I’m now back on the Social Media bandwagon, having taken all their profits and left them for dead last month.
I’m looking at taking positions in the following: LNKD, Z, and taking another long in ANGI.
We’ll talk about this rotation in After Hours with Option Addict later today.
OA
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whats the percentage of your option plays expiring worthless?
Me? I usually have about 4-5 per month on average.
Do you usually let your options play all the way out or do you have a defined loss limit at which point you try to sell?
Yes, I let the trades work, and risk the premium.
Hi Jeff,
After re-watching the options trading crash course I had a couple additional questions I was hoping you could address at some point on afterhours (or here). Here they are:
I’ve heard you recommend deeper ITM options in high IV situations such as taking a position before earnings. How do you reconcile this with the concept of a volatility smile? I understood that IV actually increases the deeper ITM you go – does this become negligible as the % of premium becomes heavily weighted to intrinsic value? I get that every additional point ITM increases the attractiveness of delta. Just wondering if you could comment about how the smile affects this situation.
Second question is regarding spreads: Why don’t you ever use a vertical bull call spread to decrease basis on the long call when you know there is a likely overhead target where the stock will pause? I’m envisioning a scenario with an obvious end to a volume pocket as a target. This caps upside however would increase my purchasing power. It seemed like your review in the crash course suggested that you use spreads just to game volatility. Would this not fit with your strategy and be outside the bounds of a pure volatility play?
Anyone else feel free to respond. Just trying to close the loop on some learning!
Thanks.
Kev,
1. There is no time value in ITM options. Smile gets thrown out the window unless time value is involved.
2. Limited reward. Makes zero sense.
OA
Thanks. Appreciate the response.
confidence shaken for me to initiate new positions 🙁
who feels like throwing in the towel today?! on the edge of my seat itching to just get out of everything and start all over. Part of me feels that way, so I’m thinking that’s when they pull a fast one and maybe we’re in for a change of direction back up…today or tomorrow. Or maybe since I think that, we haven’t actually bled enough today and there is more to come. who knows. I feel bad for anyone who bought near today’s highs.
Wait, one day towel throw?
Wow.
right when we may get a turnaround tuesday tomo to get it all going again
not throwing it in…just commenting that a day like today makes a lot of retail folks feel like giving up. I’ve been there before. I am not throwing it in…simply commenting that a day like today may actually pan out to go long. The emotional trader in me….is agonizing, while the more mechanical systematic trader in me is saying no big deal…this happens.
Hard not to shake confidence being down ~20% on the day
hahah
i do
Wow. Eye opening.
Nasdaq has first support at 4094.. 60’200sma.. Historical mean reversion puts bottom around 1750 on the Naz.. over the next 3 quarters.
Still like Gold? It’s a lot cheaper.
Yes, I still like gold. Will sell in 2016-2017. Its still in a secular bull market, and has been since 2003 and will continue to be. You have to have serious intellectual brain issues to not see a serious currency crisis coming. What is the annualized return on physical and RGLD since 2006? When I went heavy long on both..
An idea is one thing, execution is another. As I originally stated, I’ll buy at $900. At which point my conversations with you will have come full circle.
God i love those comments, see ya back in 2025, and ill tell ya how right i was…
TRLA…wow. Been sitting on those gains for a month, gone in one day. Oh well, still four days left.
haha. yes. my entire gain from trla wiped out today. haha. nuts
Quite a bounce off of 34.
It’ll hit my limit order if it retests it tomorrow.
i know its ridiculous to say, especially given how steady the market has been in the past two years. But today is giving me flashbacks to those all red days in 2011. we haven’t seen a day like today in a while.
They let you make a little, then take it all.
Hope you guys really are only using 1% of your Capital per trade.
I’m curious if people actually realize the capabilities and risk of investing in equities or even the market in general. If you can’t handle the ups and downs, invest in a money market, you’ll never have another down day in your life.
