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  1. Hallelujah!

  2. Well, here for posterity’s sake is a breakdown of my breakdown today.  It was an emotional breakdown for about 30 minutes.  I am over it, but very important to go back and look at why it all happened.  First, I will list the mistakes that I made, then I will give a little justification for cashing out at a fixed profit target.

    1. Half of my problem today was poor daytrading of AAPL puts.  It is silly to be taking large losses on put DT’s when I so completely believe that AAPL is going up.  If there was a strong pullback, I believe it would be temporary and swift and that even a small position would make a large profit.  Consequently, taking multiple large positions and taking losses that amount to 5R on daytrades is inexcusable.

    2.  The other half of my problem was giving up gains that I told myself at the open, I would take if they came.  I had a plan that if I gained $2000, I would cash out.  It reached that level, but I didn’t cash out.  I will justify this later, but that was my trading plan and I didn’t follow it.

    3.  I let my frustration at blowing a large profit upset me and make me aggressively play two positions that I actually thought were going to go against me, but let that thought creep in that if I just DD and get a pullback, I will get back to even.  Obviously, a terribly common mistake and one I allow to happen from time to time. 

    4.  The only thing I did right was to eventually get up and walk away to cool off.  At least it stopped the bleeding.

    Ok, so now take a look at the positions that I opened the day with.

    I am just focusing on those even though I doubled up on CME puts and that was a slightly larger loss as a result.  The only other thing not accounted for was a simply brilliant daytrade on SU stock.  I got in at the exact bottom around noon (which was the bottom from Thursday) and then got out $.20 off the high that followed.  Would have been a bigger win except that I only got filled on 200 shares because no big money was getting out at that level.

    As for the rationale behind my strategy, it boils down to two things.  One is probabilistic returns and the other is providing steady income.  Let’s start with the probabilities.  Today was a great example as I had 4 positions that all made large moves with mostly different arcs for the day.  MAIN PREMISE:  On any given trading day, a stock (or option) tests how high and how low it can go for that day. 

    …..(Unproven assumption #1):  A stock will fall or rise until a crescendo is hit and the stock returns to moving averages or reverses to test the highs.  One of the primary rules of trading options is to sell into the excitement as the temporary spike of IV pushes the option to a higher price than it may reach upon a second attempt at resistance as fear grips the sellers and they want out. 

    …..When dealing with a portfolio with multiple positions, the account value will reach a maximum value when the most and largest positions have the largest average gains.  (Unproven assumption #2) When your account reaches its peak value for the day, it is impossible to know whether the resulting pullback in value will come from your losers going more against you or if your winners revert more strongly to the mean.  As a result, the only way of being sure that you sell the right thing, is to sell them all.  And if the collective value drops back down later in the day, you can buy all the positions back.  In today’s example, that would have been a total of $40 in commissions to cash out and reinitate those positions.  If I would have bought them back at close, I would have had the same positions (if I still believed in them all) and $2000 more in my pocket.

    …..(Unproven assumption #3)  The average daily return on invested cash should not exceed 3R.  Consequently, by taking every 5R daily return as possible, you are gaining on the average daily return of 3R.  I had

    …..As you may remember Optrader, this portfolio was originally intended to see if a $30K account could produce a 10% weekly return of $3000.  If I am able to frequently make $2000 a day with a $400 R value, and limit my down days to an $800 loss, I should be able to do that.  It obviously requires finding some good picks and having them go your way, but that doesn’t seem to be the problem right now.  I have been getting $1000 to $2000 intraday gains often, it just happens that I had been losing much of the intraday gain as I pick and choose which positions to close throughout the day. 

    …..Finally, the whole reason I am trading is to be able to spend more time with my family.  If I am making $2000 and done by 9am, that frees me up to do things to make me and my family happier.  I hope I continue to track this and see if I could have gotten a better price if I had waited, but I think this is a very rational way to approach taking gains which is ultimately the most important part of trading.  I agree that there is some leeway for setting stops on all positions to capture positive momentum, but I will be more interested in that after several days of being disappointed with a 5R return.

    I hope you are still awake.  Thanks for your interest.  Most of this I hadn’t really put into words or thought about completely so this has been a really valuable experience in helping me understand my goals in this iteration of my daytrading account.

  3. Sorry, better spreadsheet of my positions.  (Corrected values for previous close (Column 2) and number for total HI of positions for the day now visible.)

