StockFetcher Forums · Stock Picks and Trading · Options<< 1 2 3 4 5 ... 14 >>Post Follow-up
mahkoh
895 posts
msg #125371
Ignore mahkoh
10/2/2015 3:06:36 PM

Karen, if you're looking for feedback in this thread a little elaboration as to the why of these setups might help.

BAC (current price $15.14)
STO (40) 10-09-15 $14.00 Puts @ .04 (+$160)
BTO (3) 10-16-15 $15.00 Calls @ .55 (-165)

You're selling the puts for 0.04, and I assume you have to pay commissions on those. For each contract my margin requirement would currently be $183, and return on margin 1,6 % with commissions of $1 per contract. Do you think that is reasonable for the risk you're taking on?

Do you take this trade because you have indications that the stock may rise or because premiums are favorable?



karennma
6,831 posts
msg #125373
Ignore karennma
10/2/2015 4:59:57 PM

Hi Mahkoh,
Thanks so much for responding. One thing that has gotten me so frustrated recently is getting NO feedback from members, so, I appreciate your questions.

Anyone who follows this thread ("Options") will have to figure out their own commissions, and tweak the strategies accordingly, as broker commissions vary. If I decide to do options exclusively, then eventually, I'd have to open an acc't w/ either Trade King, Optionshouse or Options-Xpress to keep my commissions/expenses down.
Regarding "indications" ....
At this time, the main purpose of the thread is to have a net gain at the close of each trade. The only way I can accomplish that is to do either debit or credit spreads. Over time, we'll see how it goes.
You'll find the strategies may be bullish, bearish or neutral. I'm not so much taking a position on one side or another as I'm simply trying to minimize losses. It's easier (and cheaper) to be "neutral" with options; not so much with stock. The beauty of the weeklies is, at the end of the trading week, you either have a loss, gain or cash. It's built-in discipline. That's why I'm switching to options.
Frankly, I don't like the "gambling" aspect of trading stock -- particularly in a volatile, unpredictable market like this. Options offer more "controlled" risk, because if you design your strategy correctly, your cash outlay is minimal with a huge amount of LEVERAGE! Stocks have no leverage.
My goal is to have a net gain at the end of each quarter. For me, small gains are better than one big loss. "Pigs get slaughtered" .. Sadly, I forgot that when I was trading AMBA.
Never again!




karennma
6,831 posts
msg #125374
Ignore karennma
10/2/2015 5:00:48 PM

Mahkoh,
That was the long answer. The short answer is -- "premiums are favorable".
:>)


karennma
6,831 posts
msg #125375
Ignore karennma
10/2/2015 5:17:13 PM

BTW, to anyone who's interested ....
As the positions are closed, I will post the results.
The results of the MU trade have been posted.



four
4,012 posts
msg #125378
Ignore four
10/2/2015 10:39:29 PM

http://www.futuresmag.com/2010/05/12/top-4-options-strategies-beginners?page=3


of interest?

Mactheriverrat
1,328 posts
msg #125381
Ignore Mactheriverrat
10/3/2015 2:31:55 AM

@Karenna
IMHO- Look at the AMBA median bollinger band(20,2) line which is down trend. Which is really the 20 day MA . Until it breaks that downtrend its still down. Such as the 20 day EMA.

Just saying. We learn from our past.

mahkoh
895 posts
msg #125383
Ignore mahkoh
10/3/2015 6:14:23 AM

Mahkoh,
That was the long answer. The short answer is -- "premiums are favorable".
:>)

Premiums are favorable, that must mean they are favorable in relation to other premiums or towards a metric. Do you filter for this in some way?


I use return on margin as a measure when evaluating possible entries. As I sell cash secured at the money puts this leads me to securities that are not too far from the option strike and are reasonably volatile. I'll consider those where ROM is over 7 - 10 % (depending on where we are in the option cycle, the closer to expiration the lower the premiums) and below 20 %. If ROM is over 20 % something is up, premiums never get elevated without a reason. The options I sell are 4 to 6 weeks out and I do not trade earnings.

Once in the trade I calculate time value to margin, when this moves below 2 % I'll usually look to close out if the trade goes against me. At this point my option is so far out of the money that I'm essentially holding the stock and that wasn't my intention when I opened the position. When the option has lost 40 % of it's value I'll take profits, once I'm 15 days in the trade I'll happily close at break even.





karennma
6,831 posts
msg #125396
Ignore karennma
10/4/2015 12:40:28 PM

Re:
Mactheriverrat
534 posts
msg #125381
- Ignore Mactheriverrat 10/3/2015 2:31:55 AM
@Karenna
IMHO- Look at the AMBA median bollinger band(20,2) line which is down trend. Which is really the 20 day MA . Until it breaks that downtrend its still down. Such as the 20 day EMA.
Just saying. We learn from our past.
=================================

@ Mac,
You're absolutely correct.
Once AMBA crossed the 20 EMA on 08-11-15, it never ... *never* turned back. Initially, I thought it was a "set-up" for a huge rally.
When I finally became skeptical, I even posted on 08-31-15, that I had my doubts & subsequently cut my position in 1/2 prior to earnings. Thank g*d, I had the sense to at least do that!
Sad, sad, sad.
It'll take me a long time to make up that loss.
:>(









karennma
6,831 posts
msg #125397
Ignore karennma
10/4/2015 12:59:33 PM

Crossing the river of death, below EMA(20). DEATH Spiral of AMBA. Also, a double-top.




karennma
6,831 posts
msg #125404
Ignore karennma
10/5/2015 10:34:25 AM

karennma
5,530 posts
msg #125366 10/2/2015 1:57:32 PM
BAC (current price $15.14)
STO (40) 10-09-15 $14.00 Puts @ .04 (+$160)
BTO (5) 10-09-15 $15.oo Call @ 0.36 (-$180)
================

Sell (5) 10-09-15 $15 Calls @ 0.72 = $360 (doubled my money, gain $180)

StockFetcher Forums · Stock Picks and Trading · Options<< 1 2 3 4 5 ... 14 >>Post Follow-up

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