Stock Options

[offroad]

Gojo -- sounds like you can profit with ease by just using a spreadsheet with automatic calculations and projections. So why isn't everyone on Wall Street making easy money? Are there that many people stuck into the buy-hold old school investment pattern? Why are people not just using a spreadsheet and doing stock options?

 

[gojo]

Gojo -- sounds like you can profit with ease by just using a spreadsheet with automatic calculations and projections. So why isn't everyone on Wall Street making easy money? Are there that many people stuck into the buy-hold old school investment pattern?  Why are people not just using a spreadsheet and doing stock options?

You have to remember, I only show my Weekly Options that I trade. They're very short term Options. New to a lot of traders, who don't want to bother with them, lack of knowledge. Sometimes it's like day trading in a way. I'll buy 30 mins. after the market opens and sell 10 mins. later with a large profit or a limited loss. You can have more losers and still be ahead. Remember it's a limited loss (only what you put in it) or you can get out before you lose it all.

The criterion ( projection & spreadsheet) you stated, works best on regular stocks and long term options. I'm more of a Technical trader than using the Fundamental techniques. I use the (candlestick charts & indicators).

I recommend paper trading with pretend money, before going with real stuff. Once you're good at it, then jump in with real money.
The books that got me started in this are;  Getting Started In Options by Michael C Thomsett, Getting Started In Technical Analysis by Jack D Schwager, Any book on Candlestick Charts you can find, A good one is by Stephen Bigalow.
I usually go to Half Price Book Store, they have used books and you can save a lot of money.

Also another good book is Encyclopedia of Chart Patterns by Thomas N Bulkowski.

Sometime you can find good used books at Amazon.....

 

[Dust-In-the-Wind]

... my specialty is index futures (nasdaq and s&p). Tons of liquidity (and leverage), and a healthy average trading range per day, and if you know what you're doing, you can make hundreds (or thousands, depending on account size) in a couple of hours. Not for everyone but it can work if you have the education (got mine through Online Trading Academy). I am also a technical trader. The truth in the fundamentals can get lost in the blizzard of information available out there, from sources biased on both sides of the equation.

And so, I like this quote: "Everything that's known, or knowable about a stock is shown on it's chart". Like Bruce, I tend to be a contrarian. If 90% of the people who actively trade in the market lose money, why wouldn't you do the opposite of the herd?

 

[gojo]

Why don't you start a new thread on this subject? Call it the Contrarians or Futures and show us some of your trades.

Back around 04-05,  I purchased a couple of used VHS courses on trading the Futures Market on ebay .
I remember I traded Feeder Cattle on paper with  pretend money. I bot one contract; margin/maint  1620/1200, 1 ct. = $500. With my profits I would buy one more contract, then with those profits I would buy 2 more contracts and it went on like 4,8,16,32, and 64 contracts. I turned $1720 to $70,000+, got stopped out. I would charge myself $100 commission, round trip $200. 
I never traded with real money.

 

[gojo]

Any Technical Stock Trader out there? Any ideas where CRM is going (up or down)? It's been within the Bollinger Band more than 20 days, it has a lit fuse, ready to break out.
At 8:51 AM central, 68 CALL  bid .29   ask .33,   67 PUT  bid .72  ask .50, market makers is playing with the PUTs, wide spread.

 

[HarmonicaBruce]

Why don't you start a new thread on this subject? Call it the Contrarians or Futures and show us some of your trades.

I have a thread on usmessageboard called "Covered calls in a $5,000 portfolio" where I post every trade in real time.  I started it Feb 21, less than 2 months ago.  Mostly I trade UCO and UCO calls.  To make a long story short: UCO is over $9.  If it is over $8 on July 17, I'll be up 18%.  Not bad for 5 months.  I'm still trying to figure out why this is possible.  I notice the volume for some of these options is quite low.  If I has a $5,000,000 portfolio instead of $5,000, my trades would move the price.  Just to be clear, my TOTAL portfolio is more than $5,000 (and far less than $500,000), but I had $5,000 in cash in my account so I used it to have something to talk about in my thread.