  4. Hey Film – Dr. Brett article that you might want to read:

    Let’s remember that day trading is not for everyone.  It’s one of the many styles we practice here and most people adopt one or the other.  I myself, am not a day-trader by nature as I usually tell people "I’m not a day trader but I’m not adverse to taking profits in a day."  You can tell from the way our DTP has devolved into a well covered portfolio now that it’s up 230%, I didn’t mind tossing $100K around but, after making $250K in profits on it, I ended up with $200K in fully hedged positions and $120K in cash – it’s just my nature…

    That’s why I’m starting a new DTP this month, these positions can all be moved to the STP at this point and we can get back to day-trading but remember when we were daytrading heavily, how often I would say "Gee, I guess I took those profits way too early."   I think that’s the key and that’s what Opt is teaching as well – make the money and get the hell out.  If you can get to believe in yourself and believe in the system, then a $2K gain should be plenty for you and taking an $800 loss should be automatic.  It’s not a defeat to cut your losses.  Try flipping a coin and write yourself down for a $2K gain on heads and a $800 loss on tails using your starting balance.  When you make 25%, put 1/2 of the profits into some long-term investment that pays 8% and if you ever lose your balance due to an incredible run of bad luck – then you need to accept you are done for the period you allocated the money for…

    With both Opt’s and my plays – there’s certainly no shortage of ideas is there?  It’s not like the trade you make today – win or lose, will be the last trade you make.  It’s just a trade, it works or it doesn’t, it makes $2,000 or loses $800 but there will be another one tomorrow and the next day and the next and, with $30K looking to make $3K a month, you only have to be right 7 times ($14,000) and wrong 13 times ($10,400) to be on track.  Of course, if you have a winner or two that runs a bit, all the better AS LONG AS YOU DON’T LET YOUR LOSERS "RUN."

    Again, flip a coin 1,000 times if you have to but get a discipline!  Rather than a coin flip, you can test your chart reading skill at but use the same rule for right and wrong guesses rather than their allocations (although you can run both and compare).  See if you can outperform a coin flip reading charts and making decisions!

  5. LOL, I just played with the instpectd chart and went from $100,000 to $308,887.39 in 31 trades by betting 100% on each trade (using default settings) which totally negates my point about slow and steady winning the race but those are stocks bet over 20 day periods so that’s 2 years of trading…

  6. Film, nice self-analysis, thanks for sharing
    All, I realised an issue I seem to get and I was hoping someone could help me explain this. I opened a position in EBAY and closed it recently, I had entered a stop and the original delta; Open stock price $31.05, stop at $31.6, delta of .34 so with an R of $760 I calculated that the position size should be 41 contracts. Now I went it with 20 contracts so my R ended up being $340, when I closed the position out at $31.8 and I ended up with a R2 loss, now I accept that there is always some variance as there is a demand/supply cycle, but as I closed this very close to my stop I got a bit surprised. I am obviously missing something very obvious so I appreciate your help/suggestions as to what I did wrong. And yes I got out to early… should have listened to Opt.

  7. Sorry this was the EBAY PUT by the way, in case that wasn’t clear.

  8. FILM – for what it’s worth, if you’re day trading and you ever want an opinion on a STOCK feel free to ask me.  I don’t know how much anyone trusts my opinion, but it’s frankly what I do for a living.  I won’t / can’t tell you if the option you got into is a "good idea", and I can’t give a recomendation (compliance)… but I CAN tell you where I THINK the stock’s going intraday and why. 

    Just throwing it out there.  Good Luck.

  9. Optrader-
    As good as the chart looked on GRMN, I guess this is another reason we don’t play earnings.


  11. FSLR COMPLETELY changing course on their conference call.  now up 3 bucks.

  12. Blake – I’m sorry dude, but "as good as the chart looks on GRMN"??????  Look at a 6 month chart… what about that looks good?!?!?!?!?

  13. Mark-
    You don’t like nice rounded bottoms.  The formation in April looks good to me, it has been dropping non-stop, but you don’t think April was a good chance at a bottom?

  14. Blake – your ideas are correct, but not completely.  Can’t that argument be made for March when it "rounded bottomed" and tested the low made in January?  A better idea is to look at a 2 year chart also.  You’ll find a "LOT" of support at 40 but all MA’s still point down (except 5 dma of course, but that’s too fast for a LT trend in a stock).  If you see GRMN test and break 50 with the 50 dma turning flat / positive, then we’re talking about a change… but look for a 40 bottom and if that breaks… well then you need to look for 2005 levels.

  15. FSLR 300+ now!

  16. Thanks Mark, that is helpfull for me.  So looking back at a chart of AAPL, when would you have gotten back in? 50 dma turned positive on 4/4 with a close at 153.
    What in your methods would have tipped you off to get out of AAPL in Dec/Jan?  Just curious to hear more about how you look at the charts.

  17. Oh man those fuc*** analyst cannot shut up their poised mouths .. WFR
    JPMorgan analyst Christopher Blansett downgraded WFR .. how can you say that with oil heading $200 and FSLR reporting those numbers ???

  18. Morning everyone,
    Lots of posts this morning. You guys like a fresh, new post, I see :)
    Film, I will look at all this in details when I have a minute and try to help if I can. Maybe give my opinion. I have to agree with Phil though. I am not a big fan of daytradting, especially with options.
    GRMN-Yes, Blake, this is why we don’t play earnings no matter what. Mark, I agree with Blake, this chart did look very good for a swing trade. Timeframes are very important in trading and I believe that there is no point in looking at a 2 year chart if you are going to hold the stock for 2 minutes. Now, the trend could be down for the last 6 months, it does not mean that the stock could not have a very strong bounce for a week. Every depends on how long you are planning to hold the trade. That being said, I agree with your analysis for the longer time frame, and anyway anything can happen at earnings.
    Andy, it would help if you could post what options you played at what price you paid.

