Let's Trade Options

Out of the following:

AAPL Mar12 123 CALL @ $4.50 up from $3.50

Actually went in to bump it up before the close but it had already been hit....but that was a good thing, because those last 10 minutes today sank everything.

That was really good, actually, as I was able to pick up the following right at the close:

WMT Mar12 133 CALL @ $1.00, so that puts the average at $1.57

AAPL Mar12 123 CALL @ $3.00

Sometimes watching the DIA 1-minute chart comes in handy!!

Well, my charts indicate an extremely oversold condition, ready to move in the next couple of days. Sometimes when the charts indicate an extreme overbought or oversold condition, but the DJI is moving opposite, it adds another day or two to the movement, but usually allows for picking up more contracts at a cheaper price, like today.

I was not expecting the pop and drop right at the end , especially on AAPL, and that's why the sell order was hit, which actually turned out to be a good thing. Luckily I took a break from cutting up remnants of the ice storm, or I would not have been able to get more WMT or back into AAPL.

I am a visual trader. If the charts indicate extreme overbought or oversold conditions with no major news and no earnings, those are the ones I see if options are doable. I've found the charts are seldom wrong when everything is taken into consideration.

I can see AAPL headed to the 10EMA (~126.90) and WMT headed to the 10EMA (~136.50) or even the mid-BB (~140) over the next few days. But since I buy straight CALLs or PUTs just out of the money, the price never has to actually make it to the strike price to be a profitable trade.

Story time

I sail and last night on our boat (40 footer) I was keeping time for the start because I was not on recently and they stuff up the starts ... being late in a race or trend is a lousy place to be.

So keeping score (tactician) and working with the steerer I was counting down the seconds for our start (40 boats in the fleet) and my job was to get the boat to the line on zero time our start time. I anticipated just a fraction to early and called go 4 seconds early and we went and were over line OCS and got dinged by the starter. Turn around and come back and do it again. Lost 2 minutes in the process.

Absolute time would have have had us on the podium but anticipation and pulling the gun early was a worse sin. I got it big time from the crew. My bad.

But waiting for confirmation of time and direction and momentum would have been so much better ..

We were in no mans land when i said go and the market (race start) was not defined properly.

Its an art to starting properly and calling a bottom correctly. You need subtle confirmation to go in boots and all and sometimes waiting just a few seconds or price bar confirmation is the best place to be.

WMT is just that

End of story

SE

Hopefully you made up the two minutes you were behind. Might be easy for your buddies to all tell the same story of how you "accidently fell overboard"....

You are right, there probably is an art form to trading, but I don't look at it like that. I just look at it as a means to an end ...I mean to end up with a lot of money!! Seriously though, I no longer worry about getting in at the very low or getting out at the very high, I just look to make money off each trade, and I have a very good track record of doing just that. If the stock moves against me and I think it is still a good trade, I just add to my position. If the move changes the charting landscape, I just get out with a loss and move on. But because I only trade extremely overbought and oversold conditions, that rarely happens.

Did the market move against my prediction the last two days? Yep. Has it ever done that before? Yep. Do I still usually wind up making money on those options? Yep. I don't fret because I know a stock has to breathe; it seldom goes straight up or down after the start of a trade.

Story Time

I used to obsess over what I need to do to become so precise as to call the absolute bottom or the top, mainly just so I can say that I was so precise I could call the absolute bottom or top. That was my ego talking. But then I realized I didn't have to be that precise to make money. That was my brain talking.

My epiphany was when I purchased a top of the line laptop computer many, many years ago (it was ~$2500 at the time, now you can get the same functionality-wise computer for about $300). Anyway, I looked and look through all the computer magazines and found the top of the line and even haggled them down $200 before I bought it....A week later I was looking through a new magazine and found a better one in some aspects for less....and a few days later found one a little better than that one for even less. I spent all that time and effort looking for the best one and in the end it didn't really matter. So it dawned on me that I don't need to spend so much time and effort into the exact prediction of the bottom or top, just in determining that it is going to occur very shortly. Sure, I might make a little more on each trade if I was ultra precise, but just the time and stress to do that wouldn't be worth it, and I could put that time and energy into finding other trades.

