Posts Tagged ‘Option Strategy’

The $25,000 Virtual Portfolio – Halfway to $100K!

Here we go again!

After a very wild ride tracking our VERY aggressive virtual portfolio, we closed out the first half with $53,942 – up 115% for the first half of the year and, since we put $11,630 back in the bank above $25,000 from last year's $10,000 virtual portfolio, that brings us to a grand total of $65,722 – up 555% from the $10K we started with last year.  Our goal in this small, aggressive virtual portfolio is $100K but forget the extra $15,722 – as I said last week, that's our starting basis with a nice profit so we put that back into nice, safe, conservative investments (like our Income Virtual Portfolio) and that leaves us $50,000 to play with.  

Our first week of trades has already been very interesting.  Make sure you to read the original post and the update if you haven’t already to get an idea of what we are trying to learn by following this "hyper-aggressive" virtual portfolio model – especially last quarter's lesson on taking those profits off the table and working on those losers.  Our "biggest loser" of last quarter was, of course, FAS and those Aug $23 calls hit $5 last week (we are already out), which is $40,000!  Anytime you can roll and DD a position in a $25,000 virtual portfolio that eventually cashes out for $40,000 – you will probably come out well…

The problem is mainly in learning how to stick with a position like that and that requires a lot of conviction because there were dozens of opportunities to panic out with a loss and that's why we practice this kind of trading – you need to get the experience in playing these out over time so that you can learn to BELIEVE in the strategy and, even then, it should only be used in places where you REALLY have a very good reason to believe a stock or ETF will, eventually, come back sharply enough to make all the work pay off – because it's a LOT of work!

Of course, no one makes 100% every six months by taking it easy, right?  Practice, practice, practice with virtual trading until you get comfortable with the strategies and, even then, use them sparingly.  This aggressive virtual portfolio is meant to be a
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DARK HORSE HEDGE – After the BOOM!

DARK HORSE HEDGE – After the BOOM! 

Add Clinical Data, Inc. (CLDA) SHORT at the market, 7/30/10

Silhouette of Horses Jumping a Steeplchase

Clinical Data, Inc. operates as a global biotechnology company developing early and late stage targeted therapeutics, as well as genetic and pharmacogenomic tests that detect serious diseases and help predict drug safety, tolerability, and efficacy.

After taking profits on earnings sell-offs from AMAG and BOOM, we are adding Clinical Data, Inc. (CLDA) as the 8th SHORT in our currently BALANCED tilt.  CLDA is rated a STRONGSELL by Sabrient with a BALANCE SHEET score barely registering at 1.1 (out of 100) and almost non-existent FUNDAMENTALS score of 0.3 (out of 100).  These rosy figures combine with five analysts forecasting a second quarter loss of -$.63. That is coming off a mind-numbing first quarter loss of -$1.44 per share, compared with expectations for only losing -$.63.  These negatives provide us with a heavy dose of “preponderance of evidence” to believe CLDA is a reasonable SHORT at the market, Friday July 30, 2010.    

***** 

EARNINGS UPDATE: Ingram Micro (IM)

 

Ingram Micro (IM): LONG with Phil’s Buy/Write strategy in DHH virtual portfolio

As expected in our July 26, 2010 post, IM posted better than expected results and higher revenues after the market closed on Thursday.  Analysts had been forecasting a profit of +$.37 per share and revenue of $7.9B, but IM delivered a healthy +$.44 per share and revenue of $8.2B.  "Every region performed well, with our two largest regions doubling and tripling operating profits on double-digit sales growth," Ingram Micro Chief Executive Gregory Spierkel said in a statement.  That is the type of BOOM! (see BOOM! article this morning) statement we like to hear from our long stocks. 

We feel very comfortable with the position we put on using Phil’s Buy/Write Strategy. IM is trading +1.67% today at $16.44.  Recall that we took in $2.50 in option premium on Monday by selling the December 2010 $17.50 calls and puts.  On Monday, we wrote

Add LONG Ingram Micro (IM) at the market Monday July 26.

We like IM leading into its earnings announcement on July 29, 2010.  The 10 analysts covering


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How to Make Profits in Your Spare Time

 

Option Sage submits:

I saw an infomercial from Fisher Investments where Ken Fisher mentioned 3 attributes that he believes are keys to successful investing which can be crudely summarized as follows:

[1]  Focus on long-term investing

[2]  Expect surprises

[3]  Stay ahead of the crowd by knowing what others don’t

The first point is certainly critical and weeds out the greedy ‘get-rich-quick’ traders from the patient traders.  Our policy here is that of ‘play-to-win’.  We like to be aggressive in seeking profits with short-term plays but we also recognize that if those trades don’t work out that we can still rely on longer term plays to end up profitable in the end. 

