Stock Picking (Beat Boho) Contest - V2.0

[easysurfer]

I ran into the "diversification rule" so I could only buy $500k of VTI.....I just bought VOO with my remaining $500k.

Good idea!

Ah yes, those checks and balances.

I'm sitting in cash enjoying the virtual scent of my virtual $1M at this time.

 

[easysurfer]

I thought that meant it takes 20 minutes for the order to be executed?

Not sure. Might be what you thought of before then. About when the market opens.

 

[RISP]

Hm. Rookie question from a first time options trader here:

I bought this put option on COP with a strike price of 50.00$, expiring tomorrow. Got it at .45$ and put in a sell order at .60$ immediately. Well, not immediately, because there is a 15-minute closed window period, but as soon as possible. The stock reacted as I had predicted and dropped back some. It is currently trading at 49.21$.
Here's the catch: While in reality the option has been trading at >.60$ for more than an hour (currently .85$), my sale never went through, and the contracts are shown in my portfolio valued at just .04$ a piece. In real life, the put never went below .25$.

What am I doing wrong?


Edit: I think the answer is, 'because I'm an idiot'. I bought a call instead of a put, didn't I?

 

[MichaelB]

Seems like we are in agreement to have open viewing or neutral, so I made the change.

Actually the default is to have the trading history and portfolio open for viewing.

What was I thinking? That the needs of the one or few outweigh the many .

Upon further thought ... folks really aren't competing against one another (like in chess or tennis where an opponent's move directly influences a competitor). This is more like track or swim meet.

Have fun!

Or a golf game, where everyone competes based on their own benchmark / handicap. However it works, thanks. I'm sure quite a few here will be looking at the transaction mix, just out of curiosity.

I do not know if this is possible, but to allow viewing of trades 1 or 2 weeks late would be sufficient to:

1) let the public know what each contestant did, and 2) let the winning hand keep some advantages.

However they do it is fine with me. Closer to the transaction date does give a better sense of how effective the strategy is.

 

[easysurfer]

Unless I'm viewing incorrectly, looks like the ranking is shown a day behind anyhow. So, that's already a built-in delay if one tried to see who's on top and match up with which trades. At this moment, the rankings only show three members..those that joined yesterday and not the ones that joined today.

 

[Boho]

With a real broker, is there a limit to how many failed or canceled limit orders you could have within a certain amount of time? I think I read there is, and I assume there's no such limit in this contest. There's an API for Investopedia's paper trading simulator that you can probably use to quickly alternate a single limit order between a dozen stocks that you're hoping to catch during a rare drop.

Yesterday, EXAR opened at $12.96, reached a high of $13.03, a low of $10.98, and closed at $12.99. That low of $10.98 isn't so far off from the previous day's closing price of $10.62 which was before the news of the buyout. A computer program that checks many stocks for such rare drops for a day or two after good news about the company gives a trader an advantage almost as if he had forecast the good news ahead of time.

...actually I'm sure there already are such programs but without restrictions on the number of failed limit orders it becomes easier even for an unsophisticated investor to take advantage of unlikely price drops.

 

[NW-Bound]

Hm. Rookie question from a first time options trader here:

I bought this put option on COP with a strike price of 50.00$, expiring tomorrow...

You made me look, as I have a bit of COP.

Saw that it closed today right at $50/share, up $4 or 8.8%. Nice! Again, I do not have enough of it.

March call and put options at 50, expiring tomorrow, are down to 0.20-0.30 range. But with the stock jumping up that big today, put option lost big time, going from more than $5 down to the pennies.

If you did get call or put options for that cheap, and the stock closed right at the strike price, it's 50/50 which way the stock goes tomorrow. One will end up being in the dollar range, while the other becomes worthless.

PS. I bought COP just recently, and have not paid attention. Turned out it dropped from where I bought, and just now recovered to where it was when I bought. So, no net gain yet. Duh!

 

[RISP]

March call and put options at 50, expiring tomorrow, are down to 0.20-0.30 range. But with the stock jumping up that big today, put option lost big time, going from more than $5 down to the pennies.

Right. I saw the huge uptick as exaggerated - after all, they just turned some assets they had on the balance sheet into cash, right? How does that make the company so much more valuable? So I expected it would drop again, which it did, but then it DID close at 50.00$ flat. So maybe I will make some money from this trade after all despite my beginner's mistake.

Next stupid question: I assume we are trading American options here, right? As opposed to European ones? Mine expires today, so assuming it is in the money, do I have to sell it, or else it will expire worthlessly? What happens at the time of expiry if I don't sell? Will it be exercised and I get the underlying?

 

[Lawrencewendall]

Haven't dug around the site. How do they treat dividends?

 

[NW-Bound]

... I assume we are trading American options here, right? As opposed to European ones? Mine expires today, so assuming it is in the money, do I have to sell it, or else it will expire worthlessly? What happens at the time of expiry if I don't sell? Will it be exercised and I get the underlying?

I would assume that Investopedia uses American options. I don't know what it will do for options that expire in the money. At Schwab, they would automatically exercise it for me. Comes Monday, I then decide if I want to keep the stock or sell it. That happened a few times when I forgot.

Usually, I sell options before expiry to save a few bucks, because Schwab charges me extra commission for the above, then I have to pay commission again to sell the stock.

This brings up a good point with another brokerage that I use. What happens if I forget? I need to check with them. I am getting old and may be more forgetful.

