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Let's Trade Options

  • #15,901
  • Edited 9:53pm Sep 25, 2018 9:40pm | Edited 9:53pm
https://finance.yahoo.com/video/star...142924380.html

I heard this come out late Tues just b4 the close and it looks like SBUX sold off a little but I thought when I heard it, "hmm, restructuring, might mean more upside..."

anyway, we have the FOMC tomorrow, heavy consensus on another 25 bps hike, deviation from that would move stocks more than the status quo
"If The Fool persists in his Folly he will become wise." - William Blake
  • #15,902
  • Sep 25, 2018 10:03pm Sep 25, 2018 10:03pm
Yeah, I saw that. Played into the PUT option, as I think people will see that and will show up on the price tomorrow. Remember, I'm looking at very short term movements, next few days.

Although, if I had to give an opinion on Starbucks a few months out, I believe that with their new policy of letting people just hang out in the stores without buying a product, come winter time when all the homeless in the bigger cities like Seattle and Portland and Albany and in northern California start getting cold and start hanging out inside the local Starbucks to stay warm, their business model will take a hit. None of the regular customers are going to want to go, especially women

and they will just find another place to buy their drinks. Business will drop off and the trendy inside of the stores are going to start looking like San Francisco until the weather warms up again. Just my opinion, though. I guess we'll see....

  • #15,903
  • Sep 25, 2018 10:04pm Sep 25, 2018 10:04pm
Quoting tzamo
I want to share a free resource that I have found
no problem Tzamo, feel free to post whatever. You need to be able to model spreads and different types of setups and you need to do that, watching how things change over time, in order to understand how the trades work. I recommend getting a demo account and putting on lots of trades b4 you try trading real money
"If The Fool persists in his Folly he will become wise." - William Blake
  • #15,904
  • Sep 25, 2018 10:17pm Sep 25, 2018 10:17pm
Quoting moneymaker2
{quote} Sort of a mixture of the two: price is always the most important, but if price still has the ability to go my way more and there is sufficient time, I may hold longer. I do not just let nature takes its course with a 'set it and forget it' approach, because if I have $19K in a trade, you can bet I am at my computer with my phone, and can close the trade with either if necessary. Depending on the instrument (stock or index option), I normally get out of a trade with a $5K loss for stock, or a $10K loss with OEX options and the parameters...
I always try to get a formula/metrics for any trade from an experiencced trader of at least 4 years.
A trader doing currency options gave me this formula:
(a) Buy only 120 days and buy an option if it meets two criteria: 40% of delta and 100 points premium.
(b) Put an stop loss for 33 points. You can cover this loss in next trade unless you continue to be hit by bad trades in a row.
(c) Let the option run for TP of 80 profitt. If the entry doesn't hit TP in 10 days, reconsider your position and get out even before TP is hit with whatever profit or loss you make. If you still want to try it, and if is still in some profit, make the position breakeven and try your luck.
(d) the advantage of buying or selling outright is that all your energy goes towards spotting big breakout trades. Nothing to worry about psychology or any kind of money management except using SL and TP. Not even worry about margin calls.

Like you said you look for extreme overbought/oversold stocks, the fx options trader looks for breakout or breakdown probability.

Do you have any such specific mechanics or metrics to share based on your own experience so far?

Thank you.
Practice makes a person perfect
  • #15,905
  • Sep 25, 2018 10:26pm Sep 25, 2018 10:26pm
Quoting moneymaker2
Yeah, I saw that. Played into the PUT option, as I think people will see that and will show up on the price tomorrow. Remember, I'm looking at very short term movements, next few days. Although, if I had to give an opinion on Starbucks a few months out, I believe that with their new policy of letting people just hang out in the store..
...lol that's an interesting insight money, you might be on to something there....anyway gl, maybe we see a big >$7 drop like happened back in June...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #15,906
  • Sep 26, 2018 7:50am Sep 26, 2018 7:50am
Quoting The Fool
https://finance.yahoo.com/video/star...142924380.html I heard this come out late Tues just b4 the close and it looks like SBUX sold off a little but I thought when I heard it, "hmm, restructuring, might mean more upside..."
SBUX up >1%....any noise about layoffs (cost cutting) usually means stocks will rally near term anyway....maybe you get a better overbought entry later
"If The Fool persists in his Folly he will become wise." - William Blake
  • #15,907
  • Sep 26, 2018 7:52am Sep 26, 2018 7:52am
trying to fill this EWZ diagonal
Attached Image (click to enlarge)
Click to Enlarge Name: 2018-09-26_0736EWZ5.png Size: 235 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #15,908
  • Sep 26, 2018 8:40am Sep 26, 2018 8:40am
Quoting The Fool
{quote} SBUX up >1%....any noise about layoffs (cost cutting) usually means stocks will rally near term anyway....maybe you get a better overbought entry later
Still looks good for a trade. Futures were up this morning, so I wouldn't have bought it at the open (as previously mentioned) since it is a PUT. Actually, I wouldn't get in a short term trade today with the meeting today, anyway (at least not before the meeting, maybe right at the close?). I chose this under those parameters just to see what other method there might be to trade this...
  • #15,909
  • Sep 26, 2018 9:01am Sep 26, 2018 9:01am
Quoting simnz
{quote} Do you have any such specific mechanics or metrics to share based on your own experience so far?
I am a very visual trader. The things I take into account before I get into a trade is if my charts tell me it is extremely overbought/oversold and ready to move, there is enough movement between strike prices to be profitable, futures before the open pointing in the direction I am going or flat, no major news or earnings coming out, and the bid/ask spread is not too wide. To get out of a trade, I have a predetermined profit based on the chart. If it is running well, I will let it go or maybe get out with half and let the other half go for a while. I almost always leave some money on the table, because I've seen some really good traders get burnt trying to be precise (and greedy).

