StockFetcher Forums · General Discussion · KEVIN'S TRADE JOURNAL<< 1 2 >>Post Follow-up
Kevin_in_GA
4,553 posts
msg #81927
Ignore Kevin_in_GA
10/28/2009 10:02:11 AM

I am starting a trading journal where I will record my trades, starting with the plan and following through its execution. Hopefully I will learn from both successes and mistakes.

NOTE- this is a paper trade journal right now, as I am trying to get a better understanding of options trading versus traditional stocks. Therefore the trades will be shorter term, lasting a few days at most. I will take 1 trade a day, and spend time analyzing entry and exit strategies, market factors that influenced the trade, etc.

Please feel free to comment here, advise, scold, whatever will help me to become a better trader.

Thanks.

Kevin



Kevin_in_GA
4,553 posts
msg #81931
Ignore Kevin_in_GA
modified
10/28/2009 10:38:07 AM

TRADE #1

DATE: OCT 28TH 2009

STOCK: DRYS (DRYSHIPS INC)

TRADE: BUY 60% NOV 6.00 CALLS/40% NOV 6.00 PUTS

RATIONALE:

DRYS IS ONE OF THE BEST PLAYS IN THE SHIPPING CATEGORY, WITH GOOD VOLATILITY AND STEADY GROWTH THROUGHOUT 2009. IT REPORTED BETTER THAN EXPECTED EARININGS (AN EPS OF $0.27 VERSUS ANALYST'S EXPECTED $0.20), YET ITS STOCK DROPPED -7.55% YESTERDAY. IT IS RESTING ON ITS LONG TERM SUPPORT TREND LINE, BUT CLOSED AT THE BOTTOM OF ITS DAILY RANGE. IT IS ALSO RESTING ON THE LOWER BOLLINGER BAND(16,2.5). BOTH OF THESE SHOULD LEAD TO A BOUNCE OVER THE NEXT DAY OR TWO.

STRATEGY:

PREMARKET STOCK PRICE IS DOWN -1.1%, SO STOCK WILL GAP DOWN. STOCK MUST SHOW REBOUND FOR ANY ORDER TO BE PLACED.

I WILL PLACE CALL ORDER ONLY IF STOCK GOES 1% ABOVE OPEN AND CLOSES ON A GREEN CANDLE. WILL PLACE PUT ORDER ONLY ONCE PRICE MOVES ABOVE PREVIOUS CLOSE AND THEN SHOWS WEAKNESS (THREE RED CANDLES). IF 33% IS HIT PRIOR TO PUT ORDER BEING TRIGGERED, TRADE IS CLOSED.

TARGET: 33% PROFIT. I WILL NOT ENTER A PROFIT STOP UNTIL AFTERNOON TO SEE IF IT GOES HIGHER.

RISK MANAGEMENT: NO STOP LOSS USED ON THIS TRADE, SINCE IT IS A STRADDLE. BOTH POSITIONS WILL BE CLOSED AT THE END OF THE DAY TOMORROW IF TARGETS ARE NOT HIT.


MARKET INDICATORS:

DRYS IS TRADED ON THE NASDAQ. AS OF 9:25 AM, NASDAQ FUTURES CURRENTLY AT -7.5 (-0.44%). VOLATILITY INDEX IS ABOVE UPPER BOLLINGER BAND(9,2), INDICATING A SHORT TERM BUY SIGNAL.

TRADE DATA:

(9:34 AM):
PURCHASED 30 NOV 6.00 CALLS (OOCKF) @$0.60, AFTER PRICE REACHED $6.34 (OPENED AT $6.27). CANDLE TURNED RED AT THE LAST MINUTE, HOWEVER. TOTAL INVESTMENT $1800.

(10:37 AM):
STOCK HAS MOVED DOWN TO AN INTRADAY LOW OF $6.15. OOCKF BID DOWN 10 CENTS. MAY NEED TO BUY THE PUTS SOON, JUST IN CASE.

(10:56 AM):
PURCHASED 30 NOV 6.00 PUTS (OOCWF) @0.40, AFTER PRICE REACHED 6.04. SHOULD HAVE EXECUTED THIS STRADDLE AT THE OPEN. LEARNING AS I GO. TOTAL INVESTMENT: $3000

(4:01 PM):
TRADE IS DOWN -$600 (20%) AT THE MOMENT. HAD I PUT THE STRADDLE IN PLACE AT THE OPEN I WOULD HAVE GOTTEN THE PUT @$0.20 PER CONTRACT INSTEAD OF $0.40, WHICH WOULD HAVE PUT ME IN THE GREEN FOR THE DAY. LEARNING AS I GO, HERE...

