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Let's Trade Options

  • #19,301
  • Feb 9, 2024 9:44am Feb 9, 2024 9:44am
Out of the following:

CHTR Feb16 300 CALL at $2.90 up from $1.20

Added to the following:

ETN Feb16 270 PUT at $0.90, bringing average down to $1.23
  • #19,302
  • Feb 9, 2024 10:57am Feb 9, 2024 10:57am
Quoting moneymaker2
Out of the following: CHTR Feb16 300 CALL at $2.90 up from $1.20
Nice. You could just about throw darts at the index and buy calls of random names and make money in this one-way market.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #19,303
  • Feb 9, 2024 10:38pm Feb 9, 2024 10:38pm
Quoting The Fool
{quote}Nice. You could just about throw darts at the index and buy calls of random names and make money in this one-way market.
Maybe, but that's what separates successful traders from those that rely on chance; I can make money no matter what the market is doing. You just need some
knowledge in trading Puts/Calls, the wisdom to know what trading "rules" should be ignored, a technical strategy that actually works and the total confidence in your strategy to trade 10+ contracts. Sure, you'll lose some trades now and then, but overall, you'll make a butt-load of money!!
  • #19,304
  • Feb 10, 2024 10:29am Feb 10, 2024 10:29am
Quoting moneymaker2
{quote} Maybe, but that's what separates successful traders from those that rely on chance; I can make money no matter what the market is doing. You just need some knowledge in trading Puts/Calls, the wisdom to know what trading "rules" should be ignored, a technical strategy that actually works and the total confidence in your strategy to trade 10+ contracts. Sure, you'll lose some trades now and then, but overall, you'll make a butt-load of money!!
I didn't mean to imply what you do takes no skill - more a commentary on the relentless bull market we are in.

That said, it'd be cool to see your rationale behind some of your trades sometimes - what you are seeing on the charts or otherwise that triggers your entries/exits.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #19,305
  • Feb 10, 2024 2:38pm Feb 10, 2024 2:38pm
No worries, TF, I didn't take it that way at all.

Like I said, 1) I trade EXTREMELY overbought/oversold stocks (not just normal overbought or oversold), 2) I check to see when they announce their earnings and don't trade if it is within a week of that, 3) check the news to see if anything is driving the stock movement, and then 4) watch the pre-markets to see what direction it is moving and normally trade in the same direction (buy Calls if the market is going up, buy Puts if going down, and if the market is moving in the opposite direction of my pick, I hold off so I can get the option at a cheaper price).
  • #19,306
  • Feb 10, 2024 2:53pm Feb 10, 2024 2:53pm
As I've mentioned before, I have a few indicators that I use that I modify somewhat that I really can't give out to people. Options trading on Puts/Calls are not like currency trading, because there is a finite amount of options available at a given strike price. I used to trade with a group of people and we used the same indicators and we would see a trade and all of us would try to, say but a specific Call. Well, that meant with more people buying the Calls, the price would move, and the last one in would wind up paying more than the first one in, sometimes by up to $0.30-$0.40. Doesn't sound like a lot, but if you are buying 50 contracts, that extra $0.40 costs you $2000 more (or as I like to look at it, reduces your profit by $2K), so I don't give out my "indicating" indicators any more.

I will, however, walk through my process on a few of the stocks I'll be looking at next week:

DIS Put
GILD Call
IR Put
MPWR Put

Now each of these are flagged for more vetting based solely on their extreme overbought/oversold conditions. Once you have found those, the rest is pretty easy.
  • #19,307
  • Edited 4:00pm Feb 10, 2024 3:21pm | Edited 4:00pm
The first one is DIS Put:

- Check for earnings report date: Just happened last week so next one is 5-8-24. So, looks good on that end.
- Check news: Nothing but earnings news, beating estimates, movers and shakers, blah, blah. So, looks good on that end.
- Stock closed at $108.39, and moved down a few cents after hours. So, lets look at options. At the close yesterday, the Feb23 108 Put was Bid $1.60/Ask $1.71. That's doable. As the chart shows, the target would be the 5-period EMA, which would give a good $1.25-$1.75 profit on the option. Since the Greeks all recalculate over the weekend, the Delta that is now ~0.46 will probably drop some, depending on any pre-market movement of the stock. So, price looks good on that end.
- Next step is to wait until pre-market and see what the indexes are going to do. If the DJIA or S&P looks like it is going to gap, naturally it is probably no trade, as the stock will likely follow.
- If there is no movement of the stock pre-market or little movement of the indexes, I will put in a Bid that splits the current Bid/Ask price. Remember, Bids/Asks often get hit even if they are not showing up in the Level II depth, so if you are trying to buy or sell, put it out there. It costs nothing and you may get the price you want or better.