I don't really have many rigid IF/THEN-type rules, especially mathematical rules. I've never thought you can use formulas and spreadsheets to condense trading into something so concise that it can be done with little actual knowledge of the markets. At least for me, anyway.
  • #15,910
  • Sep 26, 2018 10:39am Sep 26, 2018 10:39am
Quoting moneymaker2
I chose this under those parameters just to see what other method there might be to trade this...
right....we will do that on several of your ideas, I work for a living & just have a little free time boo hoo, but I will get to it. Any other names you are looking at?

I normally do a handful to maybe a dozen stock name trades but always around earnings. Right now, about a month out from the meat of earnings season is when I start trying to set up calendar trades...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #15,911
  • Sep 26, 2018 10:41am Sep 26, 2018 10:41am
Quoting moneymaker2
I am a very visual trader. The things I take into account before I get into a trade is if my charts tell me it is extremely overbought/oversold and ready to move,
just like anything else in trading, you have to know your quarry, watch it for some time (years) - many name stocks really only move around earnins releases and other (unscheduled) news.

SBUX has basically been in a ~$10 range for the last 4 years....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #15,912
  • Sep 26, 2018 12:19pm Sep 26, 2018 12:19pm
FOMC non-event
"If The Fool persists in his Folly he will become wise." - William Blake
  • #15,913
  • Sep 26, 2018 2:02pm Sep 26, 2018 2:02pm
Quoting The Fool
{quote}right....we will do that on several of your ideas, I work for a living & just have a little free time boo hoo, but I will get to it. Any other names you are looking at? I normally do a handful to maybe a dozen stock name trades but always around earnings. Right now, about a month out from the meat of earnings season is when I start trying to set up calendar trades...
Don't waste any of your time doing research on my stuff, I was more curious than anything. While I would appreciate any pointers on other methods, spend your time making $$ for you and yours so you can retire asap!

I'll just make my predictions as they come, put them on here and if you get to look at them, great, and if not, that's great, too. I certainly don't want to take time away from the family or your own trading!
  • #15,914
  • Sep 26, 2018 2:14pm Sep 26, 2018 2:14pm
Quoting The Fool
{quote}just like anything else in trading, you have to know your quarry, watch it for some time (years)
See, that's where our methods differ. You are obviously very good at what you do with the different legs and all the technical aspects and data inputs that go along with it. I have literally purchased PUTS/CALLS on stocks of companies that I had no idea what they actually did, and didn't care, because I was trading the option of the stock off the chart....that's as close as I got to the company. No earnings, no news, let's go!


Quoting The Fool
{quote}SBUX has basically been in a ~$10 range for the last 4 years....
That's why I like trading lots of contracts, because an option going in the money may jump up $1 easily, and that's ~$10K profit. Starbucks may stay in a $10 range, but when it drops $1.50 in the money , I make $$13K-$15K, depending on how fast it moves in there.
  • #15,915
  • Sep 26, 2018 8:30pm Sep 26, 2018 8:30pm
Quoting The Fool
trying to fill this EWZ diagonal {image}
wanted the EWZ diag above for 8c, filled for 10c....opps like these don't come along that often.... will be watching front iv and shopping for more
"If The Fool persists in his Folly he will become wise." - William Blake
  • #15,916
  • Sep 26, 2018 9:08pm Sep 26, 2018 9:08pm
Two more that should make a little money:

SAP Oct19 125 PUT @ $2.20 or better

WBA Oct5 73.5 PUT @ $1.15 or better (This one has already made money but it should be ready to milk it again for some more)

SBUX Oct5 57 PUT still looking like it will do it's thing....
  • #15,917
  • Sep 27, 2018 7:11am Sep 27, 2018 7:11am
Wanted to get your opinion on the following calendar spread. BAC Nov 2 sell 30 call and Nov 16 buy 30 call. Cost me 17 cents. Earnings on Oct 15th. Thinking they beat estimate and I can collect nicely on the Nov 16 call. Opinion?
  • #15,918
  • Sep 27, 2018 8:17am Sep 27, 2018 8:17am
Quoting The Fool
{quote}wanted the EWZ diag above for 8c, filled for 10c....opps like these don't come along that often.... will be watching front iv and shopping for more
FILLED Nov/Dec $42/43 diag for 4c
"If The Fool persists in his Folly he will become wise." - William Blake
  • #15,919
  • Edited 12:10pm Sep 27, 2018 11:14am | Edited 12:10pm
Quoting tommyhawk
Wanted to get your opinion on the following calendar spread. BAC Nov 2 sell 30 call and Nov 16 buy 30 call. Cost me 17 cents. Earnings on Oct 15th. Thinking they beat estimate and I can collect nicely on the Nov 16 call. Opinion?
with BAC trading right around $30 NOW, I don't understand the rationale of this trade. Will comment more later.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #15,920
  • Sep 27, 2018 2:33pm Sep 27, 2018 2:33pm
TSLA down >10% ah on more Musk tweet drama, not sure how likely it could be, but if Musk could be removed, the stock would go back to $350+ in a couple weeks....
"If The Fool persists in his Folly he will become wise." - William Blake
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