  19. GRMN-The fact is that, even if chart was very bearish on the longer term, we still made some good money playing calls. Stock moved almost 10% up from where we bought the second 1/2 and where we sold it.

  20. optrader:
    I was looking for your MA explanation, its use and significance, I cannot find it.

    Can you help me ?

  21. MA-must have missed the question. Can you repost it please?

  22. Blake – no worries.  to begin, everything’s different.  Most important thing to understand to be a "great" trader.  Charts tell you a lot, but you have to know / understand the sentiment of a stock too.  GRMN vs. AAPL is not the same stock fundie or technically. 



    So they look "similar" until Oct 31st… where they diverge quite well.  GRMN tests its 200 dma in Nov, pops off then down again thru 200 and 400 with the rest of the market sell off.  It keeps testing its 400 from below but never breaks…. where AAPL is able to keep / hold it.  In fact, teh 200 and 400 both "flatline" while at the same time there is HUGE volume that supports AAPL around Feb 29.  That volume won’t let it fall while GRMN keeps trucking donw and continuing its trend (50 dma) until it get’s as low as it did in ’06 when it began it’s upward movement.  AAPL refused to break down and therefore found its mojo.  Here it broke thru the 50dma and 20 in late March (which is turning around) and tested the 200… broke thru, then tested 20 for a bit to keep "confirming.  Here GRMN did no such thing, and CONSISTANTLY kept losing it’s 20 (fast) and never got to go back to it’s 50 (relatively slow) and no where NEAR it’s 200 (BEST LT trend). 

    That’s a very long way of explaining and sorry if it’s unclear.  I’m not a great teacher…

  23. AT&T to cut price of iPhone by $200 – Fortune
    When Apple (AAPL) introduces the 3G iPhone this summer, AT&T (T) is expected to subsidize the cost by $200 in an effort to make the iPhone more available to a wider consumer market, according to a source familiar with the strategy. The $200 rebate or subsidy would be limited to AT&T customers but not through Apple stores. Both companies declined to comment. Reference Link

  24. Op – don’t disagree, I day trade the hell outta things.  But if you’re going to play earnigns which is very fun then you NEED to look at a 6 month and 2 year chart.  They tell you what the market’s been doing (i.e. GRMN selling off losing 2/3 of it’s value!!!)  If they’ve been selling, why you buying? 

    I swing all day long brutha LOL.  But I won’t play earnings to the positive on that chart hell no.

  25. Mark, I think we agree 100%. I would not play earnings on this chart either, and this is why we did not. 
    Also agree with everything you said in previous post, especially about charts not telling the whole story.

  26. GLW-Testing $27 again.

  27. Blake – dude sorry didn’t answer your question fully.  What tipped me off to AAPL selling off in Dec Jan?  I’ll answer that this way: I was a PM before I was a trader.  I know that if I bought a stock Jan ’06 for $80 and in 12 months it’s up almost 150%… I’m gonna take the HELL outta those profits LOL.  If I’m mandated to beat the SPX long only, can’t hold a position greater than 3% of the total portfolio value, and need to keep within 2% +/- of the underlying benchmark index’s sector weights… then I’m looking to make better than 11% / year.  Market had been looking shaky and all major PM’s out there were calling for a "healthy correction" since October.  Dec / Jan was perfect timing b/c of tax loss/gain selling and b/c all big boys new eveyrone else would do the same thing.  If you look back at early Jan posts / late Dec posts you’ll see me blogging about not buying anything until late Jan.  then in late Jan I still said I was buying until I see something else change.   Soooooo… the market wanted to sell off and take profits, wanted to get "neutral" until they felt better about the news (RE, subprime, global growth, inflation, etc)… now sitting on the sidelines still until 2:15 EST today…

    Look at 6 month of GS… just chillin below it’s 200 dma… WAITING for the fed to tell it where to go.

  28. GLW-1/3 out.

  29. Thanks Mark-
    I like to hear this side of things, it is helpful to hear all the opinions of you guys that have such great levels of experience.  It will be interesting to see what happens after this afternoon.  I’ll keep my eye on the charts and look for what you are pointing out with the FED’s announcements and the long term trends.

  30. HANS- Flying again!

  31. HANS-Another 1/3 out.

  32. Out of HANS.  Thanks Film and Opt.  Great trade.
    Closing out positions prior to Fed.

  33. GLW and HANS-I still like the charts a lot of course, just taking some really nice profits out before Fed. We still have 1/3 left in each.

  34. Opt, I bought EBAY MAY 30 PUTs for .78$ and sold at $.41 (avg. on both) I entered with 20 contracts my R for this trade was $374 and the loss was $.37 so it came to 2R loss in the end. If you do have time at some point, even AH I would appreciate a pointer as I can’t see anything obvious, but following my stop should have given me the expected R or pretty close.

