Monday, March 5, 2012
$EOG setup
was itching to get into this a few days ago and got no fills. an entry today is starting to look like a lower probability entry so im going to wait some more. i dont know what oil is going to do or Iran but the consensus seems to be that oils prices will remain high. also a cramer favorite. my original setup levels remain valid but now would rather wait for a test a few points lower.. now looking for a test of the 50day / and top of previous range from at the breakout level near 108.. hits that then look again at credit put spreads at / below the bottom of that channel..near 102 but likely at/below the 200day near 98... so the 95/97.50 spread will be looked at. setting alert at 109 for now
$CAT setup for entry
5mar- havent been in this one in a while..hard to get an entry after that good run its had last few months...been pulling back lately. will be looking for a further pullback and test of the 50day near 106... then will price out some credit put spreads shooting against the 200day near 96..staying at/below that level...150day MA is on the chart but not really a big believer in that one. the more a MA is followed the more relevent it is (50/200). set your alert and wait for it to come to you
Friday, March 2, 2012
The $JOY trade and comments
update 5mar- Joy Global is down +$3 today im sure because of whatever the deal with china is, despite what company has already guided for next quarter..etc. Good example of how using a spread with plenty of time to opex you dont have to sweat the the day to day moves. yes its down, yes its closer to the short strike but there are 50days left till opex, alot can happen by then. no need to close for loss, let it sit there and let the percentages, support levels, etc work for you.
2mar -was looking for a test of the moving averages previously but then realized that earnings were at end of month so that nixed that..earnings out on 27th and stock pulled back again to near the moving averages..earnings looked good, growth rates, guidance increased, etc. so missing estimates by a penny or two it not important. this qualifies as a B.S. selloff to me. got the 5-6 point selloff on good numbers, the drop almost lines up to the moving averages. the clear level to shoot against is the 75ish level which was support from few months ago. Higher risk would have looked for a Mar 80 level short strike but i wanted to be as close to that 75 level as possible in case my premise is wrong on quality of earnings and/or any downgrades that might come with it.. so to give myself more time and more distance i :
Sold the Apr 72.50/75 credit put spreads at .36 x 15 for $540 credit.
This level allows for about at 12% drop and shows about an 85% probability of max profit using the Trademonster Analyse tab.
2mar -was looking for a test of the moving averages previously but then realized that earnings were at end of month so that nixed that..earnings out on 27th and stock pulled back again to near the moving averages..earnings looked good, growth rates, guidance increased, etc. so missing estimates by a penny or two it not important. this qualifies as a B.S. selloff to me. got the 5-6 point selloff on good numbers, the drop almost lines up to the moving averages. the clear level to shoot against is the 75ish level which was support from few months ago. Higher risk would have looked for a Mar 80 level short strike but i wanted to be as close to that 75 level as possible in case my premise is wrong on quality of earnings and/or any downgrades that might come with it.. so to give myself more time and more distance i :
Sold the Apr 72.50/75 credit put spreads at .36 x 15 for $540 credit.
This level allows for about at 12% drop and shows about an 85% probability of max profit using the Trademonster Analyse tab.
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The $POT trade and why i dont use stops
On 9feb i noted that Potash $POT stock pulled back to test the short term rising trendline, think Jim Iurio pointed it out. Although my track record on trendline tests is lower than flat line support tests i entered a credit put spread. Its difficult for me to be comfortable putting on spreads on lower priced stocks so my strategy on this one was to select a short strike under some other technical support area in this case the upward sloping 50day moving average which was near 43..so my short strike was 42.50 ... the probability of max profit using Trademonster Analyse tab was about 85% if i recall correctly. so i :
sold the Mar 40/42.50 credit put spreads for .35 credit x 12 for $420
so the premise that the stock would test the rising trendline, bounce and move higher was wrong..couple days sideways then moved lower. i have previously mentioned i dont use stops on credit spreads.. as the stock pulled back to near 44 this spread was priced at .70+ which would show a huge loss...over the course of many months i kept track of all my credit spreads, both live and paper trades, i tracked where the stock ended up closing on opex..the results were that 95% of the stocks still closed above their short strikes on opex day..including the ones i closed/stopped out/cut losses.. so almost all the ones i sold as a loser would rebound to be a winner. there will always be one that keeps moving and will have to be rolled to next month or closed altogether but in adding it all up, my losses from using stops or closing for loss far exceeded the occasional loss of taking the loss because stock did not rebound. so this POT trade is perfect example..took the trade, had probabilities on my side, had a decent lower support level to shoot against. stock pulled back, still stayed above my 42.50 short strike, never did touch the 50day (so the 50day DID act as support this time), i held and it rebounded. so on 2mar i closed the spread with stock almost the same price as when i entered but i have had 3weeks of time decay. Didnt get shaken out, held on to let time decay turn a loser back into a winner.
