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Using Options for Swing Trading


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Using Options for Swing Trading

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  #71 (permalink)
Market Wizard
Chicago, Illinois
 
Experience: Intermediate
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Current Portfolio

Long term holds: (+ 2 months to exp.)
HSP
FBP
ENVI
PRMW
ISS
FSC
FCEL
FMD
BRCD

Current positions
STP


Earnings Trades
JCP
VALE
GRPN
BP - earnings went against me
AXAS (this has always only been a naked long because the stock is like 1% from being ITM so a strong E.R. will give me some quick big profits)



Right now, I am really liking HSP and I've had it for over two weeks, but the current price action doesn't look sustainable. ENVI looks like it might break out soon/today hopefully

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  #72 (permalink)
Market Wizard
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Scooped up some GTAT. Bought a lot which will tie up a lot of capital but I have been overtrading anyways so meh:

GTAT - 09/21/13 Call - 2.50 Strike
Bought to open 18 contracts @ $2.70


Hoping that the price level of $5.10 holds, or the trendline on the chart:

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  #73 (permalink)
Market Wizard
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Here is what the $5.10 level looks like on the Daily Chart:


If it can hold, I will be pleased and looking for upside. Right now, since the option trades on a nickel spread, each tick is worth $60

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  #74 (permalink)
Market Wizard
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^^^Was stopped out of GTAT but might try and jump back into GTAT tomorrow for a flip. Potentially a hold if it hovers around it's closing price at all tomorrow.

Anyways, just a short update. I have been trading larger size with less overall positions. Taking advantage of a higher delta and taking (some) profits quicker at key resistance levels. I am not as scattered watching tons of charts so I can read the charts more purposefully this way. I am slowly getting better.

Currently trading NBR mainly. Established a position in EMC to start the day as well.

I put on a diagonal bear call spread on QCOM but don't expect to trade around it for the rest of the week. I bet earlier that it wouldn't break above $67.5 for the week and sold some calls. Bold move considering the price action on Friday but some key resistance overhead that should slow the buyers down. I bought $70 calls that expires in September so I have time to wait for the big move to hopefully come later.

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  #75 (permalink)
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why don't you try and capture theta decay instead, then manage your deltas while in the trade. A home run while the market is consolidating is going to be hard to find, and expensive.
Overtrading options is going to kill you on the slippage.

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  #76 (permalink)
Market Wizard
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AnyM View Post
why don't you try and capture theta decay instead, then manage your deltas while in the trade. A home run while the market is consolidating is going to be hard to find, and expensive.
Overtrading options is going to kill you on the slippage.

I have actually been thinking about this too. The QCOM diagonal bear call spread I mentioned is a play on theta decay trade as I got paid for the weekly to expire and I bought the September calls. I am likely gonna sell the August $67.5 that expire this week as well.

I definitely agree on overtrading hurting thanks to slippage. I have almost completely stopped trading $0.05/spread option chains. I still feel like I need to take my set-up based on the underlying chart and be proven wrong, instead of waiting for the overall market to confirm bullishness and potentially miss the trade while waiting for said confirmation. Perhaps I can make my set up criteria more rigid though...

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  #77 (permalink)
Market Wizard
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Don't update as much on this website, but just a quick update to show things are coming along:

Q2 2013 Stats



Q3 2013 Stats (so far)

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Don't update as much on this website

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  #79 (permalink)
Market Wizard
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I feel like I am maturing as a trader slowly but surely. I don't view my end of day P/L as "Man I made/lost $XYZ today" like I used to. It feels much more like an ebb and flow that the volatile price swings that I used to have. I never get too happy about my profits because I know that it is a coin-toss that I might give a chunk back the next day. I am slowly getting there with my losses as well, but they still feel a little more existential and I get a little "woe is me" at times still haha.

Anyways, a recommended blog read for yall is
Embrace The Trend

I was reading it on the train ride to work today on my Nexus Tablet. It reminds me of a concise blog version of Market Wizards with a splash of Brett Steenbarger

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  #80 (permalink)
Market Wizard
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I have been trading a lot less spreads recently which isn't surprising given the market climate but it is noteworthy. The market has been moving higher without much hesitation, so I don't see the benefit of selling calls, even if it is something like a diagonal bull call spread. I am playing stocks that are setting up for a break out anyways so I don't want to put any cap on profits with short calls.

There is some slight psychological stress added to outright calls though With the spreads I trade (different types of diagonals mostly), as long as the underlying stays in a range, I am ok... up/down/sideways are irrelevant. However, with naked long calls I am directionally biased so I am always rooting for rallies. Whenever I see red I get a little angst in my stomach.

One thing I have fully embraced is DITM options. I am trading 1 month (or greater) options with a delta of 0.80 or greater most times. Ties up a lot of capital, but I really don't need those parabolic moves like I used to with OTM options. I don't have to worry about time decay at all really either. The only issue is the occasional gap lower really stings.

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