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Et tu NQ: Trading the Nasdaq e-mini


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Et tu NQ: Trading the Nasdaq e-mini

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  #71 (permalink)
 Bermudan Option 
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Don't mind the Moving Averages if that is possible. Working with the bare charts at work makes my ThinkOrSwim set up seem so excessive.


BHI: 10% away from its two year low. Some nice clear defined support that might turn into support. Going to be paying attention to this tomorrow at the open.



If the market heads lower before I can get into a position, instead of chasing, I will wait for a retest of this trendline on the 30m:



COP:
Preferably I'd like a retest of the resistance overhead instead of an instant break lower. That would give me a better percentage chance of riding the move lower. Looking to fade the open if possible tomorrow.

On the daily, it shows that there is room to head lower beyond the 5min timeframe. Might have to buy back month puts on this though because the move might take +1 week based on the previous price action



DVN:
The trendline on the 10 minute timeframe would be an ideal chance to fade a move higher in the morning.

In fact, the higher the stock moves, the better my odds are with massive resistance overhead

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  #72 (permalink)
 Bermudan Option 
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IP is another play I am looking at.


Here is how it looks on the shorter timeframe where I will gauge an entry:







FSLR
Only potential Call I'd buy at the moment. Dont see much long opportunities in the market at the moment




FCX



MRO

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  #73 (permalink)
 Bermudan Option 
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Entered two trades this morning. Looking back a few of the other trades on my watchlist would have been better options. Except for maybe FSLR, I was looking for a move higher but no way I was jumping into that rocket of an open initially. Crazy stock ran 8% in like 30 minutes but oh well. I have been burned too many times chasing a runner.

With the two trades I entered, I faded the open and both of the underlyings moved higher. With IP, I was stopped out on a retest of the high (stock appears to have sold off for the rest of the day) while with BHI, I am still in the play and have a position that is profitable at the moment.







I had NO ideas of when I was proven right/wrong really in the trade. If I did I probably wouldn't have entered IP until it ran up to its high again. Was a little anxious monitoring all these potential positions and it got the best of me this morning. Still, I did not overextend myself in any trades and had half my account in cash. Also, I did not enter FSLR near what looks like the HOD so I am proud of that

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  #74 (permalink)
 Bermudan Option 
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Couldn't resist some FSLR going into the close. I alllllmost bought $800 worth of the April 24 Calls but I snapped out of it and remember how it would feel if the Solar stock gapped lower tomorrow morning. $800 is the my regular position size so I decided to half my position size and take an at-the-money call for the volatile Solar stock


EDIT:
Crap, why is the trend only noticeable when you are in a trade

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  #75 (permalink)
 Bermudan Option 
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Got smoked on Friday. I'll take a screen shot at work Monday but I managed to lose money on a stock that went in my direction and had little/no intrinsic value. Opening volatility with options needs to be added as a factor to watch out for.

Lessons learned:

1) The first 30 minutes of options have larger spreads and inefficiencies. If the underlying is near Support/Resistance going into a close the prev. day, consider exiting the position or taking some risk off of the table. If not, be prepared for a gamble the next morning if the market moves against you. If commission wasn't a big factor and I was trading larger, I would probably hedge my positions during the volatile options open.
2) When the underlying increases in volatility, the options become illiquid and the spread increases. Stops need to be based on the option price as a result with the underlying as an 'indicator' for lack of a better word. If I use the underlying as a stop, then by the time the underlying has broken support/resistance, the option has already become illiquid and I get a s*** fill.
3) Sit down and hone my reiterate my risk per trade and stick to it. I still feel like I am not limiting risk in a manner that is strategic and calculated.

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  #76 (permalink)
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3) Sit down and hone my reiterate my risk per trade and stick to it. I still feel like I am not limiting risk in a manner that is strategic and calculated.

As I said here, I haven't been sticking to my original risk methods here of late. I think that is subconsciously because I felt like my stop is tight and I will get stopped out so it doesn't make sense. My previous method of defining risk was based on stock trading, which is a slower, less volatile instrument. Also, the commissions tended to be lower overall. With options trading, I now see that I need to refine my method a bit.

To get around the increased intraday volatility of option trading, I need to increase the capital between my entry and my stop loss.

I choose my stop losses based on areas where support/resistance has been clearly broken. So for example, if support for a stock XYZ has been the 8.24 - 8.30 range, I might set a stop at 8.36. If I get in XYZ when it is at 8.17, then I can lose 19 cents before I reach my 8.36 stop loss and exit my position.

I choose how much capital to risk based on a percentage of my portfolio: Lets say I had $10,000 to work with on XYZ and I wanted to risk 1.5% of my capital per trade. That means I want to risk $150 per trade because $150 is 1.5% of $10,000. For Stock XYZ, an entry @ 8.17 means that I would purchase 789 shares in the trade (789 shares x 0.19 cents = $149.91 at risk)



In my real-life previous set ups for stock trading, I risked 1.5% of my capital on every trade. So when I had an account with total capital of $3,000, I would risk $45 (aka 1.5% of my capital) in a trade and attempt to make $135. My risk:reward ratio as a result was 1:3. Basically, I would risk $1 in an attempt to gain $3. As a result, I only need to be right 1 out of every four trades, (25%) to break even. (before commissions)

The changes I am making currently is to to increase the % risked but to keep my overall risk:reward ratio the same. Where I used to risk 1.5% of my portfolio per trade, I want to now risk 2.5% of my portfolio. With my current account at roughly $4,000, 2.5% risk would be $100 per trade (including commission). Based on risk:reward ratio, my new target for every option trade is $300 profit. This is because 1:3 = 100:300.

As a side note, I need to take more trades that will be proven right/wrong beyond a shadow of a doubt soon after entry. I have gotten into a few trades where my initial idea of support/resistance broke but the underlying still had the potential to reverse. The less price action it takes to be proven right/wrong, the more I can leverage a position. Do still have to watch out for slipapge though, I'll admit.

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  #77 (permalink)
 Bermudan Option 
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Managing risk ftw. Unsure how i will hold overnight positions, but definitely a step in the right direction. Started the day @ something like $3696


resistance for SPY @ 139.05



(Note: Should say BBBY and not BBY)






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  #78 (permalink)
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After commission, I risked about $124 when I thought I was risking $100. That is over 3% of my $4,000 and I only want to risk 2.5%. Need to work on that for next time.

Still.... Killed this shit for a 50 minute trade lol.

Risked: $124
Rewarded: $527
Risk:Reward ratio = 1:4.25



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  #79 (permalink)
 Bermudan Option 
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SPY is dangling precariously on the edge. Volatile trading day so far. Entered another position:




I have @ $0.11 which if 5 bucks from my entry. 5 x 20 options = $100 at risk
$30 commission per trade = $60 commission.
-----
$160 total at risk = 4% of my portfolio = way too much risk

Gotta remember to add commissions into my caluclations as they become quite high when I trade more options.

Here is the reason for the entry:


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  #80 (permalink)
 Bermudan Option 
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I don't want to overttrade but I jumped in another one. Well... actually I jumped into BBBY again:

This time, the trade will require a bit more time and is a little more speculative with some out-of-the-money puts. I bought some back month options (expires on the 2nd option expiration date from today and not front month options which expire on the very next option expiration date). they are May 65 puts


I only bought four because risk showed I was about 0.20 cents away from resistance when I entered. 20 x 4 = 80. 80 + 30 round trip = $110 risk


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