Common stops for others i see are when the spread loses 50% of value they close, or if stock hits the short strike. Spread pricing can swing wildly with a stock moving 1% but the spread moves 25% even while staying many points above your short strike so i am not comfortable using hard or mental stops. You may not be comfortable with this method but it works for me.. it puts the probabilities in my favor at opex and my history shows it works for me. Have to trade how you are comfortable.
Summary trade:
9feb - sold the Mar 40/42.50 credit put spreads for .35 credit x 12 for $420
2mar - bought back for .04 , total profit $372 , about 90% gain for 3weeks
sold the Mar 40/42.50 credit put spreads for .35 credit x 12 for $420
so the premise that the stock would test the rising trendline, bounce and move higher was wrong..couple days sideways then moved lower. i have previously mentioned i dont use stops on credit spreads.. as the stock pulled back to near 44 this spread was priced at .70+ which would show a huge loss...over the course of many months i kept track of all my credit spreads, both live and paper trades, i tracked where the stock ended up closing on opex..the results were that 95% of the stocks still closed above their short strikes on opex day..including the ones i closed/stopped out/cut losses.. so almost all the ones i sold as a loser would rebound to be a winner. there will always be one that keeps moving and will have to be rolled to next month or closed altogether but in adding it all up, my losses from using stops or closing for loss far exceeded the occasional loss of taking the loss because stock did not rebound. so this POT trade is perfect example..took the trade, had probabilities on my side, had a decent lower support level to shoot against. stock pulled back, still stayed above my 42.50 short strike, never did touch the 50day (so the 50day DID act as support this time), i held and it rebounded. so on 2mar i closed the spread with stock almost the same price as when i entered but i have had 3weeks of time decay. Didnt get shaken out, held on to let time decay turn a loser back into a winner.
Common stops for others i see are when the spread loses 50% of value they close, or if stock hits the short strike. Spread pricing can swing wildly with a stock moving 1% but the spread moves 25% even while staying many points above your short strike so i am not comfortable using hard or mental stops. You may not be comfortable with this method but it works for me.. it puts the probabilities in my favor at opex and my history shows it works for me. Have to trade how you are comfortable.
Summary trade:
9feb - sold the Mar 40/42.50 credit put spreads for .35 credit x 12 for $420
2mar - bought back for .04 , total profit $372 , about 90% gain for 3weeks
Thursday, March 1, 2012
$CF setup for April entry
6mar - was down 6-7 points when i got back this mornings, per yesterdays setup was looking for a test to the support line/50day area..
Sold: Apr 150/155 credit put spreads at $1.05 x10 . Trademonster shows a 77% probability of max profit. strikes under the 200day MA
5mar- have had a downgrade since original post. stock is around 180 now,, still watching for a pullback to test the 50day/support line. have put a 145/150 credit put spread in saved que. alert set at 176
havent had a chance to get back into this one for few months, was always waiting for a pullback. Had a really good run since december. For April opex will be looking for a pullback to test the small support level near 175..this coincides with the rapidly approaching 50day moving average. Earnings as of now look to be after the april opex so that will not be a factor. If stock pullsback to near the 175 area will then use the 200day moving average to shoot against for support protection. so will be looking under the 155 level..probably first spread level ill check is 145/150 credit put spread. Ideal would be a rapid selloff with rest of market to juice up the premium a bit. will update if / when i enter.