  35. Opt-
    Are you at all tempted to buy back 1/3 of SU here?  or do you want to wait for the fed to add positions?

  36. Blake – another reason to look at LT charts is b/c I also feel they’re good for Op’s swing trading system.  I posted 04/02 (I think) that 295 on BIDU was a very big place along with 300.  The chart technically was looking awesome and I would have bought the stock b/c of it.  So you could have bought month out calls (May’s) instead (sakiko bought front months and made 200% b/c of my post I think).  Anyways, if a stock gives you a good LT set up, then smart to buy ATM options maybe a month or two out (IMHO).  You could swing trade ‘em, but you can also hold on for a month and make 400% returns.  Is what it is.

  37. FSLR-Who wanted to short this one yesterday? I hope you did not.

  38. Mark – thanks for the refresher about PM motivations around year-end.  Had read it before but always great to hear it again for it to sink in more.
    HANS  – thanks FilmFlam for the heads up.  I’d turned this into a fully covered May/Jun spread after the run-up yesterday, which has capped me, but not too worried going into the FOMC.  I know, should’ve kept a portion uncovered ….
    MATK – I don’t think anyone else is playing this here on this board.  The chart still looks good to me, with 5ma, 20ma, 40ma all still pointing up.  Going to buy more if it drops back below 36 again.

  39. FSLR-  that was me…and I did not, Doug told me earnings were this morning, so I stayed clear of it.  Thank God!

  40. Gld holding 86 Mark what you think?

  41. kc – no worries at all.  It’s usually the part of the equation the "average retail guy" doesn’t consider.  Best thing to keep in the back of the mind… retail holders control nothing.  WE follow along with the crowd, and if we got in we’re lucky frankly.  Sooooo keep the ear to the ground, to hear what they’re saying, and you should make money knowing what the big boys intend to do (b/c it takes them weeks to work out of a position fully unlike us retailers who can dump it on market practically and not even move the bid/ask.

  42. Andy, the issue was that your puts were too cheap, and too far OTM. What happens in this situation is that if the stock moves against you, the price of the option will move much faster than the delta indicates. This is because there is less chance of the stock coming back.
    I would have picked the $32.50′s instead. In fact I always like to pick the ones that are a little bit in the money, instead of OTM. 
    A great way to take care of this too, and get more constant and accurate deltas, is to buy the vertical instead. Would be interesting to see what happened to the vertical (32.50/30) in the same period. 
    Also, remember that what worked against you this time, could work your way another time. I pointed many times here at examples where the R profit was more than it should have been. If EBAY had dropped below $30, no doubt that the delta wold suddenly have increased very fast and you would have made more money than anticipated. All in all it should balance itself over time. But still, you should avoid to play OTM. I know it was just the next strike here, but $2.50 makes a difference.

  43. SU-Not buying back , no. Not into Fed.

  44. CME-1/3 out.

  45. FSLR – I got out of my puts position yesterday  ….  Per Phil’s analysis,  I will short them again, once the buying frenzy is done.

    I Also got out of all of my Agi put positions … and I am happy I did that, although I will be getting back in those soon.

  46. ISRG-1/3 out.

  47. HANS-$36! Beautiful.


  49. This is turning into another amazing day of profits here. Hopefully Fed does not break it LOL. 
    Also, great day to remember why we don’t gamble on earnings (GRMN, FSLR etc.). Too easy to wish we had played GOOG and made a fortune and not appreciate that we don’t have to try and save some positions that went poorly this morning instead of just enjoying profits from following trends.
    Pretty happy too that we did not short the solars and Ag,s, even if we missed some nice profits. We can’t play everything and would not feel good about it today. Congrats though to everyone who played them the last couple days!

  50. Opt:

    In your wife’s IRA how do handle R’s with stock positions
    I am clear with 2 or 3% risk with options etc.
    but I wondered how you set it up with pure stocks thanks!
    Could you use Hans as an example and a $100,000 account…

  51. They hit the sell button on SU!!!

  52. GLUU-Another 1/3 out.

  53. OPT – CME:  I have a lot of trouble getting out of trades with a large bid/ask spread.  I use TOS, and will usually adjust my exit price to the mid point.  However,  in the situation where I just want to take the profits, because the trade is moving against me, I often end up chasing the movement and getting a much worse exit than if I just got out at the "Natural". So although conventional wisdom is to split the Bid/Ask for your exit/entry price, I frequently end up with worse fills than if I just took the natural.