 

[RISP]

Thank you NW-Bound.

 

[Totoro]

My broker also automatically exercises options in the money at expiry. A bit more expensive vs. doing it yourself, but not extremely so.

Love that service.

 

[easysurfer]

"Currently, a maximum of 2 shares can be traded due to the game's volume rule."
Um, OK, but I wanted 4,000? This is not a thinly traded stock! I'm afraid Investopia's volume information is completely wrong.

Edit: 20 minutes later, I could buy my desired quantity. Maybe it is just an issue when the market opens.

Ran into the volume rule on two trades of my own today. Waited about 20 mins, then trade went through.

 

[Lawrencewendall]

All 3 trade attempts were canceled "No Volume in Stock" (?)

 

[easysurfer]

All 3 trade attempts were canceled "No Volume in Stock" (?)

I think if you add the stock to your watchlist, then you can check the volume.

In the example, the volume for BND was about 140K. I walked away for about 30 mins and refreshed the page, then it was up to about 176K.

 

[Lawrencewendall]

Does volume need to at least equal what I want to purchase?

 

[easysurfer]

Does volume need to at least equal what I want to purchase?

There's a daily volume rule and option rule. I used what was on the default. 10% for daily, and 25% for option (though says 10% for option below).

Pulling out the [-]Monopoly [/-] rules shows:

Daily Volume Rule - Trades cannot exceed a certain percentage of volume for the day. The default value is 10% and this applies to both stocks and options. This prevents a thinly-traded stock from being traded in the simulator when it can't be traded in the actual markets.

Option Daily Volume - Trades cannot exceed a certain percentage of volume for the day. The default value is 10% for options however this can be edited in custom competitions. This prevents a thinly-traded option from being traded in the simulator when it can't be traded in the actual markets.

My interpretation is, taking the 10% as example, if you want to buy 10 shares, the volume of that stock on the day has to be at least 100 for you to trade.

 

[RISP]

My interpretation is, taking the 10% as example, if you want to buy 10 shares, the volume of that stock on the day has to be at least 100 for you to trade.

That is correct from my experiences so far. In the order window, there is also a button "Show Max" to the right of the "Quantity" text box. If you click it, it tells you the maximum number of shares/option contracts you can trade.

 

[easysurfer]

That is correct from my experiences so far. In the order window, there is also a button "Show Max" to the right of the "Quantity" text box. If you click it, it tells you the maximum number of shares/option contracts you can trade.

Thanks. Clicking on "Show Max" is even better than using the Watchlist. No need to do any calculations on my own.

 

[NW-Bound]

My experience has been that options of many mid-cap companies, if they are traded at all, have extremely low volumes. Often, days went by without any trade being made. And when I make a trade, against a computer I am sure, just a couple of contracts will move the price. It's fun to watch.

It is good that Investopia limits the number of contracts you can trade, else you would "make" all kind of money that is not feasible in real life. Options of megacaps or the S&P are more liquid, but trades have nowhere near the volume of their common stocks.

PS. It is interesting to read Mulligan's thread on preferred stocks to see him dealing with low-volume shares. He talked about some preferred stocks with only 800 shares outstanding. Wow.

 

[Boho]

I'm guessing I'll be in first place at the next update. I tried buying the same stock in real life for 15 cents less than in the contest but it never got that low so once again I'm doing better in the contest than in real life. This trade was based on a rumor in the news yet the price rose and stayed higher than in cases where there was an official announcement of a similar event. So, now I learned that could happen.

 

[easysurfer]

I'm guessing I'll be in first place at the next update. I tried buying the same stock in real life for 15 cents less than in the contest but it never got that low so once again I'm doing better in the contest than in real life. This trade was based on a rumor in the news yet the price rose and stayed higher than in cases where there was an official announcement of a similar event. So, now I learned that could happen.

Got me to take a peek at your trades. Does look like you'll be ahead.

The question now is can you be consistent in the trades over the course of the contest? Especially in an bull market to stay ahead of the SP index you are comparing against.

Anyhow, nice move.

 

[easysurfer]

I'm guessing I'll be in first place at the next update.
...

Got me to take a peek at your trades. Does look like you'll be ahead.

....

Looks like we spoke a bit too soon. Before we can say "leapfrog", Spudd takes over from 8th to 1st place!

I think we have a race .

 

[Boho]

I tried buying 200 shares of BA at $177.40 and I got the error:

"Invalid Trade: No Volume In Stock This order did not execute due to a violation of the game's volume rule. Every game has a setting that only allows an order to be executed when the size of the order is less than 10.00 % of the stock's real life trading volume."

It's Boeing and they're in the news. That doesn't sound right.

 

[easysurfer]

That is correct from my experiences so far. In the order window, there is also a button "Show Max" to the right of the "Quantity" text box. If you click it, it tells you the maximum number of shares/option contracts you can trade.

I tried buying 200 shares of BA at $177.40 and I got the error:

"Invalid Trade: No Volume In Stock This order did not execute due to a violation of the game's volume rule. Every game has a setting that only allows an order to be executed when the size of the order is less than 10.00 % of the stock's real life trading volume."

It's Boeing and they're in the news. That doesn't sound right.

Boho,

Did you try clicking on the "Show Max" button before trying to trade or try again later? I had to wait about 20 - 30 mins the other day on two buys.