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Using Options for Swing Trading


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Using Options for Swing Trading

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  #91 (permalink)
Market Wizard
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Jumped into some Nov $2 DRYS calls



Edit: Jumped out of the trade. I want things to be closer to that trendline before I put some money on the line w/ DRYS. The stock is too volatile for a tight stop unless I have strong support/trendline nearby

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  #92 (permalink)
Market Wizard
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Trying my hand with some BRCD calls again:


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  #93 (permalink)
Market Wizard
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Ok.... Gold is getting pretty close to my short option. Hopefully it doesn't gap lower tomorrow... If it does, then I am going to start losing money I believe. Hoping for a gap higher and then a drift lower/sideways to give me some breathing and more importantly so I can pocket the value left on the short options.







Also, I grabbed some longer term options (Feb 2014) on National Bank of Greece in an alternative trading account. The spread widened dramatically as soon as I entered. Damn the man. Gonna look to dump my options if the stock falls below $4.80


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  #94 (permalink)
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2 minutes after the market closed, I realized I played my Gold calendar spread wrong. Gold sold off going into the close, and it is extremely gap-happy, so there is a good chance the market opens even lower, around $122-123. This extended selling will not be good for my calendar spread.

Prior to the market closing, I sat at my work desk trying to will GLD to put in a bottom... but if I had remained objective and in the moment, I would have bought back my short calls for a loss and rolled down to the Oct $120s that expires next week Friday.

I realized this lesson the bus ride home while stealing a glance at Steenbarger's The Daily Trading Coach. The chapter/lesson about fear. He wrote to ask myself about the trade to determine whether there is logic behind my anxiety or if it is all in my mind. The questions I asked myself where:

Questions
- Is volume confirming my theory
- Is price action confirming my theory
- Does the reward outweigh the risk

Answers
- Volume is ambiguous but moreso to the downside
- Price action is bearish for sure,
- With the position I have, I stop gaining profit and start eating into profits below $124.

As it stands right now, the overnight risk (short puts ending up ITM thanks to a gap lower) outweighs the reward (short puts expire worthless thanks to sideways action/gap higher). This was subconsciously eating me up, but the Steenbarger lesson (#18 for those interested) talked about not getting stressed over one occurence if you know it won't affect you negatively in the long run and you can learn from it. So I have another lesson learned and I will be managing risk more effectively in the future. Tonight I will visualize what can go wrong tomorrow so I am prepared for a potential gap lower mentally. I plan on buying back my short puts, but I need to determine exactly what strike I will be rolling down towards.

Also, random fact of the day, my bus ride home was extra long because my bus had to go by Soldier Field. Go Bears!

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  #95 (permalink)
Market Wizard
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Bermudan Option View Post
2 minutes after the market closed, I realized I played my Gold calendar spread wrong. Gold sold off going into the close, and it is extremely gap-happy, so there is a good chance the market opens even lower, around $122-123. This extended selling will not be good for my calendar spread.

Gap lower and opened @ $122.38. Lost about $78 in profit, not as bad as I would thought it would be, but I left a few hundred dollars on the table by not rolling down prior to the close yesterday... since the calendar spread used the same strike price, the profits I made by my long puts going in-the-money were cancelled out by the losses in my short put going in-the-money.

Anyways, within 5 mins of the open, I rolled down & lower to the Oct $119 puts for $1.00/ct.

My $124 long puts have a much higher delta than the OTM calls I sold so I need to keep an eye on this because I really don't have a lot of downside protection at the moment until later next week. Decisions decisions....


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  #96 (permalink)
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Earlier today, I closed out a position in STP but I am looking to reestablish one in the next few days. The chart was measuring up for a potential re-entry today, but the volume has me nervous:




Here is the 1 min chart showing the volume



Here is the Daily that I have zoomed out to anticipate a better entry position:

STP blew past the level I thought would hold. Here are my new expectations:

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  #97 (permalink)
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Grabbed some MCP calls. I had an offer @ the Bid, but the stock pulled back, and my offer was filled @ the new Ask.



The trendline I am watching was broken in late September but I hope am trading under the impression that it will hold after that failed move lower. Also, there is some demand in the $6.90 area as well that might act as support additionally.

Potentially, the market is retracing and so buying dips may not work. Things are looking more bullish after the gap higher although the markets may need to consolidate a bit before we get some action grinding higher.

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  #98 (permalink)
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Stopped out of National Bank of Greece stock (NBG)


The price action didn't go beyond my stop out point, but the spread was too wide and I couldn't hang on to support being tested/broken without having substantial slippage.

Current positions
BRCD
MCP
GLD

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  #99 (permalink)
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GLD gapped higher today. Because the delta for the $124 long puts is so much higher than the $119 short puts, my profits took a beating. $500 or so in profits evaporated just like that. There will be more trades in the future though so I cannot complain. Time decay will increase as the week progresses for the short puts as well so as long as GLD doesn't start rallying, I will slowly start bringing in profits again. Here is how I am managing the position now:

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  #100 (permalink)
Market Wizard
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Bermudan Option View Post
Jumped into some Nov $2 DRYS calls



Edit: Jumped out of the trade. I want things to be closer to that trendline before I put some money on the line w/ DRYS. The stock is too volatile for a tight stop unless I have strong support/trendline nearby

Glad I bailed on that trade as the stock has been heading lower ever since. Looking for the trendline to be tested soon. Hoping for a pullback to $3.30 so that I can set a $0.15 stop around $3.15

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