    Do for CMA, the spread was $0.60, how did you come up with the exit price ?  And do you vary your exit pricing strategy when you need to get in and out fast ?  Thanks

  54. HANS is moving hard again!  Opt- I sold the May 35 on HANS…did you sell the May or Junes?  Do you have a preference on this when you run verticals?  I sold Mays because the Imp. Vol. was higher on them

  55. Lance,
    Did I say that I only play stocks in my wife’s IRA? If I did that was a mistake, I probably meant spreads. I do have options trading in it, and you should get it if you don’t. I can’t sell options though, this is why I don’t play spreads. This affects my results a little bit, as I have done some verticals lately, but not that much. 
    I play stocks mostly for daytrades. Don’t really hold any anywhere else though. Even in LT, I prefer to buy Leaps.
    The issue with stocks is that if you want to use this kind of strategy, with tight stops, then you need a huge buying power, and will probably be restricted to one position in your portfolio at one time. It is Ok to do it though.
    For calculation, it is exactly the same, except that delta is 1. In fact you don’t use delta for those.
    if you have a $100,000 account, and want to risk 3% on HANS, then that’s $3,000. We got in at $33, with a stop at $32.50 (My stop was at $32.45, but let’s keep it simple). So you should buy 6,000 shares. The problem is that 6,000 shares would cost you $200K! 
    With margin, you could find a way to play those with a little bit wider stop, but it would mean that you hold only one position. Which is totally fine by the way.

    Most of the traders who made the most money this year, bet on only one instrument. Sometimes I feel that we want to trade too many things here, and I don’t like it too much.

  56. Op – "one instrument".  YES!!!!!!!!!!!!!!!  You hit the nail on the coffin my friend.

  57. I just love watching SU fall, one of my favorite things to do!

  58. HANS-I sold the Mays as well. And I still like them. doing very good on them, and that was already after the first run. Did you adjust your position to reflect the delta of the spread? This is something I insisted on yesterday. if you did you should have approximately twice as many spreads as how many calls you got initially. And should be very happy this morning.

  59. Mark – Thanks for your volume advice yesterday.  I would like you take on some of the Agi stocks.  Lets take POT as an example.

    1) In the recent sell off, Volume has been above average
    2) Given their recent success, they were due for a correction.  I usually use the FIB re-tracement tool.  It looks like for a 50% pullback, they should drop to around $175
    3) MACD seems to indicate further correction
    4) W%R – indicates well for more correction
    5) Volatility is up with bigger intraday moves

    All of these signs give me confidence to want to "short" the stock,  but to Optraders point, this is a strong upward trending stock, and it moves quickly … so …

    1) How do you read the tea leaves ?

    2) Should we consider this correction over for the time being ?

  60. Opt-  Yes, I did adjust to reflect the delta of the spread. Thanks.

  61. Blake/HANS – I covered with May35s as well due to the high premium offered.  I ended up buying more Jun35s today (albeit a bit late) with HANS’ continued run so I wouldn’t be burned too badly by my callers.  I’ll either take profit on those naked calls when it reverses or sell more May35s. I know, this isn’t Optrader’s pure swing trade type play, but is at least one way to address.

  62. CME Wow …. I should have exited the whole position ….. what is going on ?

  63. SU under 110!!!!!!!!!!

  64. optrader – for CME are you thinking of all in ?

  65. CME-The trick when you have big spreads like this, is to exit when momentum is going your way. Look at the time stamp of when I exited and look on the chart when I exited. I usually put my order right below the ask, and try to take advantage of spread. I do this too with BIDU and GOOG. 
    Now, it depends on what your goal is with the position. If you want to exit NOW, why are even playing with $0.60? It is all about position size AGAIN. If you followed the rules, you should a very small amount of contracts and $0.60 should not make a difference.

    There is a reason why the spread is $0.6. The stock is $480 and a $5 move is NOTHING in the underlying. If the option is $20, then $0.60 is 3%. When you trade an option that is $0.95-$1 spread, do you think twice about selling at $0.95 if you need to exit? But still, the spread is 5%!!!

  66. Doug, CME is up 1%! Bees, what do you mean "all in"?

  67. Hey guys exciting day.  I am tied up with a baby.  Will share my thoughts later.  My LTP’s are thrilled with AAPL/GOOG behaving so nicely.  But, in all cash so no CME reversal or HANS follow-through for me.  My son doesn’t appreciate the importance of the time I spend in front of the computer.  So, I will be contributing during naps for the next three days.

  68. CME – I have 1/2 in @ 478 yesterday, and LOL I was thinking should I add the last 1/2near the 5ma. I should have exit @ 472.

  69. Bees, I would not add right now before Fed. There is absolutely no rush. NO POSITION IS A POSITION.

  70. This 110 line is right at the 20 dma on SU, or pretty close to it

  71. CME-Again, it is up 1% with market up 120 points. Anyone stressing-out about this kind of move needs to reduce their size. Now, chart is something else. It is right at 5MA here and we will have to wait for EOD to see if we exit.

  72. Doug – great questions.  I’ll answer it in parts.  No one stock trades the same… so b/c macd looks like too much doesn’t necessarily mean to sell (see FSLR all last year with macd).  So basically if one indicator not giving you the correct info, then it’s not the "correct" indicator.  I.E something else is baking into it (news, sentiment, etc).  So no one indicator "fool proof", hence why I look at 1 day, 2, 5, 10, 30… 3 month, 6 month, 2 year… etc. to see what they’re telling me.

