Day Trading Expiration Week at Philstockworld
by Phil - January 13th, 2010 1:14 am
I don’t want new Members to get the wrong idea…
We don’t day trade a lot at PSW, EXCEPT during option expiration weeks so call it 12 times a year we turn into day-traders as the front-month premiums get low enough to make the trades interesting. The rest of the time, my usual motto is "I’m not a day trader but I’m certainly not adverse to taking profits in a day." Our goal with any option trade is to make a 20% profit and we put up at least 20 trade ideas almost every week so that’s over 1,000 opportunities a year to make 20% - that means when we do make it - getting back to cash and moving on is a wise strategy as there will certainly be something else to trade tomorrow.
During expiration weeks, we have a unique (if 12 times a year is considered unique) opportunity to gain tremendous leverage on trades that have good risk/reward ratios to hopefully give us a series of small, quick wins so our focus shifts away from the longer trades (and we are often waiting out the week before rolling our longer positions anyway) to zone in on these wonderful opportunities.
This is covered under our Strategy Section so I won’t rehash it here but I thought I’d use my new chart tools to try to illustrate what we’re doing by going over a few of today’s trades. As we do discuss in the strategy section, allocation of assets is key and no single trade should ever be more than 5% of your portfolio and day trades should be more like 2% so, in a $100K portfolio, these quick trades should be opened in blocks of $1,000 or $2,000 entries. Ideally, we want to be comfortable doubling down if the trade goes against us right off the bat (and we still believe in it).
Our first trade of the morning was a short on USO. At 9:42 I made a comment to Members: "Jan USO puts have little premium left (the $41 puts are $1.06 - .19 premium) and can be played as a mo trade but I’m in the Feb $39 puts, now $1.01, patiently waiting to make .50."
The January trade was, of course, the riskier trade but these plays aren’t taken in a vacuum. We had been discussing oil as overpriced for days and we were watching the global market, the oil futures and the news out of China and I had mentioned in the…
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$100K Porfolio - Our Q4 Watch List
by Phil - November 24th, 2009 6:02 am
We are NOT jumping right into these positions for the new $100KP.
This is just a post to organize trade ideas for the new $100KP and we’ll be watching these stocks and looking for good opportunities but, right now, the market is high and the VIX is low so it’s just not all that attractive to jump in on upside plays at the moment. I still feel the market is toppy and, if you look at the October 8th Watch List, we were looking to see if we could hold September highs of Dow 9,829, S&P 1,071, Nas 2,146, NYSE 7,047 and RUT 620. Well, we STILL aren’t at 620 on the RUT - something is strange about that!
Our last Watch List did very well but that was BECAUSE we took well-hedged positions and scaled in slowly! Keep in mind it’s a watch list and not a Buy List. Buy Lists are for clear bottoms where we need to load up on things, we haven’t had one of those since July 11th. A Watch List is for things we feel are good values so we keep our eye on them or, as I said in the previous post, a good place to start scaling in SLOWLY to new positions, so we can take full advantage of additional weakness.
All of these stocks are ones I like and they are good for any portfolio. Anytime you see one falling though, that’s the time we want to take a closer look to see if we have an opportunity to jump on something we like while it’s on sale!
AGNC (11/24) is (gasp!) a REIT. But it’s a strange one that (according to them) "Invests in agency pass-through securities and collateralized mortgage obligations for which the principal and interest payments are guaranteed by a U.S. Government agency or a U.S. Government sponsored entity. The company funds its investments primarily through short-term borrowings structured as repurchase agreements." This $26.20 pays a QUARTERLY $1.40 DIVIDEND! The next dividend is in late December and we can buy the stock here and sell the June $25 puts and calls for $5.60, which puts us in for net $20.60/22.80.