10/29/09 - CLOSE:

STRADDLE IS UP $225 AT THE MOMENT, BUT BELOW WHERE I NEED TO EXIT TO BE PROFITABLE. HOWEVER, DRYS IS MOVING UP NICELY THIS MORNING, PROBABLY RIDING THE REST OF THE MARKET (AS IT RODE IT DOWN YESTERDAY). WILL STAY IN ONE MORE DAY.

RESULT:

CLOSED OUT STRADDLE AT A SLIGHT LOSS DUE TO SPREAD COSTS. HAD I BOUGHT THE PUT AT THE SAME TIME I BOUGHT THE CALL, IT WOULD HAVE BEEN PROFITABLE.




alf44
2,025 posts
msg #81943
Ignore alf44
10/28/2009 12:17:03 PM

GLTY Kev !

I'll be readin' your journal with interest !


Regards,

alf44

Eman93
4,659 posts
msg #81968
Ignore Eman93
10/28/2009 5:47:12 PM

Nice.....I hope we can all learn something.

Kevin_in_GA
4,553 posts
msg #81998
Ignore Kevin_in_GA
modified
10/29/2009 9:12:25 AM

TRADE #2

DATE: OCT 29TH 2009

STOCK: TAN (Claymore/MAC Global Solar Energy ETF)

TRADE: BUY NOV 7.50 PUTS

RATIONALE:

FIRST SOLAR'S EARNING REPORT LAST NIGHT TRIGGERED A MASSIVE SELLOFF OF THEIR STOCK (DOWN 15% AFTER HOURS). FSLR IS THE MAJOR CONSTITUENT OF TAN'S PORTFOLIO - THE CONTRACTS ON TAN (CURRENTLY TRADING AT 8.61) ARE MUCH LESS EXPENSIVE THAN FSLR CONTRACTS, BUT SHOULD HAVE A SIMILAR POP TODAY.

STRATEGY:

PUT ORDER ON AT OR BEFORE MARKET OPEN (IF I CAN GET IT PRE-MARKET - I DON'T KNOW). PRE-MARKET THE NOV 7.50 PUTS (TANWU) ARE TRADING AT 0.20. I WILL BUY 100 CONTRACTS, OR $2000, WHICHEVER I GET.

TARGET: 50% PROFIT. I WILL NOT ENTER A PROFIT STOP UNTIL AFTERNOON TO SEE IF IT GOES HIGHER.

RISK MANAGEMENT: NO STOP LOSS USED ON THIS TRADE. POSITION WILL BE CLOSED AT THE THE DAY.

MARKET INDICATORS:

TAN IS TRADED ON THE NYSE. AS OF 9:00 AM, FUTURES ARE UP ON ALL MARKETS. VOLATILITY INDEX IS ABOVE UPPER BOLLINGER BAND(9,2), INDICATING A SHORT TERM BUY SIGNAL.

TRADE DATA:

(9:10 AM): ORDER FILLED AT $0.20 PER CONTRACT, 100 CONTRACTS PURCHASED. THIS MIGHT BE A GLITCH WITH TRADEMONSTER'S PAPER TRADING PLATFORM, AS I HAVE SEEN THIS HAPPEN BEFORE. IF THAT IS THE CASE, I'LL CALCULATE BASED ON THE OPEN PRICE LATER TODAY. TOTAL INVESTMENT $2000.

(3:28 PM): MARKET HAS RAISED ALL BOATS - TAN PUT IS DOWN 50% RIGHT NOW. WILL HOLD OVERNIGHT (BREAKING MY ORIGINAL TIME FRAME, I KNOW) TO SEE HOW IT PLAYS OUT. AT THE LOW BID/ASK OF THESE PUTS, THEY MOVE IN 5 CENT INCREMENTS, SO BUYING IN AT .20 MEANS THE BID FOR SELLING IS .10 AT BEST. MIGHT WANT TO THINK ABOUT PRICIER OPTIONS?

10/30/09:

STOCK PRICE IS DOWN, BUT OPTION PRICE IS STAYING PUT (NO PUN INTENDED). MARKET IS DROPPING LIKE A STONE, SO HOPEFULLY THIS WILL GET BACK TO ZERO BY THE END OF TODAY.

RESULT:

ABSOLUTELY NO MOVEMENT IN THIS OPTION PRICE, DESPITE THE SHELLACKING TAKEN BY THE MARKETS TODAY. TAN TRADED DOWN 4.4% TODAY, YET NO CHANGE IN OPTION PRICE. I COULD, AND MAYBE SHOULD, STAY IN THIS TRADE, BUT I EXITED AT THE CLOSE FOR A 75% LOSS. OUCH!!


