Sunday, April 22, 2012
BELOW THE TREND LINE
Hi Folks,
We are now below the trend line that I have been talking about for months. We needed to get back above it quickly and stay there to maintain the uptrend. My sense is that we now are going to trend lower. My short term target is 134.98 in terms of SPY. Below that we have 132.10 then 127.49.
Thanks and Good Trading,
Tim
Wednesday, April 11, 2012
TBT WEEKLY OPTIONS
Hi Folks,
Just a quick update. I bought TBT April 19 calls at .16 on Tuesday and sold them today for 0.26. I had 2 targets in the stock; 19.10 then 19.45. I sold half at .26 early in the day when the stock was trading 19.10 then when we broke out above 19.10 I moved my stop up to .26 on the other half of the position and got stopped out shortly thereafter. Maybe a little aggressive on that but I was nervous about the market rolling over as it did later in the day so I kept it tight.
Thanks and Good Trading,
Tim
Just a quick update. I bought TBT April 19 calls at .16 on Tuesday and sold them today for 0.26. I had 2 targets in the stock; 19.10 then 19.45. I sold half at .26 early in the day when the stock was trading 19.10 then when we broke out above 19.10 I moved my stop up to .26 on the other half of the position and got stopped out shortly thereafter. Maybe a little aggressive on that but I was nervous about the market rolling over as it did later in the day so I kept it tight.
Thanks and Good Trading,
Tim
Tuesday, April 10, 2012
TRADING THIS MARKET
Hi Folks,
The SPY traded below the long term trend line today for the first time since the October 4th lows. We didn't break the line considerably so it is permissible for it to regain the trend as long as it does it quickly. The next level lower in SPY is around 134.10 or roughly 2 points lower than today's close. My feeling is that we will more than likely get there. However, I did buy calls today in TBT because my trading rules said that I should. I had multiple positions that I was looking at but only chose to do one of them since I feel we can still go a little lower.
Thanks and Good Trading,
Tim
The SPY traded below the long term trend line today for the first time since the October 4th lows. We didn't break the line considerably so it is permissible for it to regain the trend as long as it does it quickly. The next level lower in SPY is around 134.10 or roughly 2 points lower than today's close. My feeling is that we will more than likely get there. However, I did buy calls today in TBT because my trading rules said that I should. I had multiple positions that I was looking at but only chose to do one of them since I feel we can still go a little lower.
Thanks and Good Trading,
Tim
Wednesday, April 4, 2012
WHY I TRADE WEEKLY OPTIONS
Hi Folks,
Option trading provides many advantages over other investment choices. They offer leverage, defined risk, insurance and the ability to profit in bear, bull or flat markets.
I primarily only buy options and do not sell options unless I am executing a vertical spread. Most of my trades are directional bets. There are two main vehicles in options trading. They are calls and puts. A call gives you the right to buy a stock at a certain price, known as the strike price, at or before a defined expiration of that option. A put is the opposite; it gives you the right to sell a stock at certain price at or before a defined expiration of that option. Options are traded in contracts. Generally 1 contract equals 100 shares of the underlying stock. For example, let’s say that you feel that AAPL is going to move higher in the immediate future. At that time AAPL is trading at $600/share. If you wanted to buy 100 shares of AAPL you would need $60,000. If instead you look to the options market, you could buy 1, 620 call for $4. That would only cost you $400(1 contract = 100 shares x $4 = $400). If AAPL trades up to $640/share, your option is worth $20(640-620(strike) = $20) for a value of $2000. That is a 400% return. If instead you bought the 100 shares of stock your return would only be 6.6% instead of 400%.
Until recently options were only offered with monthly expirations. They expire the 3rd Friday of each month. You could buy the current month options and various months in the future up to and including several years in the future. Now many stocks and ETF’s offer weekly options. The new series for the next week of trading are available to trade starting the Thursday preceding that week’s expiration. For example the weekly options that expire on Friday April 13th are available to trade on Thursday April 5th. The growing popularity of the weekly options leads me to believe that soon most stocks and ETF’s will also offer weekly options not just the monthly options.
A great deal of the technical analysis that I do allows me to spot short term price moves in stocks. The moves generally unfold anywhere from 1-7 days. This makes trading weekly options ideal for what I do. I get to maximize my trading capital to take advantage of the short term price swings. I have defined risk as I can only lose what I spend on the options. Generally my winning trades offer anywhere from 100 – 400% returns on those trades. Of course not all trades are winners but even if you are only right a little better than half the time this strategy works well. I have been fortunate enough to win 75-80% of my trades.
You can get a list of the all of the weekly options that are offered at: http://www.cboe.com/micro/weeklys/availableweeklys.aspx
Thanks and Good Trading,
Tim
Option trading provides many advantages over other investment choices. They offer leverage, defined risk, insurance and the ability to profit in bear, bull or flat markets.