Sold: Apr 150/155 credit put spreads at $1.05 x10 . Trademonster shows a 77% probability of max profit. strikes under the 200day MA
havent had a chance to get back into this one for few months, was always waiting for a pullback. Had a really good run since december. For April opex will be looking for a pullback to test the small support level near 175..this coincides with the rapidly approaching 50day moving average. Earnings as of now look to be after the april opex so that will not be a factor. If stock pullsback to near the 175 area will then use the 200day moving average to shoot against for support protection. so will be looking under the 155 level..probably first spread level ill check is 145/150 credit put spread. Ideal would be a rapid selloff with rest of market to juice up the premium a bit. will update if / when i enter.
Friday, February 24, 2012
closing the 24feb $FFIV trade
13 mar - took profits and closed the credit put spread i entered on 24 feb
Sold the Mar115/120 credit put spreads for .80 credit x10 =$800 credit
Bought spread back for .13 x10 = $130
Profit on trade = $670
Trade summary- entered on 24 feb as posted below, used 124 as support line, stock dropped on one day down to the 120short strike..still had plenty of time to let recover, again this is why i dont use stops on spreads..would have gotten stopped out / shaken out on that day..stock recovered and resumed trading within the channel. closed today on quick opening pop to 128.. so got alot of time decay, a few points price appreciation and spread reached 85% of max gain with 4days to go. now the risk reward has changed and only $130 is left in the trade..better to take the profit, especially if something wacky comes out of FOMC this week.
Also if youve been following me on this name, this is the 2nd spread ive done on FFIV for Mar opex. previously had 105/110 that i took profits on 23feb...there was only .14 left in that spread and had 77%gain..by taking that gain i was able to use that same buying power and make another profitable trade vs trying to let the orginal spread expire worthless and not have to pay commission..so doing that made me an additional $500 on FFIV this month... Takeaway is to take your profits at 75% + of max profit...you only make a few pennies more if stock keeps going up anyway
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29 feb - as stated below i rolled the Mar110 short call to the Apr115 short call..paid $1.50 for that roll...still holding the mar115/120 credit put spreads and will roll to apr110/115 if needed. note that earnings are before Apr opex.
24feb - recently closed a Mar105/110 credit put spread for profit and looking to reenter at higher strike. Currently have a DITM leap and Mar110 short call. short call has delta above 95 so will be rolling it up and out to the Apr115 level soon..was priced at about 1.50 debit to make that roll. so heres the thought process.. still have plenty of time in March opex, stock has been holding above the previous breakout level near 123 for few weeks. Level im shooting against that will give some support is that 123 breakout level, safer level would have been 115/110 but wanted more premium than was being offered on those. worse case is that stock pulls back to 115 or lower. if so then will roll that spread down and out to APR 115/110 spread...but will also have the short 115 call hedge working for me if i have to roll down and out. Getting decent premium at this level with 75% probability of max profit using the Trademonster Analyse Tab. The stock along with other cloud companies have been strong fundamentally as well. Additionally, if i have to roll to Apr115/110 then that 115 level will get me under the 50 day moving average for some support.
Sold the Mar115/120 credit put spreads for .80 credit x10
Sold the Mar115/120 credit put spreads for .80 credit x10 =$800 credit
Bought spread back for .13 x10 = $130
Profit on trade = $670
Trade summary- entered on 24 feb as posted below, used 124 as support line, stock dropped on one day down to the 120short strike..still had plenty of time to let recover, again this is why i dont use stops on spreads..would have gotten stopped out / shaken out on that day..stock recovered and resumed trading within the channel. closed today on quick opening pop to 128.. so got alot of time decay, a few points price appreciation and spread reached 85% of max gain with 4days to go. now the risk reward has changed and only $130 is left in the trade..better to take the profit, especially if something wacky comes out of FOMC this week.
Also if youve been following me on this name, this is the 2nd spread ive done on FFIV for Mar opex. previously had 105/110 that i took profits on 23feb...there was only .14 left in that spread and had 77%gain..by taking that gain i was able to use that same buying power and make another profitable trade vs trying to let the orginal spread expire worthless and not have to pay commission..so doing that made me an additional $500 on FFIV this month... Takeaway is to take your profits at 75% + of max profit...you only make a few pennies more if stock keeps going up anyway
29 feb - as stated below i rolled the Mar110 short call to the Apr115 short call..paid $1.50 for that roll...still holding the mar115/120 credit put spreads and will roll to apr110/115 if needed. note that earnings are before Apr opex.
