DJIA at +182 and then again at -82 within 30min-1hr). Of course those type of intraday dips became common in the last 2 weeks, but this one's the odd in the sense that the wild swings have decreased the past couple of days. I entered today's positions near the top of the day, then added more after the DJIA came back to break even from -82. So far, it looks like it is working. I'm still cautious and so there's nothing longer than next Friday's expiration for me. I don't think we're out of the woods just yet. As long as the market is holding up though, I'll continue to dip into these beta stocks and try to catch as much as I can.
High VIX generates Large Intra-day swings. On the attached VIX chart you can see that the VIX (19) is less than half of its peak value (50) on February 6, 2018.
Thanks for the chart Jeff, it really felt like we were coming back to normal volatility the past 3 days, and then that surprise this morning. But, I'm sticking to earning trades again this week, and I'm just went with ANET Feb 320/330 call spread. The risk is a little more than $900.
I'm uncomfortable joining stocks that are about to make new heights... Do you have a method to get some idea for targets; e.g. fibs?
I expect ANET call spreads to be worthless. I added more NVDA this time using NVDA Feb wk4 247.5 calls. I was trying to get some with the expected market weakness, but that didn't happen. Also taking a potential loss on DE Feb 165 calls.
A lot of things actually come into play for me to take such a position like the ANET call spread yesterday. I take into consideration what the stock did during this report last year, and how it's been trading around earnings since then. Can the gains continue like this based on the trend of its last couple of quarters of earning reports. What's the market doing right now. Finally, can I take on this risk with the understanding that it has a high chance of being a total loss. For ANET, I followed this stock closely after its Nov 2016 earning report. I watched it play out and profited from its Feb 2017 report. I haven't traded in ANET since Feb 2017, but I've continued to follow its move and how it has traded around earning reports as well as what happens when it breaks to new highs. Even when I felt I knew this stock enough, it'll still throw in a wrench like what we're seeing today. I'm going to have to go back and review the earnings report, but usually when this happens you get a momentum in the opposite direction. That's what I will be looking for in ANET for the next 2 weeks. One more thing that allowed me to take this trade was the unrealized gains I had yesterday at the time I added the trade. I had locked in $500 in gains this week, but the positions I had in NFLX, NVDA, BA, CMG, and DE showed an additional unrealized gains of $2500. I know it's unrealized, but the fact that I had room for error allowed me to play ANET. Had all of these things not been in place along with the fact that the market's volatility has decreased substantially from last week, I would have stayed out of this trade.
When the market wants you to get out with a profit, you've got to take it. I was looking at a loss on DE all morning. Locking in gains now on DE Feb 165 calls. CMG took another leg up this morning, pushing those 300 calls higher. BA is holding up well too, but NFLX and NVDA are lagging a bit here. Just going to edit here instead of new post. Locked the run on DE from 2.80s to 8 taking +1000 in profit. That just about covered the -$919 loss on ANET. So it's a wash on these 2 trades.
You are such a good directional trader (one of the best I have seen in 20 years), why do you bother with spreads?
Took this dip as another chance to add a bit more position. I added some calls on NFLX and BA this time. My NVDA long position is too big. *Readjusted my positions. Added more NVDA Feb week4 247.5 calls, Also locked in profits in CMG calls. CMG had run up from 288 to 302 since I took the 300 calls 2 days ago. The options went from 2.3 to over 8. I had to lock in gains there as I am heavy in NVDA and NFLX now. My BA position is also bigger than I want. Those are the 3 I'll hold into next week and see how things play out.