Yesterday, I opened this long call: Bought MAY 94 CALL @ $6.25 debit
Today, I got stopped out as it faced a resistance near 100.
Sold MAY 08 94 CALL @ $4.95 debit
(4.95-6.25)/6.25= 20.8% loss
What went wrong with the trade is I accidentally set my stop at 20% instead of at 50%. Had I done 50% I would still be in it now. 20% is WAY too tight.
So my new rule for trading long positions is to not place a stop at all, but size the trade for max loss upon entry (only risking for the whole trade what I am willing to lose on my portfolio). Luckily I sized this trade at 2% of my total account, but only lost 20% of that 2%= 0.4% of portfolio. Not too bad...
So overall, this was a good learning experience.
Thursday, May 8, 2008
Wednesday, May 7, 2008
OPEN: DIA Shotgun (Triple) Calendar May/Jun Q 125, 128, 131
Per insanemoney.com, they put on a shotgun calendar on DIA on 4/23/08. I missed a shot at getting in back then as I was recovering from my trip.
Today, with DIA near 128, I decided to pull the trigger and open the trade.
I bought the May/Jun Quarterly 125, 128 & 131 calendars. Here is the analyze chart from TOS...I have almost neutralized this trade by adding the 125 calendar, eventhough insanemoney took that leg off this morning. I felt that I could add it on for protection since it has been down since this morning.
Also my theta increased by several points which means my short positions in each calendar will make more money for me. Also, vega increased as well which means that I will make more money as volatility increases. Since this is a debit trade, I want volatility to increase so i can exit the trade for a higher credit (at a higher volatility, the price is worth more).
Here were my fill prices:
BOT (Quarterlys) JUN5 08/MAY 08 125 PUT @1.73 debit
BOT (Quarterlys) JUN5 08/MAY 08 128 PUT @1.98 debit
BOT (Quarterlys) JUN5 08/MAY 08 131 CALL @1.73 debit
Total original cost basis= $5.44
Then, once I got into the trade, I rolled all my Mays to Jun to bring down my cost basis significantly and because I'm within my 10 day window before expiration to roll my legs for maximum pricing (remember once you get closer to expry, your volatility goes crazy).
SOLD JUN 08/BOUGHT MAY 08 125 PUT @ $1.50 credit
SOLD JUN 08/BOUGHT MAY 08 128 PUT @ $1.69 credit
SOLD JUN 08/BOUGHT MAY 08 131 CALL @ $1.38 credit
Total credit on roll= $4.57
New cost basis= $5.44-$4.57= $0.87
So essentially my next roll from Jun to the Jun Quarterlies will give me pure profit since my cost basis is now below $1.00!
Today, with DIA near 128, I decided to pull the trigger and open the trade.
I bought the May/Jun Quarterly 125, 128 & 131 calendars. Here is the analyze chart from TOS...I have almost neutralized this trade by adding the 125 calendar, eventhough insanemoney took that leg off this morning. I felt that I could add it on for protection since it has been down since this morning.
Also my theta increased by several points which means my short positions in each calendar will make more money for me. Also, vega increased as well which means that I will make more money as volatility increases. Since this is a debit trade, I want volatility to increase so i can exit the trade for a higher credit (at a higher volatility, the price is worth more).
Here were my fill prices:
BOT (Quarterlys) JUN5 08/MAY 08 125 PUT @1.73 debit
BOT (Quarterlys) JUN5 08/MAY 08 128 PUT @1.98 debit
BOT (Quarterlys) JUN5 08/MAY 08 131 CALL @1.73 debit
Total original cost basis= $5.44
Then, once I got into the trade, I rolled all my Mays to Jun to bring down my cost basis significantly and because I'm within my 10 day window before expiration to roll my legs for maximum pricing (remember once you get closer to expry, your volatility goes crazy).
SOLD JUN 08/BOUGHT MAY 08 125 PUT @ $1.50 credit
SOLD JUN 08/BOUGHT MAY 08 128 PUT @ $1.69 credit
SOLD JUN 08/BOUGHT MAY 08 131 CALL @ $1.38 credit
Total credit on roll= $4.57
New cost basis= $5.44-$4.57= $0.87
So essentially my next roll from Jun to the Jun Quarterlies will give me pure profit since my cost basis is now below $1.00!
OPEN: USO Long May 94 Call
So I am testing out doing some long positions on trending stocks during this market.