    POT – great story, has risen roughly 50% in 3 months.  Easy to take profits (and there were 3 reports from different brokers telling their clients to do so the past few days).  I would not play it to the downside just yet.  I’d need to see if fail it’s 50 dma way before that.  If you’re going to short then I’d day trade it, but not for overnight holds IMHO.  50 dma is 172.56 today… so if tomorrow is big then 50 dma will prob be around 175 (your fib retracement as a matter of fact).  Yes there has been big selling of it, but why hasn’t it dropped more?  Not saying you should be totally bullish, just saying keep everything in mind.  If 50 dma fails then I’d look for 160. 

    Am I making any sense here?

  73. POT- Just to make it clear, I don’t think this is strong uptrending stock right now.In fact for me it is downtrending right now, 5MA is pointing down and price is below it. All I am saying is that for fundamental reasons, I don’t really want to short Ags and solars right now. But I could be totally wrong and charts rarely lie. You just have to pick your fights, and I am not sure this is one I want to fight as these can just jump up 5% any day. 
    Great analysis, Mark, by the way.

  74. Opt, thanks for the feedback on EBAY, makes sense.

  75. Mark – Thanks –  I need to use the MA’s for different period more in my analysis.  Thanks for the guidance …

  76. Mark, can I get your laser opinion on DNA? It had an unexpected drop on the latest drug news failure, but up until then I actually expected a move up based on the chart.

  77. got it OPT =)!

  78. CME – OPT – I am just frustrated that a trade that was profitable 1 hour ago and moving in our direction, swung so fast against us.   I will wait for EOD to make this decision.  it is  coming back to us now ……  I hope.

    POT – Opt, I am coming around to your way of thinking about who to pick a fight with.  thanks

  79. Doug – no worries at all!  You’ll have to pardon me for not being completely articulate.  Not a great teacher (Op infinintely better than I).

    Andy – laser analysis ha!  My two cents… fail so far.  chart was trending down since Jan ’07, then huge fail Dec ’07… was overdone so came back… currently chart MA’s all say down. 

    NOW, all that being said I have it fundie "worth" $80.  What’s your timeframe for playing?  (5 min, 1 day, 1 week, 1 month, etc)?  ST it’s sitting on it pivot point, waiting for the fed.  has pretty good volume support at 68, but looks like it can go as low as 65.30ish.  At that point I’d be a big buyer.  For now my humble two cents is that you hope it flatlines here between 67 and 70 the next few days / weeks then lets the ma’s come back a bit to help prop it up.  Otherwise it’s still a down…

  80. Doug, I understand about CME but 1% one way or the other is nothing and you should not care about it. What I am saying is that if you are concerned about it, maybe your position is too big and you might not want to go into Fed with such a risk. It is not rare for this stock to move $20 in a day, please take this into consideration.

  81. FYI – fundie opinion, if dollar gets bought up today and keeps getting bought post fed then ags "should" sell off with other commodities.  Something to watch when thinking about shorting POT and trying to find a good reason.

  82. ISRG-Sold another 1/3

  83. WSM bounced nicely off the 200 dma.  Looking good for our puts today

  84. Actually, the ATR for CME is at 17 and this coming down from a recent high of 31.

  85. Thanks, Film. So $5 is nothing.

  86. Film-
    Did you get back in SU at 113 like you had planned?

  87. WSM-I don’t want to celebrate too soon as we have seen this one come back real fast before, but this candle is looking very pretty.

  88. GRMN – pull up an intraday chart.  see the HUGE volume keeping it afloat at $40?  Kinda matched LT support from 2 years ago no?  If you were a day trader that $40 would have been a great buy of the ATM options (which were at $2 now at 3.80…

  89. Blake, I haven’t done anything since I cashed out yesterday, not from a lack of desire, just flying solo with 11-month-old.

    Now that I am free I am deciding whether to take 40% profits on AAPL positions in LTP.  Think I will sell the July’s, keep the October 200′s.  I swore I would not give up full position, but feel the need to reduce risk ahead of Fed.  This time, I need to make sure I have my orders in for what I want if AAPL gets to 170, 165, 160.  

    Did no one go short SU at yesterday’s high which is now today’s high? Too bad.

  90. FWIW, if CME doesn’t break 471 on this drop, and it is stalling hard at 472.50 on low volume, I would definitely reduce to 1/3 position or close.  Higher highs, higher lows last two days.

  91. CME-Anyone who was anxious or thought they had missed it at $472, here is your other opportunity :)

  92. Op – from earlier praise thank you!  I always feel lacking in my explanations b/c I see things thru a completely different lens (sell side instiutional trading).

  93. Optrader-
    Would you play XLF on a break above 27?  Not today, but later?

  94. Opt- Am looking at SMN for possible calls.  Would appreciate your thoughts.

  95. Eur/Dollar. I don’t like the talk too much on CNBC. Seems too obvious at this point. Everyone expect dollar up, commodities down. When everyone expects something like this, it usually does not happen. Might happen this time, but I am taking my profits on the dollar (shorted the Eur/dollar last week when price went below 5MA). There will always be time to re-enter.