I primarily only buy options and do not sell options unless I am executing a vertical spread. Most of my trades are directional bets. There are two main vehicles in options trading. They are calls and puts. A call gives you the right to buy a stock at a certain price, known as the strike price, at or before a defined expiration of that option. A put is the opposite; it gives you the right to sell a stock at certain price at or before a defined expiration of that option. Options are traded in contracts. Generally 1 contract equals 100 shares of the underlying stock. For example, let’s say that you feel that AAPL is going to move higher in the immediate future. At that time AAPL is trading at $600/share. If you wanted to buy 100 shares of AAPL you would need $60,000. If instead you look to the options market, you could buy 1, 620 call for $4. That would only cost you $400(1 contract = 100 shares x $4 = $400). If AAPL trades up to $640/share, your option is worth $20(640-620(strike) = $20) for a value of $2000. That is a 400% return. If instead you bought the 100 shares of stock your return would only be 6.6% instead of 400%.
Until recently options were only offered with monthly expirations. They expire the 3rd Friday of each month. You could buy the current month options and various months in the future up to and including several years in the future. Now many stocks and ETF’s offer weekly options. The new series for the next week of trading are available to trade starting the Thursday preceding that week’s expiration. For example the weekly options that expire on Friday April 13th are available to trade on Thursday April 5th. The growing popularity of the weekly options leads me to believe that soon most stocks and ETF’s will also offer weekly options not just the monthly options.
A great deal of the technical analysis that I do allows me to spot short term price moves in stocks. The moves generally unfold anywhere from 1-7 days. This makes trading weekly options ideal for what I do. I get to maximize my trading capital to take advantage of the short term price swings. I have defined risk as I can only lose what I spend on the options. Generally my winning trades offer anywhere from 100 – 400% returns on those trades. Of course not all trades are winners but even if you are only right a little better than half the time this strategy works well. I have been fortunate enough to win 75-80% of my trades.
You can get a list of the all of the weekly options that are offered at: http://www.cboe.com/micro/weeklys/availableweeklys.aspx
Thanks and Good Trading,
Tim
Wednesday, March 28, 2012
WEEKLY OPTIONS
Hi Folks,
Sorry it has been a while since my last post. I have been working on the new website. It will be ready soon. I will keep you posted with the details.
As for the market, the long term up trend is still intact currently around 136.50 in terms of SPY. This week is the end of the month and more importantly end of quarter. That can mean some end of quarter marking up of positions for hedge funds and mutual funds. That equals volatility which to me equals opportunity.
I did end up selling my TBT calls on the last day for .32 so I doubled my money on those. The only trade I did this week so far was to buy the weekly options for VXX March 16 calls on Monday for .45 and I sold them yesterday at an average price of .94. I will be posting more regularly now here and on Twitter now that the bulk of the work on the website is finished.
As always feel free to comment here and ask questions about any particular stock or ETF etc..
Thanks and Good Trading,
Tim
Sorry it has been a while since my last post. I have been working on the new website. It will be ready soon. I will keep you posted with the details.
As for the market, the long term up trend is still intact currently around 136.50 in terms of SPY. This week is the end of the month and more importantly end of quarter. That can mean some end of quarter marking up of positions for hedge funds and mutual funds. That equals volatility which to me equals opportunity.
I did end up selling my TBT calls on the last day for .32 so I doubled my money on those. The only trade I did this week so far was to buy the weekly options for VXX March 16 calls on Monday for .45 and I sold them yesterday at an average price of .94. I will be posting more regularly now here and on Twitter now that the bulk of the work on the website is finished.
As always feel free to comment here and ask questions about any particular stock or ETF etc..
Thanks and Good Trading,
Tim
Friday, March 9, 2012
JOBS REPORT TODAY
Hi Folks,
We pulled back around 2.7% this week from the highs. That is in the range that I was expecting. So now what? My sense is that we are going to struggle again. If we fail this time, I expect it to be a bigger failure and a bigger sell off. The trend line that has been in place since the 10/4 lows is still intact and is what I will be watching. If we break it I think we could hit 129 in terms of SPY over the next 2 weeks or so.
Thanks and Good Trading,
Tim
We pulled back around 2.7% this week from the highs. That is in the range that I was expecting. So now what? My sense is that we are going to struggle again. If we fail this time, I expect it to be a bigger failure and a bigger sell off. The trend line that has been in place since the 10/4 lows is still intact and is what I will be watching. If we break it I think we could hit 129 in terms of SPY over the next 2 weeks or so.
Thanks and Good Trading,
Tim
Tuesday, March 6, 2012
TREND LINE
HI Folks,
It looks like we are in the middle of the pullback that I wrote about on March 1st. The trend line in SPY is now rough 133. This is the level to watch. If we break it, the bull run would be over temporarlily and set up a larger selloff in the next 6 months or so. If we bounce off the trend line, then the market could continue higher and make new highs.
I am working on a new website and will have details shortly.
Thanks and Good Trading,
Tim
It looks like we are in the middle of the pullback that I wrote about on March 1st. The trend line in SPY is now rough 133. This is the level to watch. If we break it, the bull run would be over temporarlily and set up a larger selloff in the next 6 months or so. If we bounce off the trend line, then the market could continue higher and make new highs.
I am working on a new website and will have details shortly.
Thanks and Good Trading,
Tim
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