The second point regarding expecting surprises asks the trader the question “Are you managing risk well and do you have contingency plans in mind each time you enter a trade?”  While the second part of the sentence is important, the first is paramount!  No matter what you do, never violate risk management rules which we have discussed here in the past.

The third point is a luxury in my view.  Of course, it would be nice to know what others don’t but it’s not critical.  By definition only a small number can have information that the rest of the crowd does not have so if you are not trading full-time you have to find another way of making money without relying on staying ahead of the crowd.

As I was scanning for trades over the weekend, I came across one trade which might in fact fall into the category of offering relatively attractive profits by relying on options rather than additional information.  In fact, I know many of our members find it hard to focus on the daily trades and would like to construct virtual portfolios with the longer-term in mind.  As Phil mentioned in his classic "James Bond Investing" article, playing short-term positions requires constant vigilance and you need to ready to turn on a dime with…
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Stupid Option Tricks – The Salvage Play

I often talk about stupid options tricks in member chat and I thought it would make for good weekend reading.

Today we'll look at salvaging bad positions, something that comes up once in a while in any virtual portfolio.  Not everything has to be buy, hold or sell with options – there is always hedging and there is always an option!  Since many of us are short on USO and not happy at the moment, I thought we'd focus on various salvage strategies for positions that go against us but, before we get into that, I did promise we'd discuss scaling, and the two do go hand in hand

Scaling into a position is always a sensible strategy, we can't be right all the time with our entries so we need to plan ahead for being wrong.  Also, we need to plan for our position going against us tomorrow, next week or next month.  Ideally, you should never be in any position that risks discomfort if you lose it.  If you have a large virtual portfolio, it's good to keep most of your positions under 2%.  If you have a medium virtual portfolio, 5% and, if you are in the $50,000 range or less, it will be hard to avoid having positions that are 10% of your virtual portfolio and that's where scaling is even more important so we're going to focus on the small entries and I'll assume the big boys can multiply by 2-10 by themselves.

$50,000 is not a small amount of money and we can assume that, if that is your stock virtual portfolio, that you worked hard to make it and you would rather not lose it.  This is all the more reason to take a more conservative stance with your positions.  As I said, you don't want any position to be more than 10%, or $5,000.  That doesn't mean it can never happen, but you need to treat anything over 10% as "uncomfortable" and look to reduce it when there is a good opportunity. 

When entering a new position, we want to be ready to be wrong.  Sun Tzu said: "Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat."  We made a nice profit on Tuesday morning on USO puts we had held
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Zero Hedge

Here's How CIA Puppet-Masters Are Deliberately Picking A 'World War III Level' Fight

Courtesy of ZeroHedge. View original post here.

Via DasiyLuther.com,

It’s really quite embarrassing on a global scale when members of our own government seem to be deliberately trying to pick fights with people who aren’t interested in fighting with us. If you’ve traveled outside of the United States much, you probably know that we Americans have a rather negative reputation off of our own shores. Now, generally speaking, that isn...



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ValueWalk

10 Reasons to Doubt the Racial Explanation for Trump's Success

By The Foundation for Economic Education. Originally published at ValueWalk.

10 Reasons to Doubt the Racial Explanation for Trump’s Success

“White Supremacist America!” yells Counterpunch. “White Supremacists Bolstering Trump,” says AlterNet. This really is a “White Riot,” says Vox. That’s the opinion of the left for why Trump not only won the Republican nomination, but also seems poised to win the presidency.

Photo by Dis...

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Phil's Favorites

Merkel Says No Aid for Deutsche Bank; Depositor Bail-In Coming Up?

Courtesy of Mish.

The €72 trillion (notional) derivatives mess known as Deutsche Bank remains under severe pressure. It’s market cap is $17.43 billion. It has no earnings and pays no dividend.

On April 23, Deutsche Bank was Fined $2.5 Billion over LIBOR rate rigging. Twenty-one people face criminal charges following a seven-year investigation.

On September 16, the US Department of Justice Fined Deutsche Bank $14B for mortgage securities fraud leading up to the 2007-2009 global meltdown.

