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Money… Have you ever dreamed of being a trader and live live like one? I dreamed all the time.


 

 

When I was a kid I always dreamed of a life of trader. When I was 15 I dreamed of having money working for me and not me working for it. At that time I didn’t have means to fulfill my dream. Today, it seems I can reach that dream. Trading makes me feel happy and makes me think that I can live my life the way I want it and not the way I have to live it.

Have you ever dreamed of such a life? Wake up in the morning knowing that it is another beautiful day which you may spend with your family, trading a few hours a day and then spend it doing your hobbies?

What do you like? I like to travel. Can you afford it? It is easier when you are single, but it can be boring. It is difficult when you have a family of four, but it is fun traveling.

I believe, trading can make this happen and enrich your life. Although trading is not for everybody. Where I feel happiness and joy, others feel uncomfortable and in jeopardy.

We have another week in front of us. I wish you all that it be successful and fulfilling.

Happy trading!
 
 




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New trade – Amazon (AMZN) in troubles… and my easy money trade too! Sold some calls.

New trade - Amazon (AMZN) in troubles... and my easy money trade too! Sold some calls.

What was about to be an easy money trade a week ago is about to become a disaster. A week ago I sold a bull put spread expecting Amazon (AMZN) to go higher. Well, I must admit I didn’t expect Amazon would miss it’s quarter the way it did.

Right now, AMZN sold off -10% after hours and fell thru both of strikes of both legs of my spread.

Right now the stock is at $320.52 a share. My upper (short) strike is at $332.5 and the lower strike is at $322.5. So it is not that bad as it could be, thanks to my original Delta of that trade. The entire trade delta was 0.07 or 7% chance that the trade ends OTM.

That was at the beginning. Now everything is different and we are in the money. Fortunately not deep in the money, so the trade can be managed and rolled.

I will roll this trade further away in time, but I will do that tomorrow later afternoon. There is still a chance that investors will not panic and stop the madness selling off the stock and it will go slowly higher. Although I do not believe in it too much.

However, the implied volatility skyrocketed and I will try to take advantage of it and sell a bear call spread tomorrow morning against AMZN.

Trade Detail

I plan to open the following trade the first thing in the morning. I cannot say whether I will be able to open it. If so, it will be a great trade. If not, I will be sad, but OK.

STO 1 Jul4 14 345/355 call @ $4.75

This trade consists from the following legs:

SELL 1 Jul4 14 345 call
BUY 1 Jul4 14 355 call

I will see in the morning and report this trade tomorrow if it happens. Nothing is easy. Even the trades which started like easy money.

Happy trading!
 
 




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Posted by Martin July 23, 2014
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Get up to $150 when you start trading with Motif

Retail Trader nets $50 million on $196 million trading the SPX and how she did it.


Karen the Supertrader re-joins Tom Sosnoff and Tony Battista in 2014 for a tastytrade exclusive follow-up interview! Karen the Supertrader breaks down the strategies she used in 2013 to earn $50 million on $196 million.

 

 




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Trade adjustment – Taser Int. (TASR) roll baby, roll


TASRTime to roll this stock lower and farther away in time. TASR started its consolidation in these couple of days when it bounced from 10s back up to $11 level.

It also reports earnings on July 30th before market opens. How will investors react to it? Will they like earnings or not? Will they send the stock lower?

The consolidation started on Friday by a heavy reversal trade. Today, it continued up again after erratic trading in the morning. Is the selling over or is this a dead cat bounce?

The outlook for this stock is negative in my eyes and what my indicators are telling me. The stock may still resume the selling in a couple of days. Many investors out there are expecting bad report this month which would send this stock to new lows.

I decided to roll this trade lower to protect it. I can roll it farther away in time, and as low as to $10 strike.

I can roll the trade down to 10 strike, into March 2015 expiration month, buy back 17 contracts and sell 30 new contracts, collect $98 credit in premiums and, the most important thing is, I will spend no maintenance cash. This roll will have absolutely no effect on my options buying power.

I will have to just wait longer for this trade to finally end.

