Loading ...Disclaimer: Â this is all personal/boring stuff. Â Nothing controversial or political in here – so skip along to whatever V.King and his ilk may be shouting about now.
Gotta love that ENER, the site of one of greatest calls of the year (Sep.8th)…now fresh again and back from the dead!
Been holding on to some p.o.s Dec’09 10. calls since mid-November (blue). Â I was a bit iffy from the start – with nonexistent volume in the Jan’10 contracts, I had to bring it in to Dec’09. Â The trade went south almost straight from the get-go…in fact, they were slated for a sell at the end of that month, as the underlying dipped below 10 even (yellow), but the order failed to get a fill. Â The next day, I moved the stop to just below the previous day’s low, but we soon were back above 10. Â However, despite being still ITM, the options had lost quite a bit of (extrinsic) value…short theta and all that jazz:
In any case, we seem to be back in business…now we just need a follow-through day in the next few before expiration hits next Friday. Â Did have an active limit-on-close order (@1.40/contract, with a basis of 1.35) just so that I no longer have to look at them in my portfolio…but of course, true to style, they did not get a fill.
In other action, I finally moved the portfolio to more delta-neutral territory as multiple call orders were filled. Â And even though I’m still slightly delta-negative, a last-minute rally fueled by Santa’s fury will be much less of an asshanding:
In that vein, with futures looking healthy, I’m expecting to pick a couple more calls tomorrow:
- CDE (@20.61), SLB (@61.61)
- And  a solitary put trade:  NUE @41.75.
If you already explained before perhaps I missed it but what do you use to enter these trades?
In English how do you find the stocks which you trade and decide how take the appropriate position?
Time decay is a bitch. I’ve backed off options until I learn the more complex strategies as I refuse to lose money while being right.
Right now, it’s all manual scanning. I have a “bucket” of about 100 names that I go through nightly looking for my entry criteria (a combination of the momentum indicators you see in the ENER chart). All these 100 have good/daily options activity, which reduces the chances of getting royally screwed by the MMs. Usually, I also take a look at what the Prophet pattern & candlestick scanner finds, but often these have nonexistent options volumes. The thinkorswim “sizzle” scanners are also helpful in finding where the options players may be most active.
I used to use Worden Blocks, which had a very nice interface for scanning based on criteria from various indicators, but they’ve discontinued that in lieu of their dumbed down online charting thing. thinkorswim did just add Prodigio scanning to their suite, but I’ve yet to play around with it.
The best way to reduce the effects of time decay is to not use near-term options…but unfortunately those usually have very little consistent volume, which does not suit my system.
No kidding about time delay. Today SPY closed at 111.11 and the December 111 puts are 1.18 ask. A December bearish bet will have to get ahead of about .23 of decay every day. I’d guess that will require about a 100 point SPX decline by Wednesday or a 200 point SPX decline by Friday close.
Ah yes, the price of a proposition..