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Let's Trade Options

  • #2,101
  • Dec 7, 2013 1:58pm Dec 7, 2013 1:58pm
Quoting Boy Wonder
{quote} Hey there TF. You raise a number of points, the first of which I don't quite understand. "there's a point at which the margin benefit of the original "anchor" long call or put has diminished and the run is over" Sorry, I'm not sure what you mean by that. The daytrader limits suck big time. I thought it was 5 day trades per week - that's what IB appears to do - but 3 rt/month? Seriously? That means you can only open and close 3 separate positions PER MONTH? I just checked (only very quickly) and http://en.wikipedia.org/wiki/Pattern_day_trader...
Hey BW, I will try to respond re: what I meant by the above later, diving into the modeling & will be able to say more intelligent things later on.

Daytrader limit as best as I know requires no more than 3 rt per 5 consecutive trading days, or m/l 3 r/t per week. Sorry if I said 'per month' somewhere above. I will try to find more definitive references to that somewhere & will post when I do - I'd assume that comes out of some US regs somewhere. To be sure, though, that's an onerous limitation but also one I have been living with.

Yup I have been looking at the tastytrade vids from time to time. Cheers BW & I hope we will have chances to muddle thru together with some real trades here in coming days.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,102
  • Dec 7, 2013 2:12pm Dec 7, 2013 2:12pm
Quoting Gizmosis350k
{quote} Lol... Well, gee. I'm just getting the general idea of what you guys do on options trading. Can anyone tell me WHY the heck the internet has to make the confounded subject so complicated? First things first - why is it that the only people that make any money on Options are the ones that use extremely complicated mathematical equations? The bloody pros say that if I think that past performance is an indicator of future activity I can just pack up from now < < @TheFool You use thinkorswim correct? I am deeply interested in this now
Hi Gizmo,

I have not been using ToS, but I have looked it over & am looking forward to using it. I have a Roth IRA at TD Ameritrade (where ToS lives now) and I have been waiting for it to get up to my minimum before I start trading it which actually will be in January.

Options trading has a learning curve that you must traverse but it's not insurmountable. Anything can be made more complicated than it needs to be. I recommend you just dive in and start paper trading options, follow along here & elsewhere and watch some videos online, use the resources on the CBOE site, read some books, etc - but mainly pick some instruments you think you understand and start trading options on them. It will take some time but you'll get it if you stay with it.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,103
  • Dec 7, 2013 2:31pm Dec 7, 2013 2:31pm
Quoting The Fool
{quote} Hi Gizmo, I have not been using ToS, but I have looked it over & am looking forward to using it. I have a Roth IRA at TD Ameritrade (where ToS lives now) and I have been waiting for it to get up to my minimum before I start trading it which actually will be in January. Options trading has a learning curve that you must traverse but it's not insurmountable. Anything can be made more complicated than it needs to be. I recommend you just dive in and start paper trading options, follow along here & elsewhere and watch some videos online, use...
Thanks so much - I'll be looking at a lot of the materials you've suggested as well as a few extra things here and there - thanks for the encouragement, because if one thing is clear it's that if I don't stay positive I'm shooting down the one chance I have at making this thing work.
uphill battle
  • #2,104
  • Edited 10:11pm Dec 8, 2013 12:04am | Edited 10:11pm
Quoting The Fool
{quote} Daytrader limit as best as I know requires no more than 3 rt per 5 consecutive trading days, or m/l 3 r/t per week. Sorry if I said 'per month' somewhere above. I will try to find more definitive references to that somewhere & will post when I do - I'd assume that comes out of some US regs somewhere.
http://en.wikipedia.org/wiki/Pattern_day_trader (see the docs in the References at the end of the article, some from the SEC, etc)

"A pattern day trader is defined in Exchange Rule 431 (Margin Requirement) as any customer who executes 4 or more round-trip day trades within any 5 successive business days.[2] If, however, the number of day-trades is less than or equal to 6% of the total number of trades that trader has made for that five business day period, the trader will not be considered a pattern day trader and they will not be required to meet the criteria for a pattern day trader.[3].