I think they do. We all like to celebrate victories and vent when we are down. These ups and downs are part of the game, and it doesn’t take long in the market to understand that. As quiet as its been here today, you can tell its been a down day in the market. But we will come back stronger, faster, smarter.
+1
Besides, we pick stocks, not the market.
Which makes it that much more risky.
Not necessarily, it depends on how you look at it and how you define risk..but however you look at it…I think it works out in our favor.
Money markets aren’t risk free
Technically no, but they are designed to stay at $1.00 per share, which is as close to a guaranteed winner as you will ever get. By winner, I mean, shouldn’t lose money.
That’s what too many thought in 2008
i did ok on the SWKS, the rest I’ll just let simmer
ANGI still in the green
JASO not so much
but
It’s only Monday
whatever, gave back loads $$ but buying more back. it’s a gift. buying relative strength, twtr and the like. Jeff’s message here is timely!
POMO money this week remember gents
There’s POMO buying everyday. Today included.
days like this are incredibly frustrating
They are supposed to be….hang in there.
might take a stab at some SPY calls at end of day. expecting turnaround tuesday…at least early in the morning
I used to get worried on days like today, but find myself perfectly at ease and not even checking my account or reading any news. My position sizing is much more appropriate now and I have a clear plan of when I will enter and exit the trade, which makes all the difference. No more freaking out and letting a loss turn into a bigger loss or having one bad day blow me up, reading too much news etc.
i actually wished angi was down more. i want to pick up some more.
it looks like you will get your wish
+1
The only unfortunate thing was I was trying to get better at “letting my winners run” and thought CREE had a little more room. Rather than closing out with a nice gain I’m right back where I started there. But that kind of thing comes with the territory.
That’s the risk one takes for letting a winner run — IF you can afford the risk (e.g. big account, a dozen of other positions, had a winning streak, etc.) — per OA’s crash course.
Sold everything for giant losses. I am done! Can’t take this.
haha. days like this definitely do hurt with the sectors my money is allocated. i have 11 out of the 20 stocks i own that are down 3% or more.
But got to be patient and not over react
I am just messing around – took everything in my power to not sell my TLT and commodity stocks to purchase some of these sold off stocks. Maybe tomorrow but waiting for my daily OA recording to get another perspective before I let go of my miners – I love the charts though.
sarcasm, right? or if true, this isn’t for everybody. best wishes. I wasn’t intending for anyone to throw in the towel after something like today…I was just offering up what I thought was the psyche of a lot of retail investors…something I’m not that far removed from, so I feel like I have insight into that and can use that info as a better informed, position-sized, etc trader that I am/hope to be.
I remember buying BAC at 3.5… so I am just waiting for that gut wrenching feeling to come back again… then I know I nailed the perfect trade.
GoGO resilient
waiting for a Daniel Day-Lewis picture post titled “There Will Be Blood”
If have even one more sandwich on this perpetual $HAS day, I think I am going to puke.
Certainly not a great way to start the resolution of holding winners longer. Lost mega gains in a few positions, which are now just green trades.
it will pay off in the long run though when a couple trades pop off to 800-1000%
Yes, but it is a lot less frustrating to scale out. If you own 10 contracts and are up >200%, why not sell a few (perhaps 4-5). If you get a nice push higher, sell a few more. If you are already up that much, your risk $$ is likely greater with 1/3 or 1/4 of the contracts than when you entered the trade. Personally, nothing worse for me than to see big unrealized gains plushed down the toilet.
Good info Fry, that’s what I try to do. But I have to go for the low price options to do that, and still keep position size small. That limits me to low price stocks, as I don’t want to go too far OTM or for YOLO time periods.
Out
Almost popped a nut in gym today… I was grunting like a savage. ANGI you’re breaking my heart… may have to roll you over to the Feb’s
The bigger lesson though is position sizing. Days like today are why you don’t put 5-10% of your capital in a single option.
I really hope no one is putting 10% of their account into an option trade.