24feb - recently closed a Mar105/110 credit put spread for profit and looking to reenter at higher strike. Currently have a DITM leap and Mar110 short call. short call has delta above 95 so will be rolling it up and out to the Apr115 level soon..was priced at about 1.50 debit to make that roll. so heres the thought process.. still have plenty of time in March opex, stock has been holding above the previous breakout level near 123 for few weeks. Level im shooting against that will give some support is that 123 breakout level, safer level would have been 115/110 but wanted more premium than was being offered on those. worse case is that stock pulls back to 115 or lower. if so then will roll that spread down and out to APR 115/110 spread...but will also have the short 115 call hedge working for me if i have to roll down and out. Getting decent premium at this level with 75% probability of max profit using the Trademonster Analyse Tab. The stock along with other cloud companies have been strong fundamentally as well. Additionally, if i have to roll to Apr115/110 then that 115 level will get me under the 50 day moving average for some support.
Sold the Mar115/120 credit put spreads for .80 credit x10
Thursday, February 16, 2012
$AAPL trading updates
23feb - took profits on position today. stock has moved up since both entries, got some time decay. trade was for 7-8days this time. bought all spreads back at .30-- with 3weeks to go will be watching for a pullback to reenter credit put spreads likely at a higher strike..maybe near 480 level. since i didnt sell calls as well to condor the position i dont have to sweat out the stock going up and going against the calls.
original blog entry:
15feb - The move that almost everyone was expecting to happen finally did. The much anticipated pullback happened. you could almost taste the sentiment change while watching FastMoney half time yesterday. Ive been looking to reenter with credit put spreads but shooting against the 440 level. Sometimes you get the perfect setup, sometimes you dont. the 440 level didnt give me enough premium at the time. So the stock pulled back from 525ish to near 500 in about an hour...when you get a rapid move like that the put premiums juice up a bit...so taking advantage of that i entered a half position on Mar455/460 spreads.. nothing special about 460level except since there is not a good level to shoot against like a moving average or support line, the 460 level at the time gives me about an 85% probability of max profit. Like ive said before if you are unsure of the position, take half size with the option of either just going with that or adding to it later if stock moves down more.
So on 15feb i sold:
6lots - mar 455/460 credit put spreads at .75
Stock was weak in morning on 16Feb so i added to that to make full position:
6lots - mar455/460 credit put spreads at 1.10
If stock rebounds to recents highs in next week or so i might be taking profits, if not then let the time decay work on it. The strong fundamentals of AAPL make this a good candidate for an easy roll if it comes to that near opex. No interest in making it an iron condor..if/when stock rebounds up i dont want to have to worry about call spreads...just want to worry about taking profits on the puts.
original blog entry:
15feb - The move that almost everyone was expecting to happen finally did. The much anticipated pullback happened. you could almost taste the sentiment change while watching FastMoney half time yesterday. Ive been looking to reenter with credit put spreads but shooting against the 440 level. Sometimes you get the perfect setup, sometimes you dont. the 440 level didnt give me enough premium at the time. So the stock pulled back from 525ish to near 500 in about an hour...when you get a rapid move like that the put premiums juice up a bit...so taking advantage of that i entered a half position on Mar455/460 spreads.. nothing special about 460level except since there is not a good level to shoot against like a moving average or support line, the 460 level at the time gives me about an 85% probability of max profit. Like ive said before if you are unsure of the position, take half size with the option of either just going with that or adding to it later if stock moves down more.
So on 15feb i sold:
6lots - mar 455/460 credit put spreads at .75
Stock was weak in morning on 16Feb so i added to that to make full position:
6lots - mar455/460 credit put spreads at 1.10
If stock rebounds to recents highs in next week or so i might be taking profits, if not then let the time decay work on it. The strong fundamentals of AAPL make this a good candidate for an easy roll if it comes to that near opex. No interest in making it an iron condor..if/when stock rebounds up i dont want to have to worry about call spreads...just want to worry about taking profits on the puts.
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