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Using Options for Swing Trading

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  #61 (permalink)
Market Wizard
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mattz View Post

Color me confused but their E.R. was last week.


With regards to MTG, I didn't hedge my position like I said I was going to. I literally worried myself awake and woke up around 1am and couldn't get back to sleep, then when I finally did go back to sleep, I had two dreams about MTG having disappoints results. One had MTG fall to $0.30 per share (and I distinctly remember that the sell off was on heavy volume in my dream too so it was super legit lol) and the other it disappointed and sold off a few percentage points. Anyways MTG's earnings were taken positively as the stock is up premarket. I will stand to make some money today. I feel like I made the right decision in the short term, but definitely not the long term. Taking 50/50 bets like I ended up doing is not the road to consistent profitability. I will make sure this does not happen again.

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  #62 (permalink)
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Bermudan Option View Post
Color me confused but their E.R. was last week.


With regards to MTG, I didn't hedge my position like I said I was going to. I literally worried myself awake and woke up around 1am and couldn't get back to sleep, then when I finally did go back to sleep, I had two dreams about MTG having disappoints results. One had MTG fall to $0.30 per share (and I distinctly remember that the sell off was on heavy volume in my dream too so it was super legit lol) and the other it disappointed and sold off a few percentage points. Anyways MTG's earnings were taken positively as the stock is up premarket. I will stand to make some money today. I feel like I made the right decision in the short term, but definitely not the long term. Taking 50/50 bets like I ended up doing is not the road to consistent profitability. I will make sure this does not happen again.

I know EXACTLY what you are talking about as far as your trading decisions, but stress is such a negative element on health that I would encourage you not only to turn your trading mistakes into lessons but the way you react as well. You might have a good strategy, and a good head on your shoulders, but stress will impair it in the long run.
Good luck with your strategy and I do hope it will work out for you.
Matt

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  #63 (permalink)
Market Wizard
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mattz View Post
I know EXACTLY what you are talking about as far as your trading decisions, but stress is such a negative element on health that I would encourage you not only to turn your trading mistakes into lessons but the way you react as well. You might have a good strategy, and a good head on your shoulders, but stress will impair it in the long run.
Good luck with your strategy and I do hope it will work out for you.
Matt

Yeah, I am used to having a $200 stop, and more recently, having that stop placed so that a decisive move has to happen for me to get stopped out. Having 5x my regular stop potentially exposed is a stressful change of pace. I do not intend on holding through Earnings Report ever again for any of my short term holds.

I am functioning at 50% because I didn't get enough sleep last night. No new positions, will just be managing the existing positions for now. SPY looks like it will pullback/consolidate today anyways

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  #64 (permalink)
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Market looks like it might consolidated sideways or retrace lower to $168.40 demand area highlighted on the chart below. I don't think that it will break below that level really, but I don't anticipate opening any new positions today.


A part of me thought that after the American darling AAPL impressed on its earnings, it would drive the SPY higher, but it looks like a fakeout so far this morning.

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  #65 (permalink)
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Sitting on my hands for now. Support level from yesterday didn't hold, but it wasn't crushed either so it didn't really adjust the way I am viewing the market at the moment.

Currently, there are no new trades on the chopping block, but I anticipate that I will get some alerts on pullbacks for stocks I have been waiting to get into if the SPY drifts down to the $167.75 level and weak hands dump stock.


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Earlier today I sold two MTG for a total of $261 in profit

About 10 minutes ago, I grabbed 12 more MTG 08/17/13 Call - 5.00 Strike @ $2.46. I figure support will hopefully hold. I will sell @ least 1/2 of the position at a test of resistance unless it looks super bullish.

I still have 3 contracts from my original MTG purchase earlier this week as well, for a total of 15ct of MTG August $5

I think SPY has put in its low for the day.
Edit: Let me nip 'predictions' like that in the bud now. What I mean to say is: I have established a position in MTG under the impression that the market will not go lower. I can be wrong and I accept the idea that this has a probability that I feel is higher than 50% to work, but that does not mean that this trade will work for me.

Attempting to publicly predict price action is not a goal in this journal.

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  #67 (permalink)
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Sold 4 contracts of MTG @ $2.62. Still 11 contracts in play.

Opened a diagonal bear put spread on AAPL today. I will go into more detail over the weekend but for a reference point,I sold 4 AugWk1 $455 Calls and I bought 4 August $460 Calls. Tied up like 2 grand of capital in my account. This means I am neutral/slightly bearish short term and don't think AAPL will break out next week, but overall bullish and think AAPL will be above $460 by the end of the 3rd week of August.

Edit: Here is the trend right now. Hoping for a breakout although if the market isn't gaining when MTG pushes higher, I am going to take profits quicker

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Weekly Review

Trades Opened
ENVI
VVUS
SWHC
FCEL
FSC
STP
AAPL
BP
NOV
MTG

Trades Closed
VVUS
SWHC
NOV
GTAT
SQNM

Profits Taken but still an open position
MTG
COP
FBP
BP (realized profit on short option)
GRPN (realized profit on short option)
JCP (realized profit on short option)
VALE (realized profit on short option)


Changes going into AugWK1
  1. I adjusted many of my scans so that they search only for Options with penny-wide spreads. Experienced $40 slippage on two trades I was in which is approximately 20% more capital lost than I anticipated. Need to minimize that as much as possible
  2. With the MTG trade, I liked that I added to the position when the market gave me the opportunity, and sold (some) options when resistance was tested. I will look to take advantage of this with other stocks that I am involved in that show me high % set ups.
  3. I took some time earlier today and wrote down the traits I want to work on as a trader. They involve being more unemotional, and being a continual skeptic. The latter trait of being a skeptic saved me money last week already because I had planned to load the boat on Energy stock but I forced myself to just choose one underlying and call it a day.

To Do List
  1. Break down the trades that I am no longer involved in
  2. Work on triggers that lead to me being side-tracked by P&L instead of the charts.
  3. Explain my reasoning for trades I anticipate entering in the upcoming week.

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  #69 (permalink)
Market Wizard
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AAPL
Strategy: Diagonal Bear Put Spread
Options Bought: 4 Aug $455 Calls @ 2.33
Options Sold: 4 AugWK1 $450 Calls @ $1.06
Implied Volatility: 23rd Percentile
Initial Debit/Margin Requirements: $2000
Stop-loss stock price: $432.24
Target stock price: $455 by August monthly expiration
Reasoning: Old resistance from my last trade is now support since the gap higher. Here is the updated chart from before:

Also, note the white line to highlight my stop loss basically. AAPL would have to retrace back to it's pre-earnings trading range for this to happen which I think is low probability in the next week. SPY retraced/consolidated sideways last week, so I think the market in general has a shot at going higher this week.

Special Notes: I might start trading AAPL more if this plays out like I'd like. So far, I've been able to find high probability trades on the setups, and the risk outweighs the reward as long as there are no violent gaps.

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Stopped myself out of Aapl for a loss. Very bullish action this week for Apple

Sent from my Nexus 7 using Tapatalk 4 Beta

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