...so, unless you have $25k min. balance in a margin account, you're limited to 3 r/t in 5 successive trading days. If you want to do 4 or more r/t you have to meet the pattern day-trader requirements.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,105
  • Dec 8, 2013 10:10am Dec 8, 2013 10:10am
Quoting The Fool
{quote} http://en.wikipedia.org/wiki/Pattern_day_trader (see the docs in the References at the end of the article, some from the SEC, etc) "A pattern day trader is defined in Exchange Rule 431 (Margin Requirement) as any customer who executes 4 or more round-trip day trades within any 5 successive business days.[2] If, however, the number of day-trades...
3 r/t in 5 successive trading days is still a pain in the backside, but what can you do? Not a lot, I guess. Still, it might stop you gambling on those last minute lottery tickets
If you're buying LEAPS and selling front months with 30-50 days left on them it shouldn't really be that much of a problem. We could probably all do with more patience. I know I could. And I think most of us (certainly myself) trade more than we should. It's kind of compulsive. The best thing you can do sometimes is just get the hell away from any kind of connected device.
I have no clue what I'm talking about.
  • #2,106
  • Dec 8, 2013 12:48pm Dec 8, 2013 12:48pm
Quoting Boy Wonder
{quote} .... but what can you do? Not a lot, I guess. Still, it might stop you gambling on those last minute lottery tickets If you're buying LEAPS and selling front months with 30-50 days left on them it shouldn't really be that much of a problem. ...
well you just gotta get up above the $25k floor. Not being able to make trades at will is a huge limitation. You can still grow your equity, just takes lots of patience. When you start making lots of trades you can have a chance of negotiating with brokers for reductions, etc...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,107
  • Edited 2:34pm Dec 8, 2013 2:22pm | Edited 2:34pm
http://www.fool.com/investing/genera...es-this-w.aspx

..earnings out the coming week: SWHC, LULU....

LULU can really move...I might have to bet on a replay of the Mar '13 earnings - a drop from $70 to <$65

(Note: I am not related to The Motley Fool)
Attached Image (click to enlarge)
Click to Enlarge Name: 2013-12-08_lulu.png Size: 128 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,108
  • Dec 8, 2013 2:51pm Dec 8, 2013 2:51pm
Quoting The Fool
http://www.fool.com/investing/genera...es-this-w.aspx ..earnings out the coming week: SWHC, LULU.... LULU can really move...I might have to bet on a replay of the Mar '13 earnings - a drop from $70 to <$65 (Note: I am not related to The Motley Fool) {image}
Is it a stock you'd like to own at 65?
I have no clue what I'm talking about.
  • #2,109
  • Dec 8, 2013 6:36pm Dec 8, 2013 6:36pm
Quoting Boy Wonder
{quote} Is it a stock you'd like to own at 65?
no
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,110
  • Dec 8, 2013 7:17pm Dec 8, 2013 7:17pm
Quoting The Fool
{quote} no
I asked because I started reading an options book this weekend ("how to get rich with options" LOL). One strategy it explores is selling naked OTM puts (in your case you could do a bull put spread, with a deep (maybe very deep) ITM long put for beneficial margin offset purposes) on stocks that you'd like to own. So, an idea would be for you to ditch LULU trade in favour of a stock that you'd really like to own (for the long haul) 5-20% cheaper. Granted nothing is cheap but we have no idea if and when anything is going to get substantially cheaper and in the meantime we could be selling puts on stuff we'd like to actually get cheaper.
I'd like to start using this strategy myself. But that requires doing some homework first to find the candidates.
I guess you're bearish LULU, so it's not quite a replacement trade, but perhaps something to mull over.

Laters mate.
I have no clue what I'm talking about.
  • #2,111
  • Dec 8, 2013 10:08pm Dec 8, 2013 10:08pm
Quoting Boy Wonder
{quote} I asked because I started reading an options book this weekend ("how to get rich with options" LOL). One strategy it explores is selling naked OTM puts ....
yup I like the options/stock combos, but I am not accumulating stock anymore and just looking to capitalize on free margin. I used to have a nice block of BAC and I made money writing covered calls on it sometimes, but I sold most of it this year when it hit >200%. If I had money to burn I would probably buy/hold real estate, something I know far more about than the stock market....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,112
  • Dec 9, 2013 12:51am Dec 9, 2013 12:51am
Quoting The Fool
..earnings out the coming week: SWHC, LULU.... LULU can really move...I might have to bet on a replay of the Mar '13 earnings - a drop from $70 to <$65
...Also out: ADBE, COST, TPLM...only COST of any interest
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,113
  • Dec 9, 2013 9:02am Dec 9, 2013 9:02am
Morning traders, new week so scouring through potential option trades and have already executed a option trade on POT/ POTASH, i HAVE LONGED THE $31 Put for 18c/ $18 per contract. charts do look to have a downside risk to pot and we're below the 50 and 200. I'm not going to for a lot on this but a triple of the option price will be nice.
Current price is $31.39

