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sbuck143
88 posts
msg #89695
Ignore sbuck143
modified
3/16/2010 1:20:19 PM

MTG is up off its weekly low by 9%, hasnt hit the 5% trigger from open, yet. Looks promising for today.

This is my new favorite set and forget strategy.....implementing with options.

I bought an April 7.50 call for 1.20 yesterday at open that dropped to .85c. Doubled down at that price and sold all of it at 1.35 20 minutes ago! 32% in about 24 hrs. Yeah, I'll take that for the week.

My overall risk mgmt is to shoot for 25% gains in the option, with a stop loss of 30%. Requires a 55% win rate to break even. ITM option with a delta of at least .70 to get adequate movement on a 5% move of the stock. It almost got tripped yesterday but thankfully held on.

Biggest problem is most of these Crockpot stews return stocks that either do not have listed options or are so illiquid optionwise that you have no hope of capturing your profit. You cannot win when there is only one market maker, 10 Open Interest and a 2.00 bid/ask spread on a 6 dollar stock.......


sbuck143
88 posts
msg #90410
Ignore sbuck143
3/26/2010 11:41:14 AM

No optionable plays this week, but another week, another winner in WAVX.

There's really not much reason to do much else than this strategy thats for sure....

BZ1983
7 posts
msg #90509
Ignore BZ1983
3/28/2010 6:30:46 PM

Did you play CEMJQ last week too or just WAVX?

sbuck143
88 posts
msg #90510
Ignore sbuck143
3/28/2010 7:40:50 PM

I stayed away from Chemtura since its price is so low, I was a bit afraid of a stop-out. I only played WAVX.



I think the best way to play these is to wait for the Monday morning low, buy in there, and ride it for as long as you want.

sbuck143
88 posts
msg #90511
Ignore sbuck143
3/28/2010 7:42:42 PM

Week 1: 32%
Week 2: 25%
Week 3: 10.1% (stock only)

I started with $2k in the first play, and i'm already up to $3500ish after commissions. I LOVE IT.

Kevin_in_GA
4,542 posts
msg #90513
Ignore Kevin_in_GA
3/28/2010 8:46:18 PM

OK, if you are doing that well, as a favor to all here (and me, since I put you on this path) please give us a detailed description of how you are playing this.

Stocks to consider for this coming week (6 in total):

OCLR - Bookham Technology plc
WAVX - Wave Sys Corp A
CPE - CALLON PETROLEUM CO.
WNC - WABASH NATIONAL CORP
CIGX - Star Scientific, Inc.
SRZ - Sunrise Senior Living

NOTE: According to SF, only CPE, WNC, and SRZ are optionable. I can find options for WAVX, but the spread on the $5 calls is like 75%. CIGX also is optionable (both based on my TradeMonster account).

Kevin

Kevin_in_GA
4,542 posts
msg #90527
Ignore Kevin_in_GA
3/29/2010 11:44:13 AM

CPE and CIGX already hit their 5% targets for this week.

sbuck143
88 posts
msg #90533
Ignore sbuck143
modified
3/29/2010 12:49:04 PM

I gave most of my strategy up above:

*****************************
This is my new favorite set and forget strategy.....implementing with options.

I bought an April 7.50 call for 1.20 yesterday at open that dropped to .85c. Doubled down at that price and sold all of it at 1.35 20 minutes ago! 32% in about 24 hrs. Yeah, I'll take that for the week.

[b]My overall risk mgmt is to shoot for 25% gains in the option, with a stop loss of 30%. Requires a 55% win rate to break even. ITM option with a delta of at least .70 to get adequate movement on a 5% move of the stock. [/b] It almost got tripped yesterday but thankfully held on.

Biggest problem is most of these Crockpot stews return stocks that either do not have listed options or are so illiquid optionwise that you have no hope of capturing your profit. You cannot win when there is only one market maker, 10 Open Interest and a 2.00 bid/ask spread on a 6 dollar stock.......

*******************************

Because of some Monday morning snafus with the kids, I was not able to be by my computer at market open today. I havent entered any positions yet, but so far as long as you enter on a Monday the strategy still seems to work well.


I did not play WAVX options last week, as I only stick to liquid, tight spreads in that arena.

I can update with my specific plays as I enter them from here on out if that will help anybody. I'm off to analyze and see what opportunities might be left for this week.

I see CIGX already hit but really, it hit that in the first 3 minutes today. Unless you put in a market order over the weekend (extremely risky IMO), nobody could have gotten into that.

sbuck143
88 posts
msg #90534
Ignore sbuck143
3/29/2010 12:59:44 PM

Of those 3 optionable stocks, only SRZ has anything close to what I consider a tradeable option chain.

It is traded on 4 exchanges. WNC is traded on only 1, and CPE on 2. The more exchanges the tighter the spread will generally be.

The ATM call has at least 1000 open interest. Not great but definitely better than CPE or WNC which are like 500 and FOURTEEN respectively! Without adequate open interest, it is difficult to convince a market maker to exchange with you at a fair price.


Recommendation would be to keep to stocks for this week, with the exception of SRZ.



sbuck143
88 posts
msg #90536
Ignore sbuck143
3/29/2010 1:07:39 PM

I just entered a position on SRZ. It seems to have settled down from its high earlier in the day, and has settled around the low of the day which happens to be last weeks close.

The $5 call is trading at .40/.55 with a delta of .63. A 5% move in the stock will equate theoretically to a 19c move in the option. Everything looks great for this set up, and am looking for a 15cent move in the option before I get out.

I have left money on the table each of these last 3 weeks, but the pre-determined exits are very nice to set and forget. :)

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