Today, German Chancellor ...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Bond Market Signals It May Be Ready to Take the Fed at Its Word (Bloomberg)

Treasuries traders are signaling a growing conviction that the Federal Reserve will follow through on its projections and raise interest rates in 2016.

Currency Volatility Poised to Surge as U.S. Election, Fed Loom (Bloomberg)

Volatility in the $5.1-trillion-a-day foreign-exchange market is down, but not out, according to UBS AG.

...



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Kimble Charting Solutions

Crude Oil attempting key breakout, says Joe Friday

Courtesy of Chris Kimble.

Below looks at Crude Oil on a “Monthly Closing” basis, since the early 1980’s.

Crude Oil started tanking in 2014 and its low earlier this year, took place at dual long-term support at (1) below.

CLICK ON CHART TO ENLARGE

Two support lines, that date back over a decade, came into play at (1) and so far have held. Crude remains in a down trend and this down trend is being tested at this time.

Joe ...



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Chart School

Price and volume health check

Courtesy of Read the Ticker.

Those who use volume as part of the technical studies will say the wish to see a rising market where volume is greater on the upswing that that on the down swing.

A very good demonstration of this is shown by the readtheticker.com NetVolume indicator, if volume is healthy during a rising market then the NetVolume will rise with the trend, if it is not then other forces are at work.

Also divergence is between price and the NetVolume indicator add value, if you have a fall in the market and the NetVolume indicator does not show an equal swing down, then the divergence must be bullish and the swing down can be considered a light volume sell off.

The NetVolume indicator is a price and volume trend ‘health check’, it is not a marke...

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OpTrader

Swing trading portfolio - week of September 19th, 2016

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Members' Corner

Market Liquidity and Macroeconomic Bullshit

 

Market Liquidity and Macroeconomic Bullshit

Courtesy of The Nattering Naybob

STJL - "Apparently macroeconomics is all bullshit – ROFL! Paging Naybob now… Famous Economist Paul Romer Says Macroeconomics Is All Bullshit."

The Nattering One muses... Macroeconomics as practiced by academics and those in charge is pure voodoo. Better to chant over goat blood, bird feathers and scattered entrails...

As for reality, overnight CNH HIBOR (...



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Mapping The Market

Here's a Cautionary Tale of Pension Privatization From Chile

Via Jean-Luc:

"When you let the free market take over, the little people get screwed and bankers get rich. Chile tried privatizing retirement plans and surprise, surprise, fund manager ate the profits… Pretty sure the results would be the same here..."  ~ Jean-Luc

Here's a Cautionary Tale of Pension Privatization From Chile

By KEVIN DRUM, Mother Jones

Among free-market fans, Chile's privatized pension plan has long been held up as a model for us to follow. The problem, as the Financial Times notes today, is ...



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Digital Currencies

Gold, Silver and Blockchain - Fintech Solutions To Negative Rates, Bail-ins, Currency Debasement and Cashless

Courtesy of ZeroHedge. View original post here.

By Jan Skoyles

I was so pleased yesterday by the announcement that I have joined the Research team at GoldCore as it meant that I could finally start talking about it and was back in a role that lets me indulge in my passion by researching and geeking out on all things gold, silver and money.

...



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Biotech

Epizyme - A Waiting Game

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Epizyme was founded in 2007, and trying to create drugs to treat patient's cancer by focusing on genetically-linked differences between normal and cancer cells. Cancer areas of focus include leukemia, Non-Hodgkin's lymphoma and breast cancer.  One of the Epizme cofounders, H. Robert Horvitz, won the Nobel Prize in Medicine in 2002 for "discoveries concerning genetic regulation of organ development and programmed cell death."

Before discussing the drug targets of Epizyme, understanding epigenetics is crucial to comprehend the company's goals.  

Genetic components are the DNA sequences that are 'inherited.'  Some of these genes are stronger than others in their expression (e.g., eye color).  Yet, some genes turn on or off due to external factors (environmental), and it is und...



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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Promotions

PSW is more than just stock talk!

 

We know you love coming here for our Stocks & Options education, strategy and trade ideas, and for Phil's daily commentary which you can't live without, but there's more!

PhilStockWorld.com features the most important and most interesting news items from around the web, all day, every day!

News: If you missed it, you can probably find it in our Market News section. We sift through piles of news so you don't have to.   

If you are looking for non-mainstream, provocatively-narrated news and opinion pieces which promise to make you think -- we feature Zero Hedge, ...



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About Phil:

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...

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