A positive thing is, that naked calls and puts I had open a few weeks ago, which I closed last Friday offset my current loss from this trade entirely. I collected around $725 in premiums from naked calls and long puts while this trade is showing a loss of $833 as of this writing. No matter what happens, this trade should end as a winning trade.

If I roll this tomorrow morning, there will be three outcomes.

One, the stock resumes selling after the bad earnings report and I will be in a good shape. Even if TASR falls to $9 a share, I still will be in a good shape ready to roll further when time comes. It will be cheaper and affordable roll.

Two, the stock will not react negatively to the bad earnings report since all negative impact is already priced in during the recent sell off. Then the stock remains in this 11-ish level, I will be OTM and it will be a waiting game for the put contracts to lose value and expire worthless.

Three, the report will actually be positive, the stock jumps up again and will continue growing. Then my put contracts will start losing value faster and I should be able to unwind them earlier.

In any way, this trade is heading towards a winning trade after a long struggle to manage it. It however happens sometimes that some stocks will not behave and will make you crazy. The goal is to be able to sustain it. If you do not have enough cash, patience, or even knowledge, it is better to close a trade, take a loss and move on.

I am not that kind of person. I like a philosophy of Karen the Supertrader, who has a motto to defend premiums. I believe in it, I like it that way, and I will defend already collected premiums at all cost. I will not give it back.

And yes, if the stock reacts negatively on earnings or resumes selling, I will sell new calls to help offset my losses from puts even more. At this time it is too early to open these trades, I will wait for a new, resumed weakness.

Trade Detail

This trade consists of two legs of a diagonal put spread:

BTC 17 Dec19 14 12 put
STO 30 Mar 20 14 10 put

for CREDIT 0.98

Trading TASR was quite interesting over time. I started last year with this stock opening a total return covered call trade when I bought the stock and sold call against it. I made money. During the course of that trade the stock fell from $9 a share to $6 a share so I bought another 100 shares and sold another call against it. Both trades ended with great gains as the stock went up above $10 a share.

It continued even higher. So I started selling puts and collecting more premiums. The stock went even above 20 dollars a share and I collected nice premiums all the way up.

Then the stock collapsed. And again I rode it all the way down and now it looks like that I will and this relationship with TASR at $10 a share level. Exactly where I started a year ago. The good thing is, I made money and although it was a dramatic ride, I didn’t lose. So far.

Happy trading!
 
 




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Another trader made it from $1500 to $1 Million in 3 years


I am not into penny stocks. I do not understand them, I do not know how to evaluate them, where to get information, etc. It is a foreign thing from another planet for me.

Here is a video of Timothy Sykes’s student, who studied his strategy and invested $1500 which he borrowed from his parents. In three years he finished with $1 Million in his account.

Even if you do not plan on trading penny stocks or investing in them, it is a great inspirational video.

 

 




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New Trade – Amazon (AMZN) weeklys Bull Put Spread, will it succeed?

New Trade - Amazon (AMZN) weeklys Bull Put Spread, will it succeed?

Here is another new trade I plan to open tomorrow morning. It will be a bull put spread against Amazon (AMZN). The stock shows a great push up at the beginning of a new breakout trend. I believe it will repeat the previous cycle when it broke up from a squeeze.

If it repeats the same swing, the stock should go to $380 a share or even break up thru it.

Amazon

The chart above indicates what I am looking at and what my expectations are. If you look at the squeeze indicator, you can see that the stock broke up recently. Since markets are rhythmical I expect it to repeat the same or similar pattern (of course the trend may lose steam a lot earlier than the previous one, but I hope will be out of the trade by then).

With that said, I decided to open a new trade on Monday by selling a weeklys bull put spread. It is a credit trade and I should receive $130 for this trade. It is set to expire this week this coming Friday (Friday, July 25). If that happens I will collect a full credit.

Trade Detail

STO 1 Jul4 14 322.5/332.5 put @ $1.30

This trade consists from the following legs:

SELL 1 Jul4 14 332.5 put
BUY 1 Jul4 14 322.5 put

The trade will end in 5 days and it will have a max profit, if the stock ends above $332.5 at expiration day, which is July 25. Max loss of $870 will occur if the stock drops below 322.5 at expiration (and I hope this will not happen).