On USO, I saw a nice volume spike today with a 3rd day confirmation above support at 95. So I bought some calls at 94.
Bought MAY 94 CALL @ $6.25 debit
I bought the May because I have 9 days to expiration and I not looking to hold this for probably more than a few days since this is a speculative trade.
I placed a stop loss near $5.00 as a 20% stop.
On USO, I saw a nice volume spike today with a 3rd day confirmation above support at 95. So I bought some calls at 94.
Bought MAY 94 CALL @ $6.25 debit
I bought the May because I have 9 days to expiration and I not looking to hold this for probably more than a few days since this is a speculative trade.
I placed a stop loss near $5.00 as a 20% stop.
Tuesday, May 6, 2008
CLOSE: POT Long Jun 190 Call +7.6%
I opened this trade this morning at $19.50 and closed out the call at $21.00 to generate some quick cash in my account.
$1.50/19.50= 7.6% in 1 day
$1.50/19.50= 7.6% in 1 day
OPEN: POT Long Call Jun 190
Got this trade from insanemoney.com.
POT had a nice bounce off the 30 and 50 day moving averages near 175 a few days ago. Yesterday it opened just above 190 which filled the previous gaps on 4/16 and 4/29.
Bought JUN 08 190 CALL @ $19.50 debit
Expecting to either cash this trade out or roll this long call into a possible spread....will update you soon.
POT had a nice bounce off the 30 and 50 day moving averages near 175 a few days ago. Yesterday it opened just above 190 which filled the previous gaps on 4/16 and 4/29.
Bought JUN 08 190 CALL @ $19.50 debit
Expecting to either cash this trade out or roll this long call into a possible spread....will update you soon.
OPEN: WMT Triple Calendar May/Jun 50 put,55 put,60 call
Got part of this trade from someone in my trade group:
In looking at the double calendar that Karl put on (May/Jun 55 puts & 60 calls), I got the following greeks:
Delta 6.76
Theta 3.35
Vega 7.85
Now I added a third calendar (May/Jun 50 put) for a little downside protection and to make the trade delta neutral with maximum theta and vega...This is what i got:
Delta 1.22
Theta 3.95
Vega 10.51
Now I am still grasping the use of greeks with all trades, so in my mind, the triple calendar would be more delta neutral with theta around 3 times more than the delta, and even higher vega, since I want volat. to increase. All this for only and extra $0.23.
I ended up getting filled as follows:
May/Jun 50 puts for $0.19 debit
May/Jun 55 puts for $0.61 debit
May/Jun 60 calls for $0.38 debit
Total cost basis= $1.18
BTW, I too would be getting out before earnings so I have 7 days so my plan is to get out once volatility is high 1 or 2 days before earnings.
In looking at the double calendar that Karl put on (May/Jun 55 puts & 60 calls), I got the following greeks:
Delta 6.76
Theta 3.35
Vega 7.85
Now I added a third calendar (May/Jun 50 put) for a little downside protection and to make the trade delta neutral with maximum theta and vega...This is what i got:
Delta 1.22
Theta 3.95
Vega 10.51
Now I am still grasping the use of greeks with all trades, so in my mind, the triple calendar would be more delta neutral with theta around 3 times more than the delta, and even higher vega, since I want volat. to increase. All this for only and extra $0.23.
I ended up getting filled as follows:
May/Jun 50 puts for $0.19 debit
May/Jun 55 puts for $0.61 debit
May/Jun 60 calls for $0.38 debit
Total cost basis= $1.18
BTW, I too would be getting out before earnings so I have 7 days so my plan is to get out once volatility is high 1 or 2 days before earnings.
Friday, April 18, 2008
Apr Monthly Results +8.6%
5 Wins 4 Losses
This month I was able to negotiate a better commission rate on my options so the difference was credited to my account. This helped cushion me from USO & SHLD this month.
Because of my 2 week vacation, I did not place any new trades this month.
Thursday, April 3, 2008
VACATION!
I will be travelling to ITALY for the next 2 weeks so I have closed out all of my trades and am "all cash" in my portfolio.
I did not have time to calculate all my closes for April, but will do so once I get back.
In the meantime, trade safely....these times are volatile in the markets so if your in high volatility trades now, you may want to consider tightening stops, or pulling out from your trades all together for a week or 2 until the market levels a little more (after that huge bullish spike on the DOW this week).
Happy trading!
Arrivederci!
