PUTS and CALLS

[NW-Bound]

I don't have a separate account for option trading. My option trades are on top of my existing positions as a way to time the market, and to enhance the yield a bit.

If a stock looks too hot, I sell a call option at even a higher price. If it does not go that high, I pocket the option premium. If it does go that high, I do not go broke by selling at a price that I thought not possible a month earlier.

The only thing I may regret with covered calls is that the stock jumps up big because of some fundamental changes, and I do not have it anymore. Hence, I usually do not write covered calls on all the shares of a position, so that I will always have some.

The above is also another reason I do not hold much in mutual funds. I hold the ETF versions, so that I can play option on top of the holdings.

About margin accounts, you do not need one for conservative options like covered calls and cash-covered puts. They are allowed on an IRA. You just have to apply for it.

I have after-tax margin accounts, but place most of my option trades on IRA accounts. The reason: I do not have to worry about taxes.

[SpartacusSchmartacus]

A good technical bull chart is AAPL. The colorful study "TTM Squeeze" shows us when to trade. In November the blue bars rise up toward "over-bot" territory. You might notice there is very little price drop on the light blue downward side, this means there is no willingness to sell. When the colors do drop to red/yellow "over-sold" there is little downward price pressure. When it does drop it's because of outlying market factors having nothing to do with AAPL ... as in what happened in Feb.
NOTE: This is how you recognise a bull chart.

This is obviously not an example of two way trading like BIDU. I would not be willing to sell calls or buy puts on AAPL. When red turns yellow you load up the truck with deep ITM calls or sell puts. Smaller accounts can do this too but need to manage risk, sell OTM vertical spread puts.

BTW the more time you buy and the deeper into the money, the less affected you are when a price drop does occur. I go for a delta between 70-80, after 80 is very expensive.

[Fedup]

What’s TTM squeeze?
I have access to both TDAmeritrade and Fidelity, which brokerage has better system for displaying these types of charts.

[SpartacusSchmartacus]

Quote:

Originally Posted by Fedup What’s TTM squeeze? I have access to both TDAmeritrade and Fidelity, which brokerage has better system for displaying these types of charts.

I don't personally use this study, used this for the colors. Thot it would be easier to visualise highs and lows of overbot ... oversold. There are probably hundreds of studies you can use ... check your site for "momentum" studies.

I use old school two line "MAC/D" and "slow Stochastics" together.

If you insist on this TTM study then sign up for Think or Swim online trading. They have THE BEST charts and hundreds of studies but be aware it's a big site, there is a learning curve. They have learning videos to get you around their site. I have my big money dividend retirement account on their site.

Use their great charts for everything but trade options only on Tasty Trade to separate them.

[Fedup]

I initiated a long call on one of the FANG stocks. Interestingly, I have them bunch up in my watchlist and they all gone up, plus MSFT. So far it went down a little bit, but thanks to this thread, I’m not fazed. Let’s see how I do.
Edit to add, my trade went up. So I’m hoping I got the right direction.

Back from my badminton class. Trade is still up, I’m going to ride this trade up until earnings. I notice most stocks get bid up toward earnings date and then boom, stop drops after earnings released, regardless of the results. Traders always take profit.

[gzone]

Today:
BTO $AAPL Sept21 230Call, cost $170.00commisssion and fee's $1.13= total cost $171.13.

Have a GTC order in;
STC $AAPL Sept21 230Call for $205.00, fee's are $0.16, for a net 204.84

Hope it sells at the open....be a nice $33.00 profit.

[gzone]

Quote:

Originally Posted by gzone Today: BTO $AAPL Sept21 230Call, cost $170.00commisssion and fee's $1.13= total cost $171.13. Have a GTC order in; STC $AAPL Sept21 230Call for $205.00, fee's are $0.16, for a net 204.84 Hope it sells at the open....be a nice $33.00 profit.

As stated sold $AAPL at the open....
STC $AAPL Sept21 230Call 222.00 no commission, just $0.14 fee...net $50.86

[SpartacusSchmartacus]

Jobs report sez we made it! Everyone that wants a job has a job. After what seems like about a decade of wage stagnation we have positive signs of bigger paychecks.
USA is not a country of savers (present site visitors excepted). This upcoming holiday season is going to be a big retail event! Don't take my word for this, look at charts for WMT, FIVE, CRM for a hint of what is to come. My FANG pics in order AMZN, AAPL, NFLX, GOOG, distant last FB.
FB has such a pile of haters that I'm not touching it. They still make incredible amounts of money but the thinking is FB might sit for half a year while the hate bleeds off. NFLX had haters too when they did their bonehead move a few years back - essentially treating their customers like they were stupid cattle.
I'm out of the SPX puts this morning - looks like the President is not going to wage a tariff war with China til after midterm elections. Will load up on the most retail leaning stocks, Bot AMZN Calls ($1730) 70 delta - 646 days out .
Acct down to 494K

[Fedup]

I agree to stay away from FB, it’s among the haters. My options has gone up, I’m happy that since early this morning to now, the option gain has doubled. Not at a giddy level yet and I need to stay calm and not cash out too early.

[NW-Bound]

Quote:

Originally Posted by SpartacusSchmartacus Jobs report sez we made it! Everyone that wants a job has a job. After what seems like about a decade of wage stagnation we have positive signs of bigger paychecks...

It's always good that unemployment is down. We have never been unemployed in our life, but can imagine how demoralizing it would be for people out of work (and want to work).

However, the wage increase of nearly 3% year-over-year barely matches the inflation over the same period.

Hate to be a party pooper, but it is not as rosy as it seems.

