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Option Trading (2014)


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Option Trading (2014)

  #21 (permalink)
Chicago, Illinois
 
Experience: Intermediate
Platform: e*trade
Broker: Tradingview
Trading: Options
 
Bermudan Option's Avatar
 
Posts: 484 since May 2011
Thanks: 418 given, 259 received

Filled on CX trade as well. Front month calls. This one is going to be less than a month though because I want to exit this trade prior to the earnings report in February. Sitting on hands for the rest of the day more than likely.


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  #22 (permalink)
Chicago, Illinois
 
Experience: Intermediate
Platform: e*trade
Broker: Tradingview
Trading: Options
 
Bermudan Option's Avatar
 
Posts: 484 since May 2011
Thanks: 418 given, 259 received

Stopped out of Citigroup and CX.

GLD is hanging in there. Market went against me at the open but I believe there was a spike in IV and my position lost next to nothing as a result. Currently the gap higher is being faded but we will see if it lasts.

One thing that I need to remember is that I will likely be stopped out more than I will have a winner. That is ok as long as my wins are many times larger than my losses. I have been doing well at keep my losses relatively small. There was some slippage in CX but overall I have been cutting losses quickly.

I am becoming more accepting of the idea of letting a long term trend unfold and being indifferent about the short term volatility that occurs against profitable positions. To a small degree, this post in PandaWarriors journal reminds me about the long term trend:

Sayounara View Post
Building an equity millipede @ Forex Factory
it's a thread describing and discussing the building and holding of large forex positions for a very long time.


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  #23 (permalink)
Chicago, Illinois
 
Experience: Intermediate
Platform: e*trade
Broker: Tradingview
Trading: Options
 
Bermudan Option's Avatar
 
Posts: 484 since May 2011
Thanks: 418 given, 259 received


Took a shot @ some MTG on a very deep pullback. Still feels weird to buy when everyone is selling.I suppose I will find out if I am right quicker than anyone else in the market though


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  #24 (permalink)
Chicago, Illinois
 
Experience: Intermediate
Platform: e*trade
Broker: Tradingview
Trading: Options
 
Bermudan Option's Avatar
 
Posts: 484 since May 2011
Thanks: 418 given, 259 received

I realize now that I haven't been analyzing my trades like I should be. Tradervue has been collecting dust (and a monthly payment from me) for the last few 2-3 months. I am working on utilizing the great program more moving forward.

After aboout 1 month of trading, it has been a bumpy start to 2014:


Takeaways
  1. I need to consistently review my trades: If not, then:
    1. I won't have a context to view my trading and it is harder to determine where I should be focusing my efforts as a result. My recent questioning of my volume analysis entry is a somewhat related example of this.
    2. If I do not review a large subset of data (ie results in a month/quarter/year), then I focus too much on the short term which is full of noise. I become only as happy as my last trade.
  2. Changes in strategy require changes in expectations: Last year I traded based on the 2hr chart. However, because of my success in my IRA account, I am transitioning to trading based off of the Weekly chart. The effect on my expectations is two-fold:
    1. Trading OTM options instead of ITM options means a lower delta. If a position moves in my favor, it will require a bigger move than previously to become profitable.
    2. I will have to be mentally prepared to deal with declines and uncertainty in positions for extended periods of times as stocks will often have week(s) of retracement/consolidation after a strong directional move that often shakes out shorter-term traders
    3. My percentage of winning trades may take a hit. I think that in the long run, I might be able to avoid this, but that is to be determined...
  3. Changes need to be structured prior to implemenation: I committed trading stocks in 2014. I like that I saw opportunity in stock trading again, but moving forward I need to create a more structured approach towards it. I jumped into some charts that I liked and was stopped out. If I had used options on the stocks, I would have been stopped out as well, but I did not have a concrete timeframe that I was going to hold for so the trade was doomed from the get-go.
  4. Analysis creates Mindfulness: I listen to a lot of online radio/podcasts to kill time. Harvard Business Review: Ideacast and London School of Economics are two of many Podcasts that I follow and both links above talk about the relationship regarding stress and mindfulness. In trading, mindfulness to me is being aware of heuristic biases and patterns (good and bad) that are occurring subconsciously.
  5. I need to (re)review the following:
    1. Volume confirmation during trend reversals: I am due for a refresher course to reinforce my convictions.
    2. Volume confirmation of high probability trend continuation. I know what to look for, but I have been overlooking it in my recent trades
    3. Zooming in on intermediate term timeframes to determine price of value prior to zooming into short term timeframes to determine entry.
    4. Setting stops w/ OTM options. I set my stops using the delta as a rough guide. I think, but need to verify w/ 100% certainty that this is a viable strategy. Here is how I break it down: If I want to set a stop that is 30 cents away, but the option's current delta is 0.44, then that means that the option moves approx. $0.44 for every $1 that the underlying moves. It tracks the underlying @ roughly 44% so the stop on my option contract only needs to be 44% of a stop on the underlying stock. So $0.30 x .44 = 13.2. This means that although the stock price is 30 cents away, because of the delta, I can size my options position as if the stock is only $0.13 from breaking support/resistance (ceteris paribus of course). Smaller stops = larger positions and potential profit