I did not have time to calculate all my closes for April, but will do so once I get back.
In the meantime, trade safely....these times are volatile in the markets so if your in high volatility trades now, you may want to consider tightening stops, or pulling out from your trades all together for a week or 2 until the market levels a little more (after that huge bullish spike on the DOW this week).
Happy trading!
Arrivederci!
Tuesday, April 1, 2008
CLOSE: SHLD Put Diag to Put Cal. -44.2%
On 3/13, I opened this put diagonal:
I Sold Apr 85 put for $3.00
Bought Jun 105 put for $19.55 for a net debit of $ 16.55.
My cost basis was 16.55.
On 3/20, I adjusted my short position by rolling my Apr 85 to 90 put for a credit of $0.82.
Then I rolled up my short leg again from the Apr 90 to 95 put for another credit of $1.17.
Then I rolled down my long leg from the Jun 105 to 95 put to make this a calendar instead of a diagonal for a credit of $5.10.
Adj. cost basis was 16.55-0.82-1.17-5.10= $9.46.
On 3/31, I adjusted my position to lower my cost basis by rolling the April to May:
SOLD MAY 08/APR 08 95 PUT @ $3.37 credit
9.46-3.37= $6.09 adjusted cost basis
Today I closed out of the trade completely:
SOLD JUN 08/MAY 08 95 PUT @ $3.40 credit
6.09-3.40= $2.69 debit (loss)
2.69/6.09= 44.2% loss
This was a nasty trade for sure!
I Sold Apr 85 put for $3.00
Bought Jun 105 put for $19.55 for a net debit of $ 16.55.
My cost basis was 16.55.
On 3/20, I adjusted my short position by rolling my Apr 85 to 90 put for a credit of $0.82.
Then I rolled up my short leg again from the Apr 90 to 95 put for another credit of $1.17.
Then I rolled down my long leg from the Jun 105 to 95 put to make this a calendar instead of a diagonal for a credit of $5.10.
Adj. cost basis was 16.55-0.82-1.17-5.10= $9.46.
On 3/31, I adjusted my position to lower my cost basis by rolling the April to May:
SOLD MAY 08/APR 08 95 PUT @ $3.37 credit
9.46-3.37= $6.09 adjusted cost basis
Today I closed out of the trade completely:
SOLD JUN 08/MAY 08 95 PUT @ $3.40 credit
6.09-3.40= $2.69 debit (loss)
2.69/6.09= 44.2% loss
This was a nasty trade for sure!
CLOSE: UPS Triple Call Calendar -0.6%
On 3/13, I opened the trade as seen below:
Bought Jul 65 Call -$8.00
Bought Jul 70 Call -$4.60
Bought Jul 75 Call -$2.10 debit of $14.70
Sold Apr 65 Call +$6.50
Sold Apr 70 Call +$2.70
Sold Apr 75 Call +$0.52 credit of $9.72
Total debit (cost basis) of $4.98
On 3/31, I exited out of the Apr/Jun 65 & 70 calls. My exit order for the 75 did not get filled yet.
SOLD -40 DBL DIAG UPS 100 JUL 08/APR 08 65/70/65/70 CALL @2.95.
4.98-2.95= 2.03 adj. cost basis
4/1, today, I completely exited the trade as seen below:
SOLD JUL 08/APR 08 75 CALL @2.00 credit
2.03-2.00= 0.03 loss/4.98
0.6% loss in 2 weeks
I had to exit early because of my trip-if not, I would have stayed in to profit.
Bought Jul 65 Call -$8.00
Bought Jul 70 Call -$4.60
Bought Jul 75 Call -$2.10 debit of $14.70
Sold Apr 65 Call +$6.50
Sold Apr 70 Call +$2.70
Sold Apr 75 Call +$0.52 credit of $9.72
Total debit (cost basis) of $4.98
On 3/31, I exited out of the Apr/Jun 65 & 70 calls. My exit order for the 75 did not get filled yet.
SOLD -40 DBL DIAG UPS 100 JUL 08/APR 08 65/70/65/70 CALL @2.95.
4.98-2.95= 2.03 adj. cost basis
4/1, today, I completely exited the trade as seen below:
SOLD JUL 08/APR 08 75 CALL @2.00 credit
2.03-2.00= 0.03 loss/4.98
0.6% loss in 2 weeks
I had to exit early because of my trip-if not, I would have stayed in to profit.
Subscribe to:
Posts (Atom)