Could my trading be more of a cerebral art form? I'm sure. But it is meeting my goal of making money. Good money. I made a killing on BNGO and NNDM Puts earlier this month (before I got back on here) while a buddy of mine who actually owned the stock called and asked my opinion. I told him it was going to drop but he wouldn't sell because he was "waiting to be sure" ....but I got in the trades. Why? Because I have confidence in my method, as unorthodox as it is. And since I have confidence, I don't hesitate to buy a decent amount of options, which makes even the smaller moves good money.

Will I make money on WMT? Yep. Will I make money on AAPL? Yep. Will I make money on AAL? Probably (this is off the Weekly chart which I normally don't do). So, if you add the profits from the six closed trades on this forum over the last two weeks plus the profits from the NNDM and BNGO trades that happened before I got back on here, would I be able to buy you a 40ft sailboat? Nope. But I could sure buy you a new truck to pull it!

End of story

MM2

P.S. Just to be clear, the purchase of the new truck was an example of profits made and does not, in any way, constitute an agreement or offer to do so.

Good story

FYI our boat in 7000 KG +/- and very difficult to tow ... 2.8 M draft and 60 foot height of mast kevlar and carbon fibre

I get it about precision and where you are coming from with the trade.

WMT i believe has a few days to bottom out and then i would look for the confirmation of the massive stopping action my computers see

When the move happens i do not know when but the DD on the premium paid would be too much for my stomach hence that style of trade is not for me

It should not stop a bold average down type of trader in the interim as a simple but powerful BB will show its extended position, where my systems come in is in the intensity and timing of the turn and up move .. all volume led and highlighted

(i never use the over bought and oversold terms .. oxymoron)

I will watch with extreme interest as the move unfolds

Se

cut loss -$0.15 net

Monday's 1week SPX call diagonal

I have been leaving off the double diag put side, because the skew makes you go wider to get a small debit for the put diagonal, but $3 is usually enough. If you go$3 on the puts, do the same with the calls to balance the bp hit. You can put on the double diag for a credit and the maxP can still be very good especially if you get a down move in SPX. Diagonals and calendars benefit from rising iv....

Out of the following:

AAPL Mar12 123 CALL @ $5.05 up from $3.00

After the 10EMA repainted this morning (~126.60), I got out when price butted up against it. Probably more upside, but that was my target, so take the money and move on.

As far as WMT, price seems to be stuck even before hitting the 5EMA, so I think that puts the mid-BB out of the equation with the size of the move on the DJIA today. Should still make some good spending money on it, though.

Added to the following:

AAL Mar19 21 PUT @ $0.80, bringing average down to $0.97

This should make decent money.....

...Typically I wait til after NY lunch time to put on weekly trades on Monday. Did SPX 4010/4025 Mar5/8 for 15c debit. Can't get low cost debit on similar width puts....

....

to capture anything downside I sometimes put on flys, usually 2-3 weeks out, and 50 pts wide min., I won't spend much more than 50c. These will have a wide profit range up to expiry, at least 200 pts, rising iv's do not help the maxP but extend the profit range somewhat

Added to the following with a Hail Mary bid from earlier today:

WMT Mar12 133 CALL @ $0.45, bringing the average down to $0.71

That gives me a good price and a buttload of shares, so that should be good for some money. Now, we wait.......

Glad its yours and not mine

It goes against time and everything I know about the evils of averaging down

It will be Lazarus if the trade makes money

We wait

Lazarus was dead, whereas this trade is simply resting! It will make money.....you'll see.

As far as averaging down, if the charts still indicate a good trade, I have no issue adding more, provided I can get a good price. Today's add makes it much easier to get back into profit at $0.71 than at $1.57, plus the extras contracts allow for decent money from very small movements in the option price.

My trading method may not be an art form, but it is profitable and I have a lot of confidence in what my charts say (assuming no news or earnings). as they are seldom wrong. And right now, they say Walmart is going to go up very soon. And there is plenty of time left for it to happen.

Like you said, we wait...

SE,

Out of curiosity, how many trades does your system indicate on a monthly average? Do you take all the ones your system recommends?