 

[gojo]

I have a thread on usmessageboard called "Covered calls in a $5,000 portfolio" where I post every trade in real time.  I started it Feb 21, less than 2 months ago.  Mostly I trade UCO and UCO calls.  To make a long story short: UCO is over $9.  If it is over $8 on July 17, I'll be up 18%.  Not bad for 5 months.  I'm still trying to figure out why this is possible.  I notice the volume for some of these options is quite low.  If I has a $5,000,000 portfolio instead of $5,000, my trades would move the price.  Just to be clear, my TOTAL portfolio is more than $5,000 (and far less than $500,000), but I had $5,000 in cash in my account so I used it to have something to talk about in my thread.

You just gained another viewer. I enjoy reading when someone share their trades. I never used this strategy (covered calls). You would think there would be a lot of rvers trading online. That's my dream, my wife will be retiring in 4 years, then we both can hit the road. I'll let her drive and I'll be trading online.
On our last trip to west Texas, we were driving 80 mph (that's the speed limit)  while I was buying stock options. If someone would of said that 20 years ago, I would of thought they were losing it.

 

[HarmonicaBruce]

I enjoy reading when someone share their trades.

I'm not going to be doing any trading (on my $5,000 portfolio) until July, when my calls expire.  It's been a little over 2 months that I've been trading that portfolio, and I'm almost guaranteed to be up 18% in July, 5 months.  I worry because it seems too easy, there has to be a reason this can't keep working.  The only way I can think of for it to stop working is for oil to become worthless, and I doubt if that will happen in my lifetime.

Personally, I think the market is like a big game of texas hold-em.  We play against other players, and some of these other players have computers and staffs of analysts that put us to shame.  So how are we going to "study" a stock and beat them?  I think "chart reading" is like reading tea-leaves, it's basically non-sense.  I can look at a chart and tell you with absolute certainty the stock is going to either go up, down, or stay the same.  But, my mind is open, and I'm always ready to learn. 

 

[gojo]

You'll also need a weegie board.

 

[Dust-In-the-Wind]

I'm in an options class all week but when I'm through, I'll post a couple of examples of technical analysis on a chart. Noone, and I mean no one, can predict with certainty when or where a particular stock or index is going to move. What you can do is put the odds in your favor on the direction of a move. The key is risk management. You will have losers and you will have winners. If you manage the risk properly and make the losers small and the winners bigger, you win the game. More later.

 

[HarmonicaBruce]

I'm in an options class all week but when I'm through, I'll post a couple of examples of technical analysis on a chart.  Noone, and I mean no one, can predict with certainty when or where a particular stock or index is going to move.  What you can do is put the odds in your favor on the direction of a move.  The key is risk management.  You will have losers and you will have winners.  If you manage the risk properly and make the losers small and the winners bigger, you win the game.  More later.

I look forward to hearing what you learn in options class.  I'd especially like to know why it's possible to make so much selling UCO calls.  I'm talking about UCO (oil), but I've lost my fanny on SDRL and SLV.  UCO, being oil, is going to go up.  SLV, being silver, will go up.  I don't know when, but oil and silver have always gone up in value, and unlike stocks (which often go to zero), will continue to go up (along with some ups and downs).  

 

[gojo]

I'm in an options class all week but when I'm through, I'll post a couple of examples of technical analysis on a chart.  Noone, and I mean no one, can predict with certainty when or where a particular stock or index is going to move.  What you can do is put the odds in your favor on the direction of a move.  The key is risk management.  You will have losers and you will have winners.  If you manage the risk properly and make the losers small and the winners bigger, you win the game.  More later.

Good, I was beginning to think I was the only technical trader here and talking to myself. There's a lot of strategies you can use. Yes it's true, you can have more losing trades and still be ahead. If you're new to options, all I can say is paper trade, paper trade. Good luck......