Happy Trading!

 
 




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Trade exits – TASR (+3.11%), AMZN (+9.54%), AAPL (+3.54%), FCX (+3.07%) Happy Friday Expiration

Trade exits - TASR (+3.11%), AMZN (+9.54%), AAPL (+3.54%), FCX (+3.07%) Happy Friday Expiration

This week trading was definitely something. It was erratic and crazy. I had some trades which were good, turned bad, ugly, and great again. All in one week! So what happened and what trades I had or could take off the table? Let’s take a review.

FCX logoFreeport-McMoRan Inc. (FCX) – This was a great trade I opened in May 2014 and it had August 2014 expiration. I could close this trade this Friday as it already lost all its value. I sold a put against this stock and collected $100 in premiums. On Friday I could buy it back for $5 and thus close the entire trade with $95 premium banking in +3.07% profit. Not too shabby.
 

Amazon logoAmazon (AMZN) – Even better trade than FCX one. I opened this trade three days ago, on Wednesday last week. It was a bull put spread and I was expecting the stock to end above the higher (short) put option strike, which was $355. At first this trade was great and it seemed to be going for a great profit in three days. Yet at the same day, in the afternoon, the trade turned bad and the stock ended below my strike price.

On Thursday the trade turned ugly and it was apparent that this trade will not end well and that I will have to roll it away. I think there was a pattern in this trade. I noticed that whenever I take a trade which is about to expire in two to three days, it always turns bad on me. It is like my trades need time for them to end well and taking ultra-short time trades turn nasty. I was so mad that I turned off the computer and stopped watching this trade completely. I was determined to roll it, but I decided to wait for Friday and roll it at the end of the day. What if, right?

Well, on Friday the stock spiked up and ended well above $355 strike making this trade great again and I was able to collect the entire premium as it expired worthless. I banked $148 premium (+9.54%).
 

AAPL logoApple (AAPL) – Apple was a disappointment to me. If you remember, I tried a directional trade and bought calls. Apparently, I am not good at trading long options. The trade turned bad and I decided to protect it. I opened a protective short call trade to offset the loss in a long call trade. On Friday, after a big pop in price I decided to close the trade with a profit and I bought back my protective short call. This trade offset my loss in a long call, although not as much as I originally planned. I opened this trade collecting $105 premium and bought it back spending $45. With this I banked in $60 (+3.54%). This offsets my loss in long call trade a bit. The original loss was -$205, now the loss is only -$145.
 

TASR logoTaser Inc. (TASR) – This trade is a lot complex than it seems. I sold a put contract against TASR sometimes in May 2014 at 18 strike. Then I failed to recognize problems in this stock and decided to defend the collected premium at all cost. I rolled this trade down from 18 strike to 13 strike. I was hard and I was forced to be selling more contracts in order to keep the trade a CREDIT trade. I also tried to keep the trade staying in September month rather than moving it further away in time.

At 13 strike the stock seemed to consolidate and I decided not to roll. Another mistake. When the stock failed again I at least was brave enough to open a few bearish trades.

One bearish trade against TASR was selling calls at 17 strike against my short puts turning this trade into a short straddle. It worked well as the stock fell deep close to 10 dollars a share. I collected $1,460 in premiums which perfectly offset my loss in short puts (at that time my loss was $1,945). On Friday, the stock seemed to consolidate or reverse the fall. My indicators showed the first day as changed momentum. Although the stock and trend is still heavy bearish, Friday was a change in the selling pressure as the stock moved from $10.46 up to $11.36 a share. This strong move could be just a move influenced by a market creating a fake bull trap, or a true change in direction (a beginning of it). We will see in coming weeks how this trade develops. If it resumes selling I may open new short calls against TASR to further collect new premiums.

So, I bought the short calls back, in case the bull trend continues next week ending this trade with a nice premium of $704.38 ending with +3.28% profit.

I also bought two puts against this trade trying to get better return, but once again, these two trades proved that I was bad at buying options and that I should stay with shorting options strategies. Although one trade ended with 9% profit, it is relative as it actually was only $10 gain. The second trade was a loss of -$2.94%.

In average, my TASR protective trades ended positive with +3.11% profit.
 