  96. SMN-good chart but far from 5MA now and $34 is area of resistance.

  97. XLF-Yes, but $27.40 is the level I would be watching.

  98. I was just looking at the GLD and DZZ charts, again with the wedges.  Both pushing hard into resistance.  Think I am going to close that DZZ trade, too.  Up 5% in a few days on an ETF.  That is good enough.  Feel like a dollar rescue started with a FEd announcement seems highly unlikely.  More likely, we get Fed governors talking it up over the next few weeks.  Just going to play my perception of the odds.

  99. Hope everyone is comfortable with CME popping to 485 – 490. Methinks it might if we get commodity relief.

  100. If we do not get a push for the dollar, do you guys think it will drive SU back up?

  101. Blake, I have no idea. I have given-up a long time ago in trying to analyze this kind of thing. I let this for the talking heads and analysts on CNBC, who never made money trading by the way. All I can do is follow price and charts.
    The only thing I was saying is that usually when everyone is on one side of a trade, there is very little chance it will happen. if everyone bought the dollar thinking it was going to go up after Fed, then who is left to buy after Fed?
    But I could be totally wrong about it an we could see a huge jump in the dollar and a big drop in commodities. This is why we have a balanced portfolio.

  102. CME-Sold another 1/3. Always time to buy more after Fed.

  103. All sector XL indexes are Up for the day.  It has been a while …..  Interesting to see what will happen in 15Min after the fed

  104. Ok, would love to see retailers really die now.

  105. Here we go :)

  106. So I guess you were right Opt-  I would assume by the action that the dollar is dropping?

  107. nice one minute chart on BBBY

  108. Yes, dollar is dropping. Went up a little bit for a minute.

  109. CME-Nice!

  110. Anyone who still has the short Apple straddle, doing very well today.

  111. CME – Opt, you are truly remarkable. 
    Unfortunately I wasn’t in this one.

  112. I bought back some CME as planned after Fed, will not add another line but just adjust later.

  113. CME-That’s not me. That was an idea from Film from a couple of days ago. Waited until yesterday and nice test of 5MA to enter.

  114. CME & HANS.  Thx Film.

  115. BBBY-Now that’s nice, finally.

  116. GS trying hard not to break t day close 190.24 then S1

  117. Blake, did you notice that HANS dropped and our vertical did not move? Love that.

  118. Ok, you guys were freaking out when CME was up $5 and not cheering when it is down $10? We need a little bit of positivism here. DIE CME!

  119. No, I didn’t notice,  I guess because the vertical did not move…that is great.

  120. Do not sell the retailers puts too fast. We waited a long time for this, let’s let it run.

  121. Blake, it just dropped a little bit, but been hanging around $3.65.

  122. Opt
    U Da Man

  123. this could get very ugly.

  124. CME-$460 today?

  125. ISRG-All out for now.

  126. GLW-another 1/3 out.

  127. SIGM-All out for now.

  128. Are you buying any index puts optrader?

  129. I am buying back some HANS between now and close to make up for all the calls I sold.

  130. No index puts, no, I don’t need them with all the retailer puts.

  131. Do you think we should drop another 1/3 of SU with the dollar dropping?

  132. SU-I am playing the chart before anything else. Dollar might bounce tomorrow, who knows?

  133. Anyone,
    How do I set this OPT page to ‘reset’ automatically, say every minute or two without clicking refresh.  Thank you.

  134. Opt,
    WSM: Not celebrating - Did you not close this position?  did you re-enter?  The spreadsheet above shows you are out.

  135. WSM-Of course we are in. We even added a couple days ago. We have 2/3 of a position left. This was added to an old position though, so it is lower in the spreadsheet.

  136. rcha, if you find how do this, please let me know. Especially with Safari. There is something in Firefox, but it does not work.

  137. Amazing close to an amazing day. Loved the drop in the retailers, and we now have some very bearish candles. I added at the close to BBBY.

  138. CME -$17!!

  139. CME-These puts moved like crazy. Up 73% just today !!

  140. Anyone,
    I have been away from my laptop for over a month and hence have a lot of catch up to do.  Does Opt have a separate comment area now ?  If so, where can I find it every morning?

  141. well, I went from up 8% intraday to even…this is because I don’t have any CME or BBBY, still happy to end up ok with all of the news that came out today.

  142. Safari reset ….  The problem  auto-refresh, is that if it refreshes while you are typing in the text box … your comments are lost.  I thought this was going to be a good idea, but after losing comments … it became a pain.   If you want to try it get the apple script from here …..

  143. Doug, can you decide which tabs you want to refresh? Maybe I’ll refresh Phil’s comments as I rarely post there now.

  144. CMan, welcome back! Comments are right here. We create a new post every week or so.

  145. OPT – the scripting language is Apple Script, and you can easily modify this to your needs.  The default script updates the active front document, but I am sure that you can have refresh a tab …. I will look into it and let you know

  146. How ’bout that CME?  Hell of a drop.  Glad I could make you all some money.  I will start looking for new candidates tonight.

    The VIX broke its downtrend today. Could be more selling ahead.