I got 3% of my entire account dedicated to ALL of my option trades. I’m small time right now while I’m learning.
I’m at about 4-5%
Isn’t Yelp doing to Angie what Facebook did to classmates.com?
what is classmates.com LOL…just playing. I have a position in ANGI, so I hope its up from here…if not, on to the next one.
I bet we are starting to see a period of buy dip, sell rip trading. (i.e. Rising volatility)
There is a lot of complaining on one down day. If you are that skittish, why not sell half when your trade is up 100% and let the rest run? If it runs, you curtail your upside but if it drops you also can’t do worse than break even.
I haven’t seen much, if any, complaining on the posts in here…mostly disappointment at some wealth depletion…but so far, everyone is owning their trades. “From the ashes of disaster grow the roses of success”…(and this was hardly a disaster.)
Ever feel like you missed a key buying opportunity
Be professional now, not skittish- Re’up on the ones that got away 4-6 months ago. Markets meltdown’s happen faster than this…
Apply VAR strategies into earnings options…
This is a technical/trading site not a fundamental heavy investment site gents. Rage on OA…
Did you take another position in ANGI today? Is it more Jan 15’s?
I don’t see anyone complaining. You can’t be happy losing a 300% gain in TRLA inside of one day though.
3% of your entire account? LOL, maybe if you have a big account fine. I need a little more capital than $2000 to play with…
taking note this morning….TWTR hourly chart (with extended hours turned on), very closely resembles Jeff’s sentiment chart. If I am visualizing this thing correctly, TWTR is finishing up with aversion and about to embark onto denial. Prices should start climbing dramatically.
is there news on 3D? DDD XONE and VJET all down in pre
bad news on SSYS I guess
ANGI printing 14s as well
any ideas why ANGI is down premarket? I hope its not cuz of that stupid SA article…
probably the SA hit piece
Anyone know why the February options on Z seems so expensive? It looks like even after yesterday’s $4 drop, Feb $90s are still going for almost $5. Looking at the implied volatility, it doesn’t seem like it it that high (relatively)… Also, given that the options prices on Z seem so high, what are people looking at as a target? $93? Thanks!
Yep SSYS announced lowered guidance expectations for fiscal year 2014 . All the others suffered a sympathic drop. But we should all have a crap load of time left on the options we bought so no reason to panic; I remember my TWTR premium eroded down to 40% and then boom it went to 1500% at Time of Sale. You just never know
@JM you’re paying for a lot of Theta bro best to buy the weekly’s as you can get in cheaper and not in .5 increments.
Thanks for the response!
Those of you in love with CLF it caught a buy rating this morning from Douche Bank
Hate that stock 🙂 …
most probably to get more suckers before it goes back to the lows again… hated industry for now..
DANG looks ready to GAP and GO this morning.
ANGI does nothing but go down on me…..HEHEHEHE
I have learned a valuable lesson this past week: position sizing! My ANGI position became too large (almost 10% while it was gaining). Since I’m still young, the money I use for options is all risk-able. If I lose it all, it’s not the end of the world (no dependents, yet) but I would like to keep doing this. I still think OA is correct on his long for ANGI but the gamble on the Jan 15’s is a disaster I will never forget. On to the next one.
ANGI Feb $15’s looking very tempting below $1
I’m in…
Guess I got my pull back in angi
PUGE – next 3D play
finally won one over on VMW. held out and closed at $4.80
i hate VMW.
Longs got stopped out at 41 on VJET then a huge bounce.
target 34… not buying it…
Anyone got a DANG target for these Jan calls? I’m liking 10.75..
CSIQ is the best solar stock so far this year…. last year…. FSLR, SPWR, YGE please join the ranks 🙂
I got too cute with limit orders last night, trying to pry another step or two down, and got nothing. GRPN, S, ANGI, HIMX, BZH.
Ugh.
@Danny
Hey dude – I think YESTERDAY was our buy day on PXD.