So, this is a potential play for Monday.
Attached Image (click to enlarge)
Click to Enlarge Name: DIS Put.png Size: 42 KB
  • #19,308
  • Feb 10, 2024 3:27pm Feb 10, 2024 3:27pm
The Next one is IR Put:

-Check for earnings report date: 2-15-24. Not good, as that only gives the option ~3 days to do it's thing and earnings could make it go either way.

So, this is no longer a viable play for Monday.
  • #19,309
  • Feb 10, 2024 3:59pm Feb 10, 2024 3:59pm
The next one is GILD Call:

- Check for earnings report date: next one is 4-25-24. So, looks good on that end.
- Check other news: Analyst downgraded to HOLD. But wait, Another upgraded to BUY. Don't pay too much attention to analyst's predictions...if they were so smart, they would be making money trading rather than working as an analyst. So, looks good on that end.
- Stock closed at $75.67. So, lets look at options. At the close yesterday, the Feb23 75 Call was Bid $0.47/Ask $0.59. That's very doable.
- Next step is to wait until pre-market and see what the indexes are going to do. If the DJIA or S&P looks like it is going to gap, naturally it is probably no trade, as the stock will likely follow.
- If there is no movement of the stock pre-market or little movement of the indexes, I will put in a Bid that splits the current Bid/Ask price. Remember, Bids/Asks often get hit even if they are not showing up in the Level II depth, so if you are trying to buy or sell, put it out there. It costs nothing and you may get the price you want or better.
- With an options that is cheap like this, for around $5K you can get 100 contracts. Let's say the stock moves to the 10EMA (~76.5), your profit could easily be $20K.

This is my favorite viable play for Monday.
Attached Image (click to enlarge)
Click to Enlarge Name: GILD Call.png Size: 48 KB
  • #19,310
  • Feb 10, 2024 4:24pm Feb 10, 2024 4:24pm
The next one is MPWR Put:

- Check earnings news: Just happened so next is 5-2-24. Looks good on that end.
- Check other news: Just beating estimates, blah, blah. So, looks good on that end.
- Option closed at $752. So let's look at options. At the close yesterday, the Feb16 740 Put had a Bid of $10.9/Ask of $12.00. WAYYYYY too expensive for me! Even the 720 Put was $4.90/$6.00. I don't mind putting several grand on a trade, just not on one contract. I know it sorta works out the same, but I just can't bring myself to do it. If you can get past that, it's a pretty decent trade based on what happens pre-market.

So, for me, not a viable play for Monday.
Attached Image (click to enlarge)
Click to Enlarge Name: MPWR Put.png Size: 42 KB
  • #19,311
  • Feb 10, 2024 7:10pm Feb 10, 2024 7:10pm
Quoting moneymaker2
Well, that meant with more people buying the Calls, the price would move, and the last one in would wind up paying more than the first one in, sometimes by up to $0.30-$0.40. Doesn't sound like a lot, but ....
thanks for posts above, money, good stuff. The part I quoted leads me to believe there could be some coordinated ways to trade those relatively illiquid options. Something like SPY or QQQ just too big to move like that....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #19,312
  • Feb 11, 2024 6:34pm Feb 11, 2024 6:34pm
Quoting moneymaker2
The next one is GILD Call: - Check for earnings report date: next one is 4-25-24. So, looks good on that end. - Check other news: Analyst downgraded to HOLD. But wait, Another upgraded to BUY. Don't pay too much attention to analyst's predictions...if they were so smart, they would be making money trading rather than working as an analyst. So, looks good on that end. - Stock closed at $75.67. So, lets look at options. At the close yesterday, the Feb23 75 Call was Bid $0.47/Ask $0.59. That's very doable. - Next step is to wait until pre-market and...
There are some typo on this.
If the Feb23 75 Call was Bid $0.47/Ask $0.59 then during the two weeks, the price reaches 10EMA (~76.5) then the profit will be roughly $10K, making the R:R is 1:2
  • #19,313
  • Feb 11, 2024 10:50pm Feb 11, 2024 10:50pm
Quoting ngson99
{quote} There are some typo on this. If the Feb23 75 Call was Bid $0.47/Ask $0.59 then during the two weeks, the price reaches 10EMA (~76.5) then the profit will be roughly $10K, making the R:R is 1:2
Yep, you are correct, there was a typo on this, which was the closing price. The stock actually closed at $73.67, not $75.67, and I appreciate you bringing it to my attention. In the future I will strive to do a better proofread before I actually post so as to minimize any confusion.