Back to my tea leaves...

 

[HarmonicaBruce]

Good, I was beginning to think I was the only technical trader here and talking to myself. There's a lot of strategies you can use. Yes it's true, you can have more losing trades and still be ahead. If you're new to options, all I can say is paper trade, paper trade. Good luck......

Back to my tea leaves...

If tea leaves can make you money, go for it!  When I read about chart reading, a lot of it just seems like smoke and mirrors.  Would chart theories apply the same for stocks and etf's?  One thing I've noticed is that sometimes when I sell a call the guy who bought it (who ever he is) makes a lot of money on it.  I make money too of course, but I could have made more if I had sold the calls at the right time.  

 

[gojo]

I been posting my way of trading stock options since the beginning of this thread. I am and always been a technical trader well over 10 years. A stock trader since 1994. In the last 10 years I been successful using charts.
Back in Feb. 21, I showed a chart on WMT with a Head-and-Shoulders Tops, Complex. Which means (most likely) the bears will be taking charge. On this type of trade , I would rather trade long term options. Most short term option trader like to use implied volatility, I like to use high beta (short term)!! Honestly I don't think most debater here, read these threads thoroughly. I try to simplify everything I post.
For instance, if you look back at post#64, 2/21/2015, I showed a chart on WMT, what (LIKELY) will happen, with a support line drawn under it. I posted the present chart today, so you can compare the charts. 

Bear) stock goes down
Bull) stock goes up

 

[HarmonicaBruce]

I believe the most important thing for a trader to do is document and analyze his results.  This is especially true for those people (fools in my opinion) who believe thy can make money buying lottery tickets.  If you want to buy lottery tickets for fun and to help the schools that's fine, but if you do it because you think you'll make money doing so, you're being foolish with your money.  It's just a mathematical fact.  I've had people tell me they make all kinds of money buying lottery tickets.  They'll say how a few months ago they won $300.  I ask what they spend on lottery tickets and they say $100 / week.  They don't keep track, but in their mind they're convinced they're ahead.  When I was investing in Amazon, I'd read everything I could about the stock and company.  One prolific writer on SeekingAlpha.com, Paulo Santos, would write am article every week or so about how AMZN is way too high and will crash.  He was short AMZN.  I asked him how much he had lost on AMZN and he said he had no idea, he didn't care.  After some time he wrote that he was giving up, he covered his shorts and was out of AMZN.  

It's easy for me to measure my overall account, because I haven't added or taken out any money since I've had it (it's an IRA).  My results so far are:
2012 - up 19.1%
2013 - up 8.6%  
2014 - up 1.9%
2015 (to date) - up 9.3%.

The main reason for my poor results in 2014 is because in December I started buying UCO (oil eft) and SDRL, both of which tanked, but are coming back now.  With covered calls, my account shows a negative for the calls I'm waiting to expire, which is misleading because they will expire worthless.  

The stocks I've played are:
1) AMZN - I bought at $135.  After quarterly earnings announcements, if it was a positive surprise and the stock jumped, I'd sell some and buy back when it dropped back down.  This worked pretty well, but the last time I sold it was $305.  I was waiting for it to go back down but it never did!
2) SLV (silver etf) - I was a "gold bug" for years.  I've since seen the light.  Every country in the world uses fiat money, the precious metal currency days are over!  I've lost a bunch on SLV.  I still have a lot, I'm trying to get even selling covered calls and hoping they get exercised.
3) SHLD (sears holding) - Sears is a terrible company that is going bankrupt.  They lose massive amounts of money.  Eddie Lambert, the first wall street billionaire, controls Sears.  The stock just won't go down!  People sell SHLD short, and they eventually have to cover.  I bought at $32 and sold $37 calls, which got exercised!  Eddie knows what he's doing.  He personally loaned SHLD a lot of cash to keep them afloat.
4) GERN - looking at the chart for GERN I see that the it jumps up, then falls back down, and has done so for years.  So I bought at $2.20, sold come $3 calls, and they got exercised.  Now it's about $4.  I'm waiting for it to go back down under $2.50 to think about doing it again.
5) BABA - when the BABA ipo happened, I bought at $92.  I sold at $105, and it's down to $81, I got lucky.
6) BIDU - a Chinese internet company, so why not?  I bought at $109, and it just went down, kept going down, but finally turned around. I sold at $150, and it's still going up, at $200 now.  