And of course, I reaffirmed a lesson – do not buy options. Sell them.

Happy Trading in the next week.
 
 




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Trade exit – AAPL long call for a loss (-24%)

Trade exit - AAPL long call for a loss (-24%)

I once read a story about a trader who was quite successful trading futures – E mini S&P 500 and he was making a lot of money. Later he wanted to start trading different markets and he decided to trade currencies at Forex. Guess what. He almost lost everything. So he got back to trading E mini S&P 500 and continued making a lot of money.

I once traded advanced options. Some of the strategies were long options and all sorts of spreads. I was making money a bit, but at the end I lost almost everything. So I started trading short options and I became successful. I recovered my account and even doubled it twice.

So I decided to start trading long options and spreads again. Since now I was a lot better trader and making a lot of money, right? Guess what?

All trades I took turned out to be losers again.

I had a trade against GLW (3 long calls) and AAPL (1 long call).

Both trades quickly turned against me and I started losing money. I closed GLW trades for a loss quickly a few days ago. Yesterday, I sold a short call against my long AAPL call (as a calendar spread), but today I couldn’t bear enlarging losses on the long call. Not only I was losing due to shrinking intrinsic value, but also a time value was eating up my trade. It was supposed to be a swing trade. I wasn’t ready to hold it for a longer time to go over a stock price drop and hope that time decay won’t destroy the value so when AAPL recovers I won’t make anything.

AAPL will post earnings next week. Will the stock skyrocket or sink even more? Who knows? And I do not want to hold an option I am not comfortable with. Be it a short option I would feel more comfortable even though some consider it riskier than long option.

So I decided to close my long call for a loss and keep the short call offset the loss. And hopefully next week the short call expires worthless and offset the loss by roughly 50%.

I bought the call for $855 and today I sold it for $650 creating a $205 loss (-24%). If my short call expire worthless next week, my loss will only be -$100 (or -12%).

If the stock spikes up on earnings, then I will be screwed.

Next week will show.




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New Trade – BULL PUT SPREAD JUL14 (AMZN) and SHORT CALL (AAPL)


Today I opened two new trades for income.

The first trade was against Amazon (AMZN) – a bullish trade – bull put spread. In the morning the trade looked very good, later the stock collapsed (intraday) and then slightly recovered. I think it was Yellen and her testimony sending tech stocks down.

When she finally left off the TV the stock recovered a bit and it is flat since (until this writing).

The overall AMZN trend is very bullish. It broke up recently (I wish I could pick this breakout earlier), and now marching upwards. Originally I wanted to take just a simple call trade, but it exceeded cash on my account. So I decided to go with a spread which is cheaper.

If the stock is so bullish then why I am looking at intraday behavior of the stock?

The reason is, that the trade I opened this morning is just a two day trade. It will expire this Friday and I want it to expire and not roll it. As the momentum is bullish, I have 70% chance that it will expire, but you never know. Yellen may say something investors will not appreciate and all is gone.

It amazes me anyway. She (Yellen) was talking about tech stocks mentioning how overvalued they seem to be and that brought a question to my mind. How many stocks has she ever bought that she dares to analyze the stocks? And the second, if she stops pouring cheap money to the economy, the stock will fall down to their intrinsic value as the artificial buy backs by the companies using cheap cash will end.

Here is the chart of AMZN and the trade I took:

AMZN

Trade Detail

STO 1 Jul14 350/355 put @ $1.48

This trade consists from the following legs:

SELL 1 Jul14 355 put
BUY 1 Jul14 350 put

The trade expires this Friday. If that happens I will keep $148 premium. If any of the leg gets ITM I will either close that leg with a loss or roll it down and in time (that would depend on available cash reserves in my account.

The second trade was a short call against Apple (AAPL).

Three days ago I bought a call option against AAPL which was supposed to be my first purely directional trade. I was also expecting this trade to be short, one or maybe two days.

Thanks to Yellen, tech stocks struggle moving up. Although from a long term perspective, AAPL is very bullish, but it struggles moving higher in a pace I was expecting.