[Fedup]

Anecdote here, but my kid gave one of her employees 5% wage increase. He asked for more, but that’s all she was able to give him. She did say, if he wants more money, he is welcome to look elsewhere. He wants to move out of his parent’s house and get an apartment on his own. I’ll see if he sticks around or not.

[Fedup]

I closed my trade, made about $13 per share. Stock went up $22 per share but since this is option, I didn’t make as much. The reason for closing, it seems like traders exist this stock and move on to other stocks. On an upday and this stock started out negative and up slightlywhen I sold it. Maybe I’m wrong, but I rather take my gain.

[SpartacusSchmartacus]

Quote:

Originally Posted by Fedup I closed my trade, made about $13 per share. Stock went up $22 per share but since this is option, I didn’t make as much. I'd rather take my gain.

Nothing ever wrong with making a profit. Lets go over some fine tuning.
By the nature of your profit it looks like you bot pretty much "at the money"
(remember Delta?)
45 delta means that stock goes up 45 cents for every dollar the stock does.
90 delta goes up 90 cents for each dollar. I do somewhere in between.
Low delta options are false economy ... don't do it unless you have inside knowledge of a stock making a BIG move.

Why sell now? Rome wasn't built in a day. Plan on having that option a very long time. - lots of time. The more time you buy the less Theta (time decay) applies to that option.
One thing I know about day-traders is they all go broke. You will hear about the killing they made on this or that but you never hear of the big loss.
It's like gambling, with each loss they have smaller and smaller amounts of cash to "bet" with. This leads to more reckless behaviour to try and win it back all at once ... eventually you'll find them circling the drain.

[Fedup]

Quote:

Originally Posted by SpartacusSchmartacus Nothing ever wrong with making a profit. Lets go over some fine tuning. By the nature of your profit it looks like you bot pretty much "at the money" (remember Delta?) 45 delta means that stock goes up 45 cents for every dollar the stock does. 90 delta goes up 90 cents for each dollar. I do somewhere in between. Low delta options are false economy ... don't do it unless you have inside knowledge of a stock making a BIG move. Why sell now? Rome wasn't built in a day. Plan on having that option a very long time. - lots of time. The more time you buy the less Theta (time decay) applies to that option. One thing I know about day-traders is they all go broke. You will hear about the killing they made on this or that but you never hear of the big loss. It's like gambling, with each loss they have smaller and smaller amounts of cash to "bet" with. This leads to more reckless behaviour to try and win it back all at once ... eventually you'll find them circling the drain.

I tried to find out where’s the Delta in Fidelity but I couldn’t see it. I guess when I have time I will look in Ameritrade. I sold because it’s probably one of the stocks that are haters. I had a bit of confident it was going up because it did drop quite a bit before I initiated my trade. Thanks to you, I bought the option with 350 days. I was expecting a bounce and it did.

[NW-Bound]

On 9/5:

Quote:

Originally Posted by SpartacusSchmartacus ... Account is now 525K ...

On 9/12:

Quote:

Originally Posted by SpartacusSchmartacus ... Acct down to 494K...

That's a change of -5.9%.

Over that same period of 1 week, I was down -1.15%.

Compared to the market, S&P is flat, while the NASDAQ is down -0.5%.

For what it's worth...

[SpartacusSchmartacus]

Quote:

Originally Posted by NW-Bound On 9/5: On 9/12: That's a change of -5.9%. Over that same period of 1 week, I was down -1.15%. Compared to the market, S&P is flat, while the NASDAQ is down -0.5%. For what it's worth...

What exactly are you saying ... that option trading is not for the faint of heart? Strong stomach needed for sure.
This is what has been alluded to since thread was put up.
acct today at 11:51 AM $513,995.60

[NW-Bound]

Quote:

Originally Posted by SpartacusSchmartacus What exactly are you saying ... that option trading is not for the faint of heart?

What goes up a lot can go down a lot. Of course you and I know this.

Just wanted to reinforce it for the readers who might forget this.

PS. It does not even have to be options. One of my holdings in the semiconductor segment took a 10% hair cut right at market open a few days ago, just due to an industry report that spotted some weakness in this business.

[FIRE'd@51]

Quote:

Originally Posted by Fedup I tried to find out where’s the Delta in Fidelity but I couldn’t see it.

If you're using Fidelity's Active Trader Pro, you can add columns containing the Greeks (delta, theta, IV, etc) to your Option Chain and Watch Lists by clicking on the Settings tab on the green bar at the top.

[SpartacusSchmartacus]

Quote:

Originally Posted by FIRE'd@51 If you're using Fidelity's Active Trader Pro, you can add columns containing the Greeks (delta, theta, IV, etc)

IV has been mentioned so let's go there, Implied Volatility is the "excitement or expectation" around a stock's movement. It puffs up the option price artificially cuz there is always a sucker willing to buy it. IV is measured ATM cuz thats where suckers buy their options. Buy deep ITM to lessen this effect.
If you are doing Spread trades then IV doesn't matter cuz you buy one/sell one.
High IV is good if you are selling naked or covered puts/calls.


FIRE'd - I was a big fan of William F Buckley - we need more guys like him.
Read alot of his stuff ... favorite off topic book was "Airbourne" .. about his sailing adventure.

[Fedup]

Quote:

Originally Posted by FIRE'd@51 If you're using Fidelity's Active Trader Pro, you can add columns containing the Greeks (delta, theta, IV, etc) to your Option Chain and Watch Lists by clicking on the Settings tab on the green bar at the top.

Thanks for your post.
I have to call the Fidelity guy to ask him for help. So far I’ve just started trading using Fidelity since Sep 4, I haven’t quite find out how to do on a lot of things.

Edit to add, this morning, I initiated a trade on a stock in the Dow, this will be a long term hold, my options go out to 2020. Deep in the money. Will see how this pan out, so far I’m ahead of this morning.