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  #25 (permalink)
Chicago, Illinois
 
Experience: Intermediate
Platform: e*trade
Broker: Tradingview
Trading: Options
 
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Posts: 484 since May 2011
Thanks: 418 given, 259 received

The Gold Trade:
I have been bearish on the Precious Metal trade since early 2013. I first started taking a stab at the trade when GLD was in the $150's and SLW when it was around $36. However, I sorted the data so far on the trades and they have been unprofitable thus far. I have not given up on my bearish sentiment, but the data is a reminder that although the idea may be sound, the execution has room for improvement. This is partially due to errors I have made, but also due to the volatile nature of precious metals. They doesn't trade smoothly and are known to gap higher/lower on a regular basis. They are losing their correlation as a risk-off trade, but it still exists to a degree so when fear enters the market, this can push price higher temporarily.

Here are my results after a year of Precious Metals trades:

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  #26 (permalink)
Chicago, Illinois
 
Experience: Intermediate
Platform: e*trade
Broker: Tradingview
Trading: Options
 
Bermudan Option's Avatar
 
Posts: 484 since May 2011
Thanks: 418 given, 259 received

Stopped out of MTG on a deeper than expected pullback. There was a subsequent bounce back above the opening price but c'est la vie.

Jumped into ETFC but going to be sitting on my hands other than that.

GLD is doing well so far. If it clsoes below 121 then that is a great sign and might lead to a gap lower to open tomorrow morning:

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  #27 (permalink)
Chicago, Illinois
 
Experience: Intermediate
Platform: e*trade
Broker: Tradingview
Trading: Options
 
Bermudan Option's Avatar
 
Posts: 484 since May 2011
Thanks: 418 given, 259 received

Looking to potentially enter a long term trade on ZION tomorrow if the price action is right:

Looking at a stop $0.80 - $1 away.

Can't decide if I want the July $34 or the April $33. Leaning towards the July $34 for the extra time it gives me... I suppose the lesson I learned around this time last year is that Time > Size almost every time.


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  #28 (permalink)
Chicago, Illinois
 
Experience: Intermediate
Platform: e*trade
Broker: Tradingview
Trading: Options
 
Bermudan Option's Avatar
 
Posts: 484 since May 2011
Thanks: 418 given, 259 received

^^^ Missed the pullback in ZION but looking to get involved on a shorter term pullback on the 1hr/2hr chart.

I realized what people on numerous boards were telling me... I need to throw that damn 1-min chart out the window for now. It was too hard for me to tell what is strong overall, vs what is strong volume relative only to the current intraday volume. I had a few stop outs on the deep pullback the market had in January.

It did a slight number on my confidence. I had to hold my nose and buy stocks recently because I was so certain that it would be another stop out. This time though, I focused more on the 2hr chart putting in higher lows prior to my entry which seems to have improved my positions so far. Currently I have option positions in the following stock:

MTG
RVBD (just purchased today)
RF

Also, I have a stock position on KWK

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  #29 (permalink)
Chicago, Illinois
 
Experience: Intermediate
Platform: e*trade
Broker: Tradingview
Trading: Options
 
Bermudan Option's Avatar
 
Posts: 484 since May 2011
Thanks: 418 given, 259 received

Hey all. I am still alive. My portfolio is doing reasonably well. I haven't traded as much as I used to which I think is why my account has been more consistent. I did open 2-3 new positions in the past 1-2 weeks thanks to what I perceived to be a weak pullback in an uptrend.

Current Holdings
HLF diagonal bear put spread: Short September $35 Puts, Long November $30 Puts


MSFT: Long Oct $45 Calls


XRX: Long Oct $12 Calls


NLY: Long Nov $12 Calls


BRCD: Long Oct $10 Calls


TSO: Oct $67.5 Calls

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