ATVI (11/24) is a good one if we are going to have a good retail season. They own WarCraft, which is the 2nd biggest monthly revenue producer behind SNE’s Everquest. Having a monthly subscription base sees them through rough times and they have had their growth halted in China as…
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$100,000 Portfolio Update - Week 5
by Phil - October 4th, 2009 8:28 am
Well this has been annoying…
After 30 days of trading our current portfolio value is just $100,454.39 as we took quite a setback when we sold naked calls ahead of the move up. Fortunately, we didn’t lose our cool and rode it out. In fact, we only made one trade in the past two weeks so there hasn’t been much to report and there still isn’t but the end of our first month is a good time for an update. Of course, we do have a lot of outstanding October Premium to collect so the next two weeks are when we make our real money…
We still have $92,315 in cash so plenty of buying power should we choose to deploy it but we are sticking with our plan of scaling into the postions we have, which means we’re letting them run out through October 16th expirations and we’ll see if we finally get the bargains we’ve been waiting for to set up our longer term bull plays. For now, in this VERY conservative, low-touch portfolio, we’ve been following Warren Buffett’s Investing Rule #1: Don’t lose money!
| Description | Price Paid | Last Price | Qty | Market Value | Margin Req. | Profit Loss | % |
|---|---|---|---|---|---|---|---|
| AIG CALL 40 Oct 09 | $6.30 | $5.50 | -1 | $550.00 | $1,196.20 | $80.00 | 12.70% |
| On target with AIG at $43.40, this is typical of our outstanding sales with the VIX so high - we just have to wait. | |||||||
| AMZN CALL 90 Oct 09 | $3.60 | $2.80 | -10 | $2,800.00 | $16,127.50 | $800.00 | 22.22% |
| We wouldn’t do this play if we needed the margin but a nice $2,800 to collect if AMZN stays below $90 | |||||||
| BAC CALL 10 Jan 11 | $8.60 | $7.50 | 5 | $3,750.00 | $0.00 | -$550.00 | -12.79% |
| BAC CALL 17 Oct 09 | $1.27 | $0.43 | -5 | $215.00 | $1,110.50 | $420.00 | 66.14% |
| BAC PUT 17 Oct 09 | $0.97 | $1.09 | -5 | $545.00 | $1,770.50 | -$60.00 | -12.37% |
| BAC PUT 20 Jan 11 | $5.45 | $6.30 | 5 | $3,150.00 | $0.00 | $425.00 | 15.60% |
| Drifting right around our $17 target is perfect. If they get cheaper, we buy more! | |||||||
| C CALL 4 Mar 10 | $1.30 | $1.09 | 10 | $1,090.00 | $0.00 | -$210.00 | -16.15% |
| C PUT 4 Dec 09 | $0.46 | $0.32 | -10 | $320.00 | $720.00 | $140.00 | 30.43% |
| C PUT 5 Oct 09 | $0.52 | $0.57 | -5 | $285.00 | $624.00 | -$25.00 | -9.62% |
| We DO want to own C long-term so no big deal but needs to be watched closely if they head lower still. | |||||||
| CROX CALL 4 Mar 10 | $3.70 | $2.99 | 5 | $1,495.00 | $0.00 | -$355.00 | -19.19% |
| CROX CALL 7 Oct 09 | $0.50 | $0.13 | -5 | $65.00 | $112.75 | $185.00 | 74.00% |
| CROX PUT 7 Oct 09 | $0.90 | $0.80 | -5 | $400.00 | $862.75 | $50.00 | 11.11% |
| A bit low - shame we never filled the long put or this would be perfect (same with C). | |||||||
| Description | Price Paid | Last Price | Qty | Market Value | Margin Req. | Profit Loss | % |
|---|---|---|---|---|---|---|---|
| GE CALL 16 Oct 09 | $1.29 | $0.34 | -20 | $680.00 | $4,008.00 | $1,900.00 | 73.64% |
| GE PUT 16 Oct 09 | $0.88 | $0.99 | -10 | $990.00 | $3,294.00 | -$110.00 | -12.50% |
| We need a .50 stop on the $16 calls and for .10 we buy them out this week. We’re fine with GE put to us net $15.12. | |||||||
| LZB - Stock | $9.21 | $7.97 | 500 | $3,985.00 | $0.00 | -$620.00 | -13.46% |
| LZB CALL 7.5 Jan 10 | $2.70 | $1.40 | -5 | $700.00 | $0.00 | $650.00 | 48.15% |
| LZB PUT 7.5 Jan 10 | $1.15 | $1.10 | -5 | $550.00 | $925.00 | $25.00 | 4.35% |
| Right on target to get called away so no change. | |||||||
| MHP PUT 25 Oct 09 | $0.80 | $1.25 | -5 | $625.00 | $2,471.50 | -$225.00 | -56.25% |
| We actually want this stock so not worried at all. | |||||||
| PSQ CALL 50 Jan 10 | $3.05 | $2.50 | 10 | $2,500.00 | $0.00 | -$545.00 | -17.90% |
| These are doing their job… |
|||||||
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$100K Portfolio Adjustments
by Phil - September 18th, 2009 7:00 am
Just a quick post to update the $100K Portfolio.