Dammit
We missed 7x Delta today….Ugh
Looks like there are some major risk takers here. Humble suggestion to dial down position sizing. Resist the hero mentality to make your fortune in 1 trade. Recommend “The Big Short” by Michael Lewis which talks about traders who went through psychological/emotional hell putting much of their trading capital on a single idea.
pray for those who bought the top in ICPT, may they make it through the pain. Perfect example of don’t chase.
Pigs get slaughtered.
That’s a good book… But in the end they were right and made their fortunes. If were those guys I would’ve never done it: full-grown-ass men with families to feed and a mortgage to pay.
wooooo caught lucky break on tesla. wish I got in yesterday..
woo hooo. $ANGI jan calls back from the dead.
$SOX making new highs…
waiting in da bushes til next week… this weeks gonna be a dud..
NOV has got the look that Jeff’s been talking about in the oil services area
I’m trying to decide if it was “amateur hour” of me yesterday when i cut my Feb $GRPN $13 calls loose. got rid of them when the price took out Dec 30th low of $11.14.
interested to hear other peoples perspective.
Nah. There are bad sells and that wasn’t one of them.
should a bot more appl calls dayum
MLNX looking real good weekly lotto maybe
mlnx will be down tomorrow for the 5. time ,
buyers can’t make up there mind ,
lol
ANGI Chart is exactly the same as the YGE Chart before it blasted off into outer space. I think it’s putting in a higher low confirming reversal as I type this
Glad I kept my TSLA Jan calls from last week
same here.
Thoughts on holding for the remainder of the week? I have 155 and 160’s
If you sell those calls you need to beat upside the head with a “WTF Stick”…lol
This is huge news for that company; Tomorrow probably $155-$160
What danny said sounds nice so I’m gonna hold, I have the 160’s
Thanks Danny. When something comes back from the dead, it can cause you to think irrationally. Needed the smack
just want to say. i like today 🙂
@OA – thank you for the session last night. Much food for thought.
Anyone adding to VJET at these levels?
i need an f’n therapist and an antidepressant
shake it off. hindsight is 20-20. its a marathon, not a race. you’re in good company here, we’ll all be fine. (that’s all I got…did it work?)
Don’t let the swings get too you. Stick to the price targets! Sometimes it’s best too turn off the monitor and go for a walk.
To add to yoshii… last year was supposed to be an easy year right? Well I lost $, not much but I still lost. I found this site back in November… since then I’ve been doing very well – I still have a way to go but OA’s picks and style works. It’s the execution where I struggle: buy too early, don’t but enough time, sell too early, etc. We need to make trade plans and stick to them, and not freak on days like yesterday.
I live in the Midwest and I think I’ve seen the sunlight once this whole winter so it’s pretty easy to get down over the winter season. Get your vitamin D on.
Can I help?
@Danny – PXD 175’s as a YOLO ?
Absolutely LAN
In at .70
yea I added to VJET at $41; DDD, XONE did nothing to deserve the drop. I expect a sharp reversal coming in these just like when TRMR tanked and took down FUEL with it. Sympathy drops don’t scare me.
Thanks Danny. I think I’m gonna dump ANGI stock and just let my calls ride here. Are you in the TA room?
You believe in the stock enough for calls but not the real deal? Make up your mind homie! I’d keep ’em both. Love the YGE and ANGI comparison.
I think ANGI is a cross between a stripper and a $50 crack whore. You really don’t know what you’re getting until it’s over.
Im not sure either one is a compliment
It wasn’t intended as a compliment, rather just the opposite.
LOL everytime she pops shorts just keep knocking her down again.
@LAN check out the chart if she puts in a higher low today and tomorrow; I’m saying she pulls a YGE by Thursday
That’s what I’m thinking, she could be a squirter.
or she gets pinned at 15 this month
Let us hope…
@Jules no I am not a member of TA
@LAN let’s hope the market doesn’t shit it’s pants for our CRM YOLO’s
New OA post is up