 

[Dust-In-the-Wind]

Funny you should mention lottery ticket buyers.  In class we talked about folks who buy penny stocks, hoping for some humongous return.  That's the markets' version of a lottery ticket and the odds of profit are about the same.  

So the class is over and it was five straight days of 8a to 4pm non-stop learning.  It'll take me a little while to recover and put some thoughts together.  I'll start with this.  Whether it's stocks, options, futures or forex, you have to decide whether you are a "trader" or an "investor".  Huge difference.  Within those two categories are a couple of sub-categories.  OK, you're a trader.  You can be a swing trader, position trader or momentum trader (think holding an investment for days or weeks) or a day trader (obvious) or a scalper, which is how I trade futures.  Sometimes I'm in a futures contract (I mostly trade the Nasdaq e-mini index) for less than a minute; sometimes for an hour or so.

Options.  I'm usually in an option for a couple of weeks. With options, days to weeks is probably a minimum just because of the way they work.  Pretty complicated, lots of moving parts, a ton of ways to play them.

Or, you're an investor.  You have an IRA or 401K and you plow money in every payday or whenever you can and you or someone you trust is putting the money to work in stocks or ETFs. (Exchange Traded Funds) Or maybe mutual funds. (Not what I would recommend because of all the hidden fees)  Over time, you expect the balance in the account to grow and you may or may not really know what you're investing in.  I would venture to say that the latter description fits the vast majority of folks who have money in the market.  They are so busy trying to make a living that they don't have time to really do any strategizing about the details of their account.  

The folks I know who've become really good at trading have picked an area, focused on it, committed to learning about it (which never stops by the way), decided WHAT to trade and how, and went after it whole-hog.  That's my plan as well.  

I'm going to try really hard to keep these posts from being too long-winded or rambling.  Feel free to let me know if I'm missing that mark. Til next time, Regards.

 

[IGBT]

Eh, I got burned by Seadrill in 2014 too.  Lost about $20k there but made it all back since then in biotech (some swing trading and some Gilead).   I do see that Seadrill is coming back now but I am staying away.  Once a stock burns me that bad, I remember the scar.

 

[offroad]

Eh, I got burned by Seadrill in 2014 too.  Lost about $20k there but made it all back since then in biotech (some swing trading and some Gilead).   I do see that Seadrill is coming back now but I am staying away.  Once a stock burns me that bad, I remember the scar.

Was reading that biotech is up 200% in last two years. Trouble is. Which one? Lol.

 

[HarmonicaBruce]

Eh, I got burned by Seadrill in 2014 too.

It's coming back, along with oil in general.  I have no idea really what it's going to do, but I'll just hang onto it and hope!

 

[gojo]

Any Technical Stock Trader out there? Any ideas where CRM is going (up or down)? It's been within the Bollinger Band more than 20 days, it has a lit fuse, ready to break out.
At 8:51 AM central, 68 CALL  bid .29   ask .33,   67 PUT  bid .72  ask .50, market makers is playing with the PUTs, wide spread.

I forgot all about CRM, I watch to many stocks, I need to slow down, 100+...
Back in April 14, 2015, I posted that CRM had a lid fuse. April 29,2012, it BLEW!! That day the price range were; low 65.89 - high 78.46, a range of 12.57. Even a longer term option would of been a good trade. This is where you can make 1000%+ on weekly options.

The Bollinger Band is on indicator to watch. Usually when a stock stays longer than 20 days within the bands and the bands narrows, means something going to happen. It works best on volatile stocks.