Trading stocks and options
As I once heard - 'Day trading is not about knowing the market, it's about knowing yourself.' As of mid 2011, I have dabbled in options. Started with covered call and moved on to spreads. My linkedin profile is:
Friday, June 5, 2015
Friday, November 8, 2013
The JC Penney Trade - part 1
JCP has been hit by a lot of bad news. I will employ a medium term trade to generate at least 5% a month for 3-4 months. The trade is based on the premise that JCP will not go bankrupt in 3-4 months and there is an opportunity to generate money due to the high volatility on JCP options (around 100 for bi-weekly ones, and 60-70 on weekly ones).
I will document the trade here. With JCP at $8.23, I have started by selling 2 cash secured puts at $7.50 strike and 1 cash secured put at $7.00. Both expire on 11/22/13. This is a small trade which require $2200 of capital, which will be used to test the strategy. If it goes well for one month, I will increase capital to $10,000 or more.
The exit strategy will be to unwind the trades as soon as there is a doomsday news on JCP, which is low probability but can nonetheless occur.
Date: 11/8/13
Cash secured: $2200
Puts sold: $98
$7.5 strike, 11/23 expiry - 2 @ $0.37
$7 strike, 11/23 expiry - 1 @ $0.24
I will document the trade here. With JCP at $8.23, I have started by selling 2 cash secured puts at $7.50 strike and 1 cash secured put at $7.00. Both expire on 11/22/13. This is a small trade which require $2200 of capital, which will be used to test the strategy. If it goes well for one month, I will increase capital to $10,000 or more.
The exit strategy will be to unwind the trades as soon as there is a doomsday news on JCP, which is low probability but can nonetheless occur.
Date: 11/8/13
Cash secured: $2200
Puts sold: $98
$7.5 strike, 11/23 expiry - 2 @ $0.37
$7 strike, 11/23 expiry - 1 @ $0.24
Wednesday, August 7, 2013
Put selling on SVXY
Seeing that XIV and SVXY have a long term positive bias, I have decided to sell puts on SVXY as well. There are a lot of swings on it, so for this trade, i will relax Teddi's conditions on closing as it is riskier and needs larger swings.... doing ok till now - need to go into the 'bad' territories to see if this really works...
| Trade | Under. | Value | Expiry | Contracts | Strike | Price | Comm | Cash | |||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 7/23/2013 | |||||||||||
| 7/24/2013 | 1 | Sold | SVXY | $102 | 08/17/13 | Put | 1 | $90 | $2.01 | $11.0 | $190.00 |
| 8/2/2013 | -1 | Brought | SVXY | $113 | 08/17/13 | Put | -1 | $90 | $0.55 | $15.0 | ($70.00) |
| 2 | Sold | SVXY | $113 | 08/17/13 | Put | 1 | $102 | $1.50 | $150.00 |
Rules employed for put selling
Following are the rules that I will apply:
OPENING (mostly from Teddi but modified a bit)
CLOSING (all from Teddi) - http://www.fullyinformed.com/
OPENING (mostly from Teddi but modified a bit)
- Take solid stocks - Teddi says don't use stocks worth over $120. I am using IBM though
- Find out stocks which crossed their lower bollinger bands
- Confirm with the K/D indicator that they are firmly oversold
- Check if MACD shows positive momentum - this one seems less useful
- Check out flattening of 10 day EMA - also it should be lower than 20 day SMA and 30 day SMA both
CLOSING (all from Teddi) - http://www.fullyinformed.com/
- Put offer to buy back the naked put at a 75% profit if it was close to ITM, 80% if it was OTM. This offer should hold till 2 weeks before expiration. Afterwards, keep reducing the order, till you reach the expiry date. Lower by 10% each day.
- If trade turns against you, close at 20% loss for ITM, 25% loss for OTM
- If you are in profit zone, and trade turns against you, close immediately
Put selling
I am following Teddi's put selling strategies (http://www.fullyinformed.com/). I am quite in sync with the kind of trades she suggests and will be replicating them here for my own records. These are my trades till now - small earnings but confidence builders
| Trade | Under. | Value | Expiry | Contracts | Strike | Price | Comm | Cash | |||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 7/9/2013 | |||||||||||
| 7/10/2013 | 1 | Sold | IBM | $193.00 | 08/02/13 | Put | 1 | 185 | $2.17 | $11.00 | $206.00 |
| 7/18/2013 | -1 | Brought | IBM | $198.00 | 08/02/13 | Put | -1 | 185 | $0.18 | $11.00 | ($29.00) |
| 7/18/2013 | 2 | Sold | INTC | $23.15 | 08/17/13 | Put | 9 | 22 | $0.24 | $9.85 | $206.15 |
| 8/7/2013 | -2 | Brought | INTC | $22.70 | 08/17/13 | Put | -9 | 22 | $0.08 | $9.85 | ($81.85) |
| 8/7/2013 | 3 | Sold | IBM | $188.45 | 09/06/13 | Put | 1 | 185 | $2.06 | $9.85 | $196.15 |
Tuesday, November 6, 2012
Election day analysis
Below is how the S&P500 reacts to the elction day over the last three elections. The 2 day before election day is at "1" and then the movement is indexed to it. e.g. if election is on 11/7/2000, then day one is the closing price of 11/6/2000.
The day before election is always a very quite one - need to remember - i.e. from 11/2/2012 to 11/5/2012 the market change is small - ths has been true for the past three ones
The day of the election (before the election) i.e. 11/5/2012 to 11/6/2012, there is some change -2% in 2000, 1% in 2004 and -4% in 2008, looks like 1.5% in 2012 (day not closed yet)
Post election, there is more movement, i.e. movement from 11/6/2012 to 11/7/2012. -2% in 2000, 1.5% in 2004, -5% in 2008 and we dont know yet for 2012
Thus, I will close my position today as there may be a major movement tomorrow.
The day before election is always a very quite one - need to remember - i.e. from 11/2/2012 to 11/5/2012 the market change is small - ths has been true for the past three ones
The day of the election (before the election) i.e. 11/5/2012 to 11/6/2012, there is some change -2% in 2000, 1% in 2004 and -4% in 2008, looks like 1.5% in 2012 (day not closed yet)
Post election, there is more movement, i.e. movement from 11/6/2012 to 11/7/2012. -2% in 2000, 1.5% in 2004, -5% in 2008 and we dont know yet for 2012
Thus, I will close my position today as there may be a major movement tomorrow.
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