Here is a list of all current positions and the adjustments we want to make into expirations. Keep in mind that, other than a contract we sold that is clearly expiring out of the money, we do NOT want to go into the close with an open September position under any circumstances:
| DESCRIPTION | PRICE PAID | LAST PRICE | CHANGE | QTY | MARKET VALUE | MARGIN | PROFIT LOSS | % |
|---|---|---|---|---|---|---|---|---|
| AIG CALL 30 Jan 11 | $13.45 | $18.00 | $0.00 | 1 | $1,800.00 | $0.00 | $455.00 | 33.83% |
| AIG CALL 40 Oct 09 | $6.30 | $4.20 | -$0.75 | -1 | $420.00 | $954.45 | $210.00 | 33.33% |
| AIG PUT 35 Sep 09 | $3.95 | $0.06 | -$0.09 | -1 | $6.00 | $356.00 | $389.00 | 98.48% |
| Sept Put Looks to be expiring worthless. Keep .25 stop just in case. No new sale at this point. | ||||||||
| AMZN CALL 85 Sep 09 | $1.01 | $5.50 | -$0.35 | -5 | $2,750.00 | $9,533.00 | -$2,245.00 | -444.55% |
| AMZN CALL 90 Oct 09 | $3.60 | $4.00 | -$0.45 | -10 | $4,000.00 | $17,566.00 | -$400.00 | -11.11% |
| Rolling 5 Sept $85 calls (short) to 5 Jan $80 PUTS, now $4.55 - hopefully even but AMZN may pin $90. | ||||||||
| BAC CALL 10 Jan 11 | $8.60 | $8.90 | $0.40 | 5 | $4,450.00 | $0.00 | $150.00 | 3.49% |
| BAC CALL 17 Oct 09 | $1.27 | $1.35 | $0.23 | -5 | $675.00 | $1,995.75 | -$40.00 | -6.30% |
| BAC PUT 17 Sep 09 | $0.51 | $0.03 | -$0.11 | -5 | $15.00 | $1,030.75 | $240.00 | 94.12% |
| BAC PUT 20 Jan 11 | $5.45 | $5.70 | -$0.29 | 5 | $2,850.00 | $0.00 | $125.00 | 4.59% |
| No Change - We will not be adding a new put until next week as I expect some pullback. | ||||||||
| C CALL 4 Mar 10 | $1.55 | $1.07 | $0.12 | 5 | $535.00 | $0.00 | -$240.00 | -30.97% |
| C PUT 4 Dec 09 | $0.46 | $0.39 | -$0.08 | -10 | $390.00 | $790.00 | $70.00 | 15.22% |
| C PUT 5 Oct 09 | $0.52 | $0.76 | -$0.16 | -5 | $380.00 | $711.50 | -$120.00 | -46.15% |
| Buying 5 more C March $10s. No put sales yet (too cheap). | ||||||||
| CROX CALL 4 Mar 10 | $3.70 | $3.60 | $0.00 | 5 | $1,800.00 | $0.00 | -$50.00 | -2.70% |
| DESCRIPTION | PRICE PAID | LAST PRICE | CHANGE | QTY | MARKET VALUE | MARGIN | PROFIT LOSS | % |
|---|---|---|---|---|---|---|---|---|
| CROX CALL 6 Sep 09 | $1.30 | $0.74 | -$0.21 | -5 | $370.00 | $871.75 | $280.00 | 43.08% |
| CROX PUT 7 Sep 09 | $0.75 | $0.35 | $0.15 | -5 | $175.00 | $676.75 | $200.00 | 53.33% |
| Right on target. Rolling to Oct $7 puts (.85) and calls (.55), so a more bullish stance on them. | ||||||||
