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StockFetcher Forums · Filter Exchange · Furious Thug! your elder ray defense 6-20-08<< 1 2 >>Post Follow-up
woofys
212 posts
msg #66670
Ignore woofys
8/26/2008 12:57:20 AM

Helo Furious: My! My! I do find that monica of yours quite smashing! But about your post sir, 6-20-08 11:14:35 am, conserning your version of elder ray and the kind of money you have amassed trading options....Options: such cunning little beasts arnt they? Studied the things for years. Lost money for years.
In your post to these boards you state:
"Bought 1 x SNP July 105 put @$3.40 8:31 am
Sold @ 7.30 at 8:47 am
Bought 3 x ENER June 80 put @ $.98 8:31 am
Sold @ $3.10 at 9:06am"

Eee Gadds! Old thing how stunning. Larry Macmillan and Teresa Lo claim they buy options that are a week to a week and a half from expiration. Well, of course your feat beats that by miles dosent it? I wonder...dear fellow stock fetcher, if you would mind sharing your know how with us members of the great unwashed. How did you manage to buy and within an hour or less sell, an option and make money?
Did you buy the little devils all the way in the money, or what, dear fellow? And thank you for sharing.

FuriousThug
256 posts
msg #66687
Ignore FuriousThug
modified
8/26/2008 2:11:30 PM

My what a floral address...

Yes, ITM. I've been doing this regularly with low-spread, high volume options (BIDU, for e.g.). These are not the cheap $.10 homeruns people usually associate with options. These are rather expensive (the BIDU ones have been around $16), close to expire, and ITM so the moves are often point-for-point with the underlying.

p.s. Who's monica? Did you mean moniker...perhaps pronounced with a British accent?


woofys
212 posts
msg #66769
Ignore woofys
8/28/2008 10:34:18 PM

Furious....Yes, about that moniker thing. Furious, because of the misspelling of that little word,over the last 2 days I have have been overcome with montains of grief. Furious, I have not been able to sleep, shave or batthe, let alone wash my shorts.
Listen, Furious, at the moment I am a begger that is sorely in need of enlightenment: with online option chains set up
like they are, how in heavens name old man, is one to buy an option 1 week or so, before expiration? And Furious, thank
you for sharing.

FuriousThug
256 posts
msg #66778
Ignore FuriousThug
modified
8/29/2008 12:12:54 AM

C'mon...I haven't bathed in a week.

The general idea behind swing trading options that are close to expire is that they've shed almost all of their time value and retain only their intrinsic value. So an ITM option will often move point-for-point with its underlying.
If I had the capital, I would absolutely be trading the underlying stock as it's easier to overcome spreads and small moves can still be profitable. But with limited capital, this is the best way to get leverage and reduce risk...and it is way easier to go short via buying puts than selling.

Some examples from my trades this week:

Bought one LVS Sept40call on Monday the 25th at $3.90
It's now sitting at $7.00...not a point-for-point move, but it's still nearly a month from expire so there is some time value left in it.
A capital investment of 100 shares of LVS would have been around $4000 and the current gain would be $585 (+15% appx) whereas control of the same number of shares for only $390 sits at a profit of $310 (or +80%).

Bought 4xPGNX Sept12.50calls on Monday the 25th at $.80/each
They now sit at a bid of $1.80/each.
If I had bought 400 shares of the underlying, that would be over $4800 capital at risk and a current $672 gain (+13.5% or so).
With the options, I've risked $320...and the gain sits at $400 (or +125%).

I haven't been doing this very long so I'm still getting used to the anxiety that being down anywhere from 5 to 25% immediately on entering an order invites. But tight spreads (nothing more than $.20) and decent option volume (at least 100 but preferably more) can help limit that. I'm not shooting for huge gains (which is obvious from my small positions) but rather for getting more comfortable with stock selection and finding good entries. A stock can make a decent move in one day but if you've bought an option at the wrong time that day, you might only have dug partway out of a hole by the EOD.

