Let's Trade Options

Well, I would normally just buy the Oct5 57 PUTS. That would be my trade. I was trying to figure a way to have any more money in my pocket when the smoke clears. So, what I figure was the Oct5 57 PUTS are going to do what is expected, so I will make some amount of money on them. The only way to sell any PUTS and make it worthwhile would be to sell PUTS at the next expiration at a different strike price....then either the stock price would be higher than the strike price of $55, meaning I can keep all the money I sold the PUTS for, or I can buy to close the trade anytime before Oct12 that the options are still in profit. So I've got the profits from buying the Oct5 PUTS, and an additional small profit from selling the Oct12 profits.

Am I missing something? I might be as I've never done this type method....

Well no its a bad example if you wre dead set on seeing sbux move in the coming week. Come Tuesday or Wed you could do a Oct5/12 calendar on something and be in the trade for 3 days or more....

That's just it, I AM dead set on seeing the stocks I chose move within a few days. I have a very high confidence level, and thus a very high expectation what I expect to happen will happen.

But I'm getting kinda confused.....is the above example a bad example because I am dead set on seeing SBUX move, meaning I shouldn't do something like that because I don't understand something?

Let me ask it this way so I can understand a little better: If you were confident SBUX would go down in the next 3 days, how would you trade it?

Well I dont usually get myself into risky covictions. I very rarely buy options solo unless I am legging into a spread. Sometimes I do long strangles just ahead of earnings or another scheduled event that might move the stock. Strangles a bidirectional trade. I am almost always covering my ass on both ends.

Its true that by limiting my risk I also accept some limits on my profits. My trades are typically either 1x losers or 2-3x winners. Pretty frequently I post winners >5x and occasionally they run up to >20x. My drawdowns are low, poor performance usually m/l sideways equity...

Well, I believe they do, but let's find out. I will post my picks here, like I've been doing, up through the end of December. That's basically four months of picks (counting September), and I would think that would be enough time for comparison, and anyone who choses to will be able to verify the prices and moves for themselves. At the end of each month I'll tally up what the purchase of 10 contracts (basically $1K X option price) on each of the picks would have resulted in as far as dollars made/lost. I'm not going to involve commissions/fees, that would just muddy the water needlessly, as everyone knows commissions and fees are a part of trading and will be negligible overall.

So for this month (September) I have made 12 picks with 2 of those still active:

HD----------$2450 profit
KMT---------$200 profit
WBS--------$800 profit
FDX---------$6300 profit
JAZZ--------$2200 profit
OSK---------$1300 profit
WBA--------$700 profit
ITW---------$1300 profit
SWK--------$1200 profit
SAP---------$1700 profit
WBA------- open trade
SBUX------ open trade

Total profit/loss----$18150 profit

Your profit in relation to your risk...thats my measure of trading success. But hey, thats just me, although its also anybody else if you are trading professionally. Anyway, as Ive said, its hard to argue with consistent profits, no matter the methods..

Yeah, I'm just wired different than most. For me, reducing risk was developing a way to become very consistent at predicting short, directional reversals in high priced stocks that had good option movement, not so much the amount of money put on the trade. That basically carried over to currency trading, too. I never got into a trade and then "hoped" it did something.....if I wasn't confident in the trade before I got into it, I just didn't get into it. Although it works for others, I didn't see the point for me to only use specific R:R ratios or only trade a certain %; if I was confident it was going to do something, I traded as though I was confident it was going to do something. Plus I like the short term trading style in options and currency. Small, high confidence trades work well for me.

And like they say, if it ain't broke, don't fix it.....

Unless you could make it better? Make more % return with less risk? But I'll leave that up to you.

Up 13% pre... let the iv drain off and maybe some profit taking go...

The only way I can see to make it better with the trades I like to take would be to sell PUTS or CALLS in the opposite direction of my trades. Otherwise, I don't see a way to make more % return with less risk trading the stock moves that I do now, except maybe the example I gave above.

I really can't justify throwing out my trading style where I can predict what's very likely going to happen over the next few days to start trading hit or miss potential moves in the future based on something I really can't predict. For me, risk is relative....my risk is reduced by determining which stocks are about to move, not the money put on each trade. That's why I like the short term trades (meaning within the next few days) rather than a trade a couple of months out where it is very difficult to predict what will happen in that time frame.

Are the strangles and straddles and butterflies and spreads more accurate over the long run than a coin toss? Are they high confidence trades worthy of putting 50-100 contracts into each trade? Are the trades done very often or just 1-2 per month? I'm all about making the money, and if they are actually better than what I trade in terms of making more money, I'll sure learn it!!

Update on the two open trades:

WBA Oct5 73.5 PUT up to $1.20 from $1.10

SBUX Oct5 67 PUT up to $1.10 from $0.55

Both probably have more downside the next day or two, but both hit support early and faltered, so a good time to get out (WBA hit 10EMA and SBUX hit mid-BB). This is why I want to be at the computer when trading and not just set a sell order....lots to be gained from visualization.

SEPTEMBER PICKS
HD----------$2450 profit
KMT---------$200 profit
WBS--------$800 profit
FDX---------$6300 profit
JAZZ--------$2200 profit
OSK---------$1300 profit
WBA--------$700 profit
ITW---------$1300 profit
SWK--------$1200 profit
SAP---------$1700 profit
WBA--------$100 profit
SBUX-------$550 profit
Total profit/loss----$18800 profit

good calls money

Thanks, TF

I am playing EWZ north & south with lots of time. General elections this weekend with probable runoff for top dog 10/28.

https://www.bloomberg.com/news/artic...rnd=markets-vp

you know, it's a bull market.....



your god damn right it is old man.....

should just bought an S&P my first day on the job.....and just kept adding every time I had the margin to do so.....

looking for a break in Utilities, no one trades those anymore anyway....

Citi looks weak, might be ripe for a tumble...

later Fool, have a good month man....

hey man, good to see you. I only really load up for the elections anymore....Q4 lookin like it could be epic...