| FAZ CALL 17 Sep 09 | $6.10 | $3.02 | -$0.10 | 2 | $604.00 | $0.00 | -$616.00 | -50.49% |
| Rolling to 4 (double) October $19 puts ($1.65). This is a flip bearish. | ||||||||
| GE CALL 16 Oct 09 | $1.29 | $1.27 | -$0.15 | -20 | $2,540.00 | $7,538.00 | $40.00 | 1.55% |
| GE PUT 16 Oct 09 | $0.88 | $0.59 | $0.04 | -10 | $590.00 | $2,429.00 | $290.00 | 32.95% |
| No Change. | ||||||||
| HIG PUT 25 Sep 09 | $1.35 | $0.05 | $0.00 | -5 | $25.00 | $1,275.00 | $650.00 | 96.30% |
| Should expire worthless - .15 stop. | ||||||||
| LZB - Stock | $9.21 | $9.75 | -$0.38 | 500 | $4,875 | $270 | 5.86% | |
| LZB CALL 7.5 Jan 10 | $2.70 | $3.10 | $0.00 | -5 | $1,550.00 | $0.00 | -$200.00 | -14.81% |
| LZB PUT 7.5 Jan 10 | $1.15 | $0.55 | -$0.10 | -5 | $275.00 | $650.00 | $300.00 | 52.17% |
| No change - these are very relaxing trades. | ||||||||
| MHP PUT 25 Oct 09 | $0.80 | $0.75 | $0.25 | -5 | $375.00 | $1,625.00 | $25.00 | 6.25% |
| No Change. | ||||||||
| PSQ CALL 50 Jan 10 | $3.05 | $2.10 | $0.14 | 10 | $2,100.00 | $0.00 | -$945.00 | -31.03% |
| No Change | ||||||||
| TWM PUT 29 Sep 09 | $0.60 | $1.55 | $0.15 | -5 | $775.00 | $2,846.50 | -$475.00 | -158.33% |
| Roll to Oct $28 puts ($2). | ||||||||
| UYG CALL 4 Jan 11 | $2.45 | $2.67 | $0.02 | 10 | $2,670.00 | $0.00 | $220.00 | 8.98% |
| UYG CALL 5 Oct 09 | $0.95 | $1.20 | $0.00 | -10 | $1,200.00 | $2,116.50 | -$250.00 | -26.32% |
| DESCRIPTION | PRICE PAID | LAST PRICE | CHANGE | QTY | MARKET VALUE | MARGIN | PROFIT LOSS | % |
|---|---|---|---|---|---|---|---|---|
| UYG PUT 4 Jan 11 | $0.70 | $0.61 | -$0.09 | 10 | $610.00 | $0.00 | -$90.00 | -12.86% |
| UYG PUT 5 Oct 09 | $0.25 | $0.05 | -$0.10 | -10 | $50.00 | $550.00 | $200.00 | 80.00% |
| No Change. | ||||||||
| XLF CALL 14 Oct 09 | $1.36 | $1.38 | $0.00 | -20 | $2,760.00 | $7,323.00 | -$40.00 | -1.47% |
| XLF CALL 14 Sep 09 | $0.50 | $1.20 | -$0.05 | -10 | $1,200.00 | $3,481.50 | -$700.00 | -140.00% |
| Taking the loss on the Sept $14 calls and buying them back, hopefully for $1 on a dip. | ||||||||
So that’s it. Not too many moves to make . We still have $93,459 in cash and $59,983 in buying power, which we would use to get more bullish if the markets go up next week as we’re too bearish at the moment - or were this week anyway.
Have a good weekend,
- Phil
(What's this?)
(Investment U, 8/31/09)
(Investment U, 8/28/09)
(Geographic Independence,…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
(