POT Dec 2013 31.000 put (POT131213P00031000)
-OPR
0.18 http://l.yimg.com/a/i/us/fi/03rd/down_r.gif 0.02(10.00%) 14:30

Potash Corp. of Saskatchewan, Inc. (POT)
-NYSE

31.39 http://l.yimg.com/a/i/us/fi/03rd/down_r.gif 0.15(0.48%) 15:01 - Nasdaq Real Time Price
  • #2,114
  • Dec 9, 2013 9:21am Dec 9, 2013 9:21am
Longed SLB $87 puts for 61c or $61 per contract a retracement in oil will help with schlumberger as it provides services to the oil industry. Again not looking for a huge fall just enough to double the option price.

I got in at $87.29 and now price is $87.15

Schlumberger Limited (SLB)
-NYSE
87.15 http://l.yimg.com/a/i/us/fi/03rd/down_r.gif 1.00(1.13%) 3:21PM GMT - Nasdaq Real Time Price


SLB Dec 2013 87.000 put (SLB131213P00087000)
-OPR
0.61 http://l.yimg.com/a/i/us/fi/03rd/up_g.gif 0.11(22.00%) 14:52
  • #2,115
  • Dec 9, 2013 11:10am Dec 9, 2013 11:10am
Quoting Cecil Gee
Morning traders, new week so scouring through potential option trades and have already executed a option trade on POT/ POTASH,
...nothing new here, just managing existing spreads, all looking OK. TSLA short $120 puts expiring 12/13 look safe. Will be watching TSLA long 12/21 $100 puts & will probably sell them for whatever is left beginning of next week. Most everything else with short legs expiring 12/21.

Watching LULU, hope they will run it up pre-earnings, will take a shot at cheap 12/21 puts or a 12/21 long strangle.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,116
  • Edited 5:41pm Dec 9, 2013 5:10pm | Edited 5:41pm
Quoting The Fool
{quote} ...nothing new here, just managing existing spreads, all looking OK. TSLA short $120 puts expiring 12/13 look safe. Will be watching TSLA long 12/21 $100 puts & will probably sell them for whatever is left beginning of next week.
out in the snowy hills all day, come back to find another new S&P high close.

TSLA also up well, lt $142.23, up near 4% on the day. On any kind of further advance tomorrow I will cash out of the spread.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,117
  • Edited 1:25am Dec 10, 2013 12:27am | Edited 1:25am
Quoting The Fool
{quote} TSLA also up well, lt $142.23, up near 4% on the day. On any kind of further advance tomorrow I will cash out of the spread.
I'm expecting this will be the order of the day and I will be shopping for a new spread.

I am looking at trying to catch a rise in gold, and will do that via one of the miner stocks. Looking at buying Mar NUGT $55c and selling Jan $50c, will price these tomorrow. In the same account I will take a similar spread position in DUST.

Or I might look away from the shiny yellow metal. There are other juicy stocks to trade...

in the same vein as the NUGT/DUST pair are the other Direxion and ProShares etf pairs, like SSO/SDS, TLT/TBT, TNA/TZA, FAS/FAZ, etc...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,118
  • Dec 10, 2013 9:24am Dec 10, 2013 9:24am
Quoting The Fool
{quote} TSLA also up well, lt $142.23, up near 4% on the day. On any kind of further advance tomorrow I will cash out of the spread.
Will hold TSLA 12/13 $120 short put leg until expiry, what I'd give up with a premature roll might be worth more than the 12/21 $100 long put leg. With a little luck TSLA will sell off by Mon-Tue and the $100p will pick up a little.

Didn't get in a bullish gold spread, too bad. Watching other movers, looking for YELP above $68...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #2,119
  • Dec 10, 2013 10:07am Dec 10, 2013 10:07am
Starbucks dropped today
  • #2,120
  • Dec 10, 2013 11:11am Dec 10, 2013 11:11am
Opened another trade today on a LONG FCX put , the $34 put for 5c or $5 per contract. Freepoort is struggling to move above its 50 day even with this strong gold move.

current FCX price $34.90

Freeport-McMoRan Copper & Gold Inc. (FCX)
-NYSE
34.90 http://l.yimg.com/a/i/us/fi/03rd/up_g.gif 0.27(0.79%) 17:07 - Nasdaq Real Time Price


FCX Dec 2013 34.000 put (FCX131213P00034000)
-OPR
0.05 http://l.yimg.com/a/i/us/fi/03rd/down_r.gif 0.06(54.55%) 16:46
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