AAPL

As you can see above, overall outlook is positive, but intraday trading yesterday and today was a struggle. That makes my long call trade stagnating and making me no money. That means that I might end up in this trade longer than I expected. But I want to take a benefit of it. I decided to start selling short term (weeklys) calls to generate income while waiting for this trade to move on.

Trade Detail

STO 1 Jul14 4 100 put @ $1.05

This trade will expire next Friday (next week). I hope the stock will not march that high (to $100 a share) by the next Friday, otherwise I will have to roll this trade or close it with a loss.

If it expires, I will bank $105 (minus commissions).

As of now, as AAPL struggles moving higher, this trade is protecting me against losses.

Let’s see this and next week how the market evolves.

Happy Trading!
 
 




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New Trade – BUY OCT14 CALLS on AAPL – my first directional trade

New Trade - BUY OCT14 CALLS on AAPL - my first directional trade

This trade against Apple (AAPL) will be my first directional trade buying long calls. In the past I traded this kind of option strategy the wrong way and no wonder that it didn’t work for me so I stopped buying options and instead started selling options.

First, let’s take a look on the chart below, why I consider this trade a good candidate for a directional trade and then later I will try to explain the mechanics of the trade. You may want to enlarge the chart to see it better or open it in a new window.

AAPL long Call trade

First, take a look at the chart. I consider the trend unbroken and in a slight consolidation. Most likely the stock will continue to the new highs.

Second, look at the squeeze chart below. It turned from a negative (below zero) territory to a positive. That action itself is bullish to me. Now we may see another swing up. But I cannot see how big.

Third, look at the wave (the bottom indicator) which is in a very strong magnitude, pointing up with no sign of weakness (which of course may change any day, but it doesn’t show up yet).

These are three quick reasons, why I consider this trade a good candidate to pick a few points within a few days.

Let’s take a look at the details:

Trade Details

BTO 1 OCT14 89.29 call @ $8.55

Delta: 73
Expiration: 96 days
Exit: upon a sell signal
Stop loss: upon a sell signal

Let’s take a look at those metrics and explain what I was doing wrong in the past:

Delta 73

Delta has two functions in options. The first one is that it tells you the probability of an option ending ITM or OTM. In this trade with Delta 73 (or 0.73) it tells you that the option has 73% chance ending up ITM at expiration and 27% chance that it ends OTM.

The second function is that it tells you the magnitude of the move of the option price compared to a stock movement. In this example, the option price will move by 73 cents for every dollar of the stock move.

This is the mistake investors do when they buy options. When you buy options you want its price to move as much as the stock. If you buy cheap OTN option, the move will be slow and in many occasions time decay will eat up your option faster than the price moves.

So for me, no more cheap OTM buys. You buy ITM options, sell OTM options. Do not be a cheap guy or you will lose money.

Expiration: 96 days

Another mistake I made in the past was I tried to buy as little time as possible. Once again I was approaching the long side of the trade from the seller perspective and constructing the trade the wrong way.

Take a look at a typical option behavior vs. time:

Options

When the option loses its value the most? Obviously when it approaches its expiration time. As close it gets to expiration as faster the time decay works against you as a buyer or for you as a seller. The cut off is roughly at 50 days of the time value when the things start getting nasty. And faster. The biggest time value loss is around 15 days when things start speeding up rapidly. So you want to be a seller in this time frame.

As a buyer, I want time decay as slow as possible, so I decided to buy as long expiration as possible. I think, 96 days is OK.

Exit & Stop loss – upon a sell signal

This can get tricky. As I do not know Think or Swim platform that much yet (for many years I was using Strategy Desk and Trade Architect), I do not want to program (and experiment with) an automatic stop loss order in a live trade yet. So I will watch the trade like a hawk and as soon as I see a sell signal, I will liquidate this trade. When that happens, I will post about it.

I entered this trade tonight for tomorrow open. Let’s see if the trade executes at the open or not. I may update this post or you can check My Trades & Income tab on this blog to see if the new trade appears in the list. You may also check My Holdings.

I do not expect holding this trade until expiration. If the stock moves a few points I should ride it as long as it moves and makes me money. Then I sell it for a profit (or a loss if it turns against me).

Happy Trading!
 
 




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