CoalMiner41
6 posts
msg #81999
Ignore CoalMiner41
10/29/2009 9:16:18 AM

Forgive me, for I am relatively new to this stuff too, but I am concerned with the way you are trading. You say you wish to trade short term, a couple of days, but your reasons for buying calls and puts from these companies is for long term, fundamental reasons. Just because DRYS is a great company that is underpriced, doesnt mean AT ALL that the price is going to jump back up within the short trading window you are using. Sure, the companies you choose may go the direction you think it will go, but it could easily take 3 months to turn that direction.

Since you are trading on a short term basis, perhaps using technical analysis would prove more effective? Also, I havent heard of any respectable and profitable traders not using stops to protect their capital. I'm interested in the reasoning for not setting stops.

I will be watching your picks with great interest Kevin, and may your skill (not luck) keep you making the green!

Kevin_in_GA
4,553 posts
msg #82002
Ignore Kevin_in_GA
10/29/2009 10:13:03 AM

Forgive me, for I am relatively new to this stuff too, but I am concerned with the way you are trading. You say you wish to trade short term, a couple of days, but your reasons for buying calls and puts from these companies is for long term, fundamental reasons. Just because DRYS is a great company that is underpriced, doesnt mean AT ALL that the price is going to jump back up within the short trading window you are using. Sure, the companies you choose may go the direction you think it will go, but it could easily take 3 months to turn that direction.

Since you are trading on a short term basis, perhaps using technical analysis would prove more effective? Also, I havent heard of any respectable and profitable traders not using stops to protect their capital. I'm interested in the reasoning for not setting stops.

I will be watching your picks with great interest Kevin, and may your skill (not luck) keep you making the green!
++++++++++++++++++++++++++++++

I am trading short term based on unusual moves made by otherwise solid stocks, which I believe will result in a countermove back toward "equilibrium".

In the case of DRYS, there were several TA components - position relative to Bollinger bands, Position relative to MA and historical trend line for support. In the case of TAN, it is simply an expectation that this ETF will go down in price because of its significant holdings in FSLR.

The stop loss is not needed for DRYS because I have purchased both calls and puts at the same strike price - this straddle gives me coverage if the stock moves against my initial position. It also limits my return. The price only has to move few percentage points to make it profitable, and that's why I looked at DRYS' recent drop as one where a short term reversion to the mean is probable.

For TAN, I am assuming that it will move in the direction indicated, but only as a reaction to the FSLR move. I can exit at any time today if the trade moves against me, so no stop is needed. So far TAN has stayed put this morning, but I'll wait and see.

You correctly state that my trading will rely on luck as much as skill (even more than skill, since I am not particularly skillful right now). And recognizing this is whay I am paper trading options here, as the first post indicated. I am OK making mistakes in "virtual space" until I learn what specific style works best for me.



Kevin_in_GA
4,553 posts
msg #82160
Ignore Kevin_in_GA
modified
10/30/2009 9:09:38 PM

TRADE #3

DATE: OCT 30TH 2009

STOCK: TNA (Direxion 3x Small Cap Bull)

TRADE: BUY NOV 38.00 CALLS (STOCK TRADING AT IN $36 RANGE)

RATIONALE:

VIX BUY SIGNAL.

STRATEGY:

PUT ORDER IN JUST BEFORE MARKET CLOSE. I WILL BUY 20 CONTRACTS.

TARGET: 50% PROFIT.

RISK MANAGEMENT: NO STOP LOSS USED ON THIS TRADE.

MARKET INDICATORS:

VOLATILITY INDEX IS ABOVE UPPER BOLLINGER BAND(9,2), INDICATING A SHORT TERM BUY SIGNAL.

TRADE DATA:

Sent: Oct 30 2009 04:00 PM
Subject: FILLED: #72 BOT 20 TIJKS @ $2.55 (TOTAL INVESTMENT = $5100)

UPDATE: Options sold at $3.00 on 11/4 (caught the high for the day with a limit order). Profit of $900 on $5100 in three days. Of course, had I waited until the end of today, they would have been worth $3.30, or or profit of $1500 instead. Still happy to be out with a 16% profit.



tmanbone
124 posts
msg #82193
Ignore tmanbone
modified
10/31/2009 7:25:23 PM

Thanks for the invite. I'd like to take you up on your offer and give you a vertical trade to compare to your single call

buy 20 vertical TNA Nov 09 38/40 call @ .70, max profit 2,600, cost of trade 1,400 + 69.95 com. = 1,469.95 ; of course you can do a lot better on commissions elsewhere, but the idea here is to use less money to achieve your 50% target 5,100/2 = 2,550. Hope this helps. I really like your journal idea. Keep up the good work.

Kevin_in_GA
4,553 posts
msg #82197
Ignore Kevin_in_GA
10/31/2009 9:12:04 PM

That's clever - less at risk for the same return. I like!

StockFetcher Forums · General Discussion · KEVIN'S TRADE JOURNAL<< 1 2 >>Post Follow-up

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