FT

FuriousThug
256 posts
msg #66779
Ignore FuriousThug
8/29/2008 12:26:33 AM

Oh...and before you scratch your head, the PGNX 12.50 call was not actually ITM when I bought it, but sometimes I'll live dangerously if it's close enough and I think there's a pretty good chance it will be there in a day or two.

woofys
212 posts
msg #66912
Ignore woofys
modified
9/2/2008 9:26:49 PM

Furious!....Sence my last post I have been taking more than a good look at the first 2 trades you spoke of on 6/20/08. SNP 105 put. And then, of course there is the "other one"

I must say Furious, that "other one" sent me into absolute fits of laughter for days on end. My neighbors have been looking at me rather strangely ever sence. Me thinks they contemplate having the old boy committed. My pets have been acting strangely also. Bilbo, my canary, very casually open the cage door, took dead aim and threw herself at the cat.
Why all the laughter? It conserns that smashing job you did in purchasing the 80 put on ENER. Cant help loving this war story. Furious, ever sence I read your post on that trade I wondered, how in the name, of all thats, etc., etc., could a stock that was about $66 have a put option of .98. Then I pulled up the chart on sf for that date and WAM'MO! Theirs the answer.
The puts for

woofys
212 posts
msg #66918
Ignore woofys
9/2/2008 11:20:55 PM

Furious: The puts for ENER were cheap beacause you bought them when close was on the rise--did'nt you Furious? You little devil! Even now I'm still laughing like hell. Close was still 2 days from resistance. That 80 put must have put you itm by about $14. You mentioned tight spreads no more than .20. Did you mean between bid/ask? Also, please give more details, ie., when bought what was iv doing. What was bid and ask on entry. I'm very interested in iv thats very important. Do you have any favorite filters in the archives I could look up. How about ibd100, do you find it good for picks?
Until next time, Thank you Furious










FuriousThug
256 posts
msg #66919
Ignore FuriousThug
modified
9/3/2008 1:40:34 AM

??
ENER opened at $80.38 on June 20th (not $66). I don't have intraday data that far back but I'm guessing it dropped quickly as my exit was within an hour of the open. Low of the day was $76.30 which likely came within that first hour...nearly a $4 move in the underlying and I picked up a $2+ move on the option which was close to expire (note, it was a June put...and on June20th, that was expire day--hence the price) and ITM...the kind of move I was describing before. If anything, looking at it's subsequent move over the next couple weeks, I should have exercised but I'm not in the mode of holding equity liabilities as my goal is short-term gain on near-term options.

W/r/t IBD100: gave up on IBD but used it as a learning tool from back in Sept07 until July08. I couldn't stomach the slobbering tirades they passed off as editorial content plus, it's just not an investor's market atm. O'Neil's books were good for when I was just starting to learn about the markets and I know a lot of that material now and could drop into a CANSLIM mode whenever (and if) the market ever stabilizes.

I have been using some of WSG's filters to find stocks (projection oscillator, absolute bottom) but like every filter, that's only a starting point. I've shelved the Elder Ray as a pullback filter but have really found bullpower/bearpower divergences to be helpful in screening results. TRO's filters are great, especially the big movers as those can really...well, move. I add my own criteria for my purpose which usually involves stocks above $10, above 500,000AV, and obviously optionable stocks. Unfortunately, most of the runners scare the crap out of me because they really swing big in either direction. I'm sure I'll man up one day and actually dive into JRCC...

FuriousThug
256 posts
msg #66920
Ignore FuriousThug
9/3/2008 2:02:41 AM

And w/r/t IV: haven't the faintest idea what IV was doing on ENER back in June; nor do I generally pay much attention to it now. I'm sure as my trading gets more sophisticated, it might play a role, but as it stands, it seems secondary to the way I'm using options (i.e., swing trading). The more important factors are volume, liquidity, and where the momentum of the underlying is pointing. With adequate open interest, volume and underlying move, the IV number won't give me any more important info.

woofys
212 posts
msg #67104
Ignore woofys
9/9/2008 2:40:17 PM

Furious! Ah, yes...quite sorry about that bu bu of ours. Cant recall how we got our info so confused. But life plunges on. This time more carefully. Furious I'm still verry interested in your trades and believe me when I say that I do hope you will find the time to continue posting them on these boards for the rest of us options addicts. You have indeed opened my eyes to idears I wish to get cracking with.

StockFetcher Forums · Filter Exchange · Furious Thug! your elder ray defense 6-20-08<< 1 2 >>Post Follow-up

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