However, since the Feb23 75 Call was still Bid $0.47/Ask $0.59, and for around $5K you can still get 100 contracts, if the stock moves to the 10EMA (~76.5) from the actual closing price of $73.67, your profit could still easily be $20K.

So the R:R is actually ~ 1:4. But honestly, I never even look at the R:R any more. Because I have such a high confidence level in my system/strategy, I have no issue trading $2000 to make $1000, or $1200 to make $400, for that matter. I don't trade for bragging rights or to be able to say my minimum R:R is such-and-such or for accolades or acknowledgment, I trade to make as much money as possible in as short of time as possible. And I found years ago (decades, actually) that focusing on R:R was actually a hinderance to that. At least for me, anyway.

Yes, there was a typo on the closing price, but not on the thought process of the strategy, which is what I was attempting to convey.
  • #19,314
  • Feb 11, 2024 11:14pm Feb 11, 2024 11:14pm
Potential plays I will be looking at in the morning:

RL Mar15 165 PUT

TSM Feb23 129 PUT

WYNN Feb23 104 PUT

DIS Feb23 108 PUT

GILD Feb23 75 CALL

Earnings are all far away, not too much in the news area and right now they are all pretty affordable. Pre-market for the stocks and indexes will determine if these are to be traded tomorrow or wait to get a better price. And a gap down of the DJ or S&P will negate most, if not all, of the Puts. But sometimes, they don't react quickly, so if you want them, put in your Bid and it may just get hit!
  • #19,315
  • Feb 12, 2024 9:33am Feb 12, 2024 9:33am
Busy morning today. I need to add another screen to my computer, I think....

Out of the following:

BERY Feb16 57.5 CALL at $2.20 up from $0.30 (this was a big ol' chunk of coin)

SKX Feb16 60 CALL at $0.425 up from $0.32

In the following:

WYNN Feb23 105 PUT at $1.95

DIS Feb23 110 PUT at $1.60

Have a couple of Hail Mary Bids out on a few more but I'm not holding my breath on them today. But fingers crossed....
  • #19,316
  • Feb 12, 2024 9:35am Feb 12, 2024 9:35am
Still in the following:

ETN Feb16 270 PUT at $1.23 average

LVS Feb23 54 PUT at $1.11
  • #19,317
  • Feb 12, 2024 11:48am Feb 12, 2024 11:48am
In the following:

TSM Feb23 130 PUT at $2.16
  • #19,318
  • Feb 12, 2024 1:37pm Feb 12, 2024 1:37pm
In the following:

RL Mar15 170 PUT at $2.10

$2.00 was one of the Hail Mary Bids I had out and it was the only one that split the Bid (1.90) and Ask (2.10) and was never even looked at, so I folded and just got in at the Ask price. A little more than I wanted to pay, but I'll still make money with it.
  • #19,319
  • Feb 12, 2024 1:51pm Feb 12, 2024 1:51pm
Quoting moneymaker2
Out of the following: CHTR Feb16 300 CALL at $2.90 up from $1.20 ......
This is what I mean about finding a good exit and get out and unless it is doing something that makes it a good trade again, just don't pay it any more attention. I got out at $2.90 and was happy with it, but today it traded at $6.00. Would be great to ride it to the highs, but you will become mentally exhausted trying to do that. I recommend never look at what "could" have been, because it makes you more edgy when closing a trade....should I or not-kinda thing. Just make your money and move to the next. Money is left on the table all the time by profitable traders.
  • #19,320
  • Edited 3:31pm Feb 12, 2024 2:13pm | Edited 3:31pm
Out of the following:

ETN Feb16 270 PUT at $1.55 up from $1.23 average

Not a lot, but it is hitting the 5EMA and the chart doesn't look as strong with the big up day Friday, so I'm out.

Again, Bid was 1.40, Ask was 1.60, and I put in an Ask of 1.55 and it was hit immediately, and the Level II depth never changed. They just wanted that Ask price out of the way, I guess. You spend enough time watching this stuff, you see all kinds of little quirks. That's why I am a firm believer of putting a price out there, because it may not show up on the board and will still get hit.
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