Full Throttle Friday: Dollar Dive Does Bears In [View article]
We don't let FAS become a problem because we sell premium (short calls), we don't buy it, so the decay works in our favor. Occasionally, we'll do a bullish play on FAS of no more than a month but, after that, the decay tends to get you - especially in a choppy market.
Full Throttle Friday: Dollar Dive Does Bears In [View article]
FAS and XLF are both useful for different time-frames. In our FAS Money trade, we're long XLF because it doesn't decay and short on weekly FAS calls (when we're bearish, of course).
As to RIG, they got low enough for us to sell short puts on them.
I'm sorry that you had trouble. If you like that kind of trading I'd be happy to give you a pass for our new Swing Trading portfolio, run by Optrader, I think it might be more what you were looking for as they are mainly momentum trades with a constantly updated live spreadsheet with all the entries and exits laid out.
No I'm not happy, are you? The market sure isn't and oil going up was our signal to go negative and cover longs yesterday. Am I not allowed to have a market premise on which we take action now?
Tradeflow, I see you were a member from 11/30/07 - 12/29/07 on my site and from 9/7-12/7 on Wangs. I can't speak for Andy but obviously Dec was a rough month with the Dow dropping 500 points but I'm very curious as to what it was that you lost $30,000 on in one month.
ENER - well some guy (maybe you Expert) paid us $2.25 for the $50 call that expires next Friday. So we don't need to buy the stock, or do anything other than take the $2.25, put on a stop at $3 (if it breaks $50 before the value of the contract deteriorates) and, if ENER doesn't break $5 in 5 days we take it all ($225 per contract) as pure profit.
My risk is $75 and my potential profit is $225 - you should really learn to understand the mechanics of a trade before you criticize it as I would have to buy $5,000 worth of ENR and they would have to make 4% by Friday just to make the same $225 while my risk of a gap down is significantly higher than my risk of a gap up on the call I sold as the stock has to go to $52.25 (up 4%) JUST for my caller to get his $225 back.
This is what we teach at Philstockworld, how to use options to DECREASE your risk and make superior returns. I don't think ENER is a bad stock at all, I just don't go chasing 40% moves no matter how much we love a stock.
Ted: I advise rather than spend $22K on a single contract that is a horribly bad idea (for pretty much the same reasons that I just told Expert you don't chase ENER and note the $90 was the insurmountable barrier), you should spend $49 and spend a month papertrading our picks on my web site. This is not a shameless plug - we really do help people just like you every day!
You are, frankly, lucky you still have .56 of value for a call that's more than 10% out of the money with no expected event. There is no cheap way to "save" this play as the premiums for the other months are ridiculous on V.
The correct way to play this (other than cashing out and moving on) would be to roll yourself down to the $80s at $7.65 (+ $7.09) and sell the $85s for $3.75, which brings the total cost of your play to $1.10 + $7.09 - $3,75 = $4.44 and any finish above $84.44 gets you even. The most you can make on that play is .56 because above that you owe the $85 caller money but it has a very good chance of getting your $10,800 back (assuming you have $88K for the new play!).
Another expensive way to "fix" this is to take the low premium ($2.80) June $80s for $10.10, which will lose approximately .60 of premium between now and expiration and sell those same $85s, which have $1.45 of premium, after which you will "roll" that position to the June $85s, now $7.10 for a net collection of perhaps $8.50 against your $11.20 investment meaning you need a June finish above $82.70 to "win."
There is one other thing you can do but it's risky:
Since you already have the 200 $95s you can sell 200 $90s for $1.52 and 200 $85 puts for $1.52 covered with 200 $80 puts for .38. That puts net $53,000 back in your pocket and you are playing for the stock to finish between $80 and $90 on Friday. You would need $5 per contract in margin to make this trade ($100K) and you do risk that loss (less the $53K you collected) if the stock goes all the way up to $95 or down to $80.
There are about 5 other strategies we teach on our site to save a play like this but mainly we teach you never to put yourself in this position in the first place!
Full Throttle Friday: Dollar Dive Does Bears In [View article]
Full Throttle Friday: Dollar Dive Does Bears In [View article]
As to RIG, they got low enough for us to sell short puts on them.
Options Trader: Thursday Outlook [View article]
Options Trader: Thursday Outlook [View article]
Let me know if you'd like to take a look.
- Phil
Options Trader: Thursday Outlook [View article]
Tradeflow, I see you were a member from 11/30/07 - 12/29/07 on my site and from 9/7-12/7 on Wangs. I can't speak for Andy but obviously Dec was a rough month with the Dow dropping 500 points but I'm very curious as to what it was that you lost $30,000 on in one month.
Options Trader: Thursday Outlook [View article]
Trade flow - what was your member name?
Options Trader: Thursday Outlook [View article]
My risk is $75 and my potential profit is $225 - you should really learn to understand the mechanics of a trade before you criticize it as I would have to buy $5,000 worth of ENR and they would have to make 4% by Friday just to make the same $225 while my risk of a gap down is significantly higher than my risk of a gap up on the call I sold as the stock has to go to $52.25 (up 4%) JUST for my caller to get his $225 back.
This is what we teach at Philstockworld, how to use options to DECREASE your risk and make superior returns. I don't think ENER is a bad stock at all, I just don't go chasing 40% moves no matter how much we love a stock.
Ted: I advise rather than spend $22K on a single contract that is a horribly bad idea (for pretty much the same reasons that I just told Expert you don't chase ENER and note the $90 was the insurmountable barrier), you should spend $49 and spend a month papertrading our picks on my web site. This is not a shameless plug - we really do help people just like you every day!
You are, frankly, lucky you still have .56 of value for a call that's more than 10% out of the money with no expected event. There is no cheap way to "save" this play as the premiums for the other months are ridiculous on V.
The correct way to play this (other than cashing out and moving on) would be to roll yourself down to the $80s at $7.65 (+ $7.09) and sell the $85s for $3.75, which brings the total cost of your play to $1.10 + $7.09 - $3,75 = $4.44 and any finish above $84.44 gets you even. The most you can make on that play is .56 because above that you owe the $85 caller money but it has a very good chance of getting your $10,800 back (assuming you have $88K for the new play!).
Another expensive way to "fix" this is to take the low premium ($2.80) June $80s for $10.10, which will lose approximately .60 of premium between now and expiration and sell those same $85s, which have $1.45 of premium, after which you will "roll" that position to the June $85s, now $7.10 for a net collection of perhaps $8.50 against your $11.20 investment meaning you need a June finish above $82.70 to "win."
There is one other thing you can do but it's risky:
Since you already have the 200 $95s you can sell 200 $90s for $1.52 and 200 $85 puts for $1.52 covered with 200 $80 puts for .38. That puts net $53,000 back in your pocket and you are playing for the stock to finish between $80 and $90 on Friday. You would need $5 per contract in margin to make this trade ($100K) and you do risk that loss (less the $53K you collected) if the stock goes all the way up to $95 or down to $80.
There are about 5 other strategies we teach on our site to save a play like this but mainly we teach you never to put yourself in this position in the first place!
Good luck....