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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Phil's Favorites

COP 23: three ways cities are leading the fight against climate change

 

COP 23: three ways cities are leading the fight against climate change

Courtesy of Barbara NormanUniversity of Warwick

Mettus / Shutterstock.com

The global population is predicted to rise to 10 billion by 2050, and the majority of those people will live in cities. Given that cities ...



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Zero Hedge

Opioid-Related Deaths Drained $500 Billion From The US Economy In 2015

Courtesy of ZeroHedge. View original post here.

The national opioid epidemic is even larger drain on the US economy than previously believed, according to a new analysis from the White House Council of Economic Advisers. The cost of opioid-related deaths in 2015 was $504 billion, according to the CEA – a figure equivalent to 2.8% of that year’s gross domestic product.

CEA said the report, which was obtained by the Hill ahead of its release on Monday, was...



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Digital Currencies

As Bitcoin Tops $8,200, Only 39% Of Survey Respondents Say It's A Bubble

Courtesy of ZeroHedge. View original post here.

Having first surged above $8000 overnight amid Zimbabwe's chaos, it appears uncertainty in the core of Europe has driven further demand for cryptocurrencu protection, sending Bitcoin to a new record high of $8247 - up 50% from the 'Bitcoin Cash' crash weekend lows.

...



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Insider Scoop

Earnings Scheduled For November 20, 2017

Courtesy of Benzinga.

Companies Reporting Before The Bell
  • Bitauto Hldg Ltd (ADR) (NYSE: BITA) is expected to report quarterly earnings at $0.29 per share on revenue of $335.93 million.
  • Star Bulk Carriers Corp. (NASDAQ: SBLK) is estimated to report a quarterly loss at $0.04 per share on revenue of $66.32 million.
  • Northern Tech...


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Chart School

Weekly Market Recap Nov 19, 2017

Courtesy of Blain.

Monday, Tuesday, and Friday saw the now usual “no volatility” days – while bears finally saw some action on Wednesday, bulls came right back Thursday with even bigger gains.  So while we have been cautious on the market for 3 weeks now all that has meant is consolidation in the market (granted the Russell 2000 has taken some hits).  For the week the S&P 500 fell 0.3% while the NASDAQ gained 0.5%. Economic news was light (we cover retail sales below), and earnings are coming to their tail end so we are in a bit of a news vacuum as negotiations about the tax reform bills will take the reigns.

Retail sales slowed in October, rising...



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Biotech

The two obstacles that are holding back Alzheimer's research

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

 

The two obstacles that are holding back Alzheimer's research

Courtesy of Todd GoldeUniversity of Florida

Family members often become primary caregivers for loved ones with Alzheimer’s disease. tonkid/Shutterstock.com

Thirty years ago, scientists began to unlock the mysteries regarding the cause of Alzheimer’...



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ValueWalk

Robert Mugabe Under House Arrest, Military Takes Control Of Zimbabwe

By Andjela Radmilac. Originally published at ValueWalk.

Zimbabwe’s head of state, 93-year-old Robert Mugabe, has been placed under house arrest after what seems to be a military coup took place in the nation’s capital.

By U.S. Navy photo by Mass Communication Specialist 2nd Class Jesse B. Awalt/Released [Public domain], via Wikimedia CommonsRobert Mugabe is safe

Following numerous reports on social media late Thursday night about the increased military presence in Harare, the capital of Zimbabwe, the country’s military took...



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Members' Corner

An Interview with David Brin

Our guest David Brin is an astrophysicist, technology consultant, and best-selling author who speaks, writes, and advises on a range of topics including national defense, creativity, and space exploration. He is also a well-known and influential futurist (one of four “World's Best Futurists,” according to The Urban Developer), and it is his ideas on the future, specifically the future of civilization, that I hope to learn about here.   

Ilene: David, you base many of your predictions of the future on a theory of historica...



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Mapping The Market

Puts things in perspective

Courtesy of Jean-Luc

Puts things in perspective:

The circles don't look to be to scale much!

...

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OpTrader

Swing trading portfolio - week of September 11th, 2017

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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Promotions

NewsWare: Watch Today's Webinar!

 

We have a great guest at today's webinar!

Bill Olsen from NewsWare will be giving us a fun and lively demonstration of the advantages that real-time news provides. NewsWare is a market intelligence tool for news. In today's data driven markets, it is truly beneficial to have a tool that delivers access to the professional sources where you can obtain the facts in real time.

Join our webinar, free, it's open to all. 

Just click here at 1 pm est and join in!

[For more information on NewsWare, click here. For a list of prices: NewsWar...



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Kimble Charting Solutions

Brazil; Waterfall in prices starting? Impact U.S.?

Courtesy of Chris Kimble.

Below looks at the Brazil ETF (EWZ) over the last decade. The rally over the past year has it facing a critical level, from a Power of the Pattern perspective.

CLICK ON CHART TO ENLARGE

EWZ is facing dual resistance at (1), while in a 9-year down trend of lower highs and lower lows. The counter trend rally over the past 17-months has it testing key falling resistance. Did the counter trend reflation rally just end at dual resistance???

If EWZ b...



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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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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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Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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