  147. Opt, better get back on that strong dollar trade….  The tide’s a turnin’.

  148. Good morning film.!

  149. GRMN puts look interesting, price hit lower 100 day channel.
    Also noticed STP calls, they have earnings on 22nd May, could be interesting, bit worried of the solars, MA is pointing down somewhat to flat in the last sessions.

  150. Film, I might indeed. Especially if it breaks $1.53245.

  151. STP-why worried about solars?

  152. Opt, nothing in particular, just felt FSLR has had quite the run and if (big if) oil starts dropping I am not sure solars will hold up that well. Did you think STP looked good for calls?

  153. Yes, I was looking at STP for calls.

  154. Blake, happy we kept the SU puts? From yesterday: "SU-I am playing the chart before anything else. Dollar might bounce tomorrow, who knows?". Just shows that we never know and better thing we can do is stay disciplined.

  155. Yes,  VERY HAPPY!!!

  156. WSM-A break below 50 MA would be real nice.

  157. Next support under $109 for SU? 50dma of $105 or so?

  158. I meant JCP.

  159. SU-I see some minor support at $158, then it is 50MA.

  160. I’m never selling my SU puts!!!  just kidding

  161. Well, I didn’t find the time to screen for new 5MA entries, but I did step back and look at the big picture, and came up with the following list of stuff that I am bullish on for the LT.  I will detail more later, but basically this is my list of things to grab here with a .5R stop.  POT, EWZ, GOOG, AAPL, DIS, EWT, MON, ISRG

  162. OPT – Are we still trading MAY options ?  Do we start on June in about 5 days ?

  163. Doug, yes, next monday.

  164. FIlm, I have a very similar list.

  165. I am back in my FSLR Puts, they have barely corrected at all so far.  The earnings jump seems not to have changed the need for a pullback


  167. FSLR-Support is at $275. If that breaks it could go much lower.

  168. MA / V – truckin’!

  169. CME-That’s some bounce. This thing can move real fast.

  170. Op – FSLR – I second thee…

  171. Opt-
    So you are looking at STP for calls and FLSR for puts?  Seems contradictory.

  172. Film – DIS – They announce in three days – Do you like them before earnings ?

  173. Blake, I am just watching right now, looking at supports etc. and trying to keep an open mind.

  174. Mark, would you mind asking you about charts? which book is your fav for chart reading?

  175. Bees – chart reading?  Books still can’t go wrong with Murphy – generally speaking the bible, and if you really want to learn just look up the reading material for the CMT.  CMT is I beleive much more usefull for a trader than a CFA IMHO.

  176. Mark- I got murphy’s just find it a bit hard to memorize all the patterns in the book and apply it when I looking at charts.!

  177. OK, now I am mad I did not take the profits on CME yesterday.

  178. Opt : When do you throw in the towel on bbby?

  179. CME – Just wait 30 Min ….  It will dump again ….  it is on its way right now

  180. BBBY-Why would I throw the towel, especially after yesterday’s candle? It is below 5MA now.

  181. SU-DIE!

  182. I gotta get away from those 5 min charts …
    Thanks for SU   a thousand thanks!!!!!!!!!!!!!!!!!! I wish I hadn’t sold the first 1/3 where do you see yourself peeling 1/3 off?
    105 ish?

  183. SU-1/3 out.

  184. I am selling all of my SU puts when it hits 50!!!! just kidding

  185. Also will you wait for GRMN to close above ma 5 for you to consider?

  186. FSLR – WOW … Puts are doing well

  187. Bees – ahh.  I see.  I wouldn’t use everything.  Generally I look at MA’s, macd, rsi, closes, highs, lows, pivot points, volume, and price.  Keep those on all your different chart set ups (1 day, 2 day, 5 day, 10 day, 1 month, 3, 6, 2 year, etc).  Well, not the pivots, highs, lows, and closes on LT charts, but good to look at on intraday’s.  Then at night look at LT charts and see if you can find any patterns settin up (like the Cup and Handle I pointed out on BIDU early April).  Those are the "set ups" that give it the umph it needs to go much higher LT, and can help you when trying to figure out if now is a "proper" time to buy / sell the company. 

    You can also use different software to help you find these set ups.  Here’s one my buddy uses and loves (and it is pretty decent for how cheap it is).

  188. FSLR – 1/3 OUT

  189. GRMN-Yes.

  190. Bees, Mark
    Of all the TA/Chart books, there is only one (I have found) that has performaned any rigrorous statisticacl analysis regarding the success/failure/retracement probabilities, time frames, and expected gains/losses associated with various popular chart patterns.  It is call "The Encyclopedia of Chart Patterns" by Thomas Bulkowski.  He also has a web site with the new research he does on various topics, such as industry group rankings and returns.

  191. POT – Doug I think it was.  here comes that 50 dma test… not 175 like I thought but 172.59.  Let’s see if it goes that low today or not.

  192. DB – I’ll have to check it out!  Once again, you guys not knowing me personally may have a slightly incorrect view that I’m just pure charts all the time!  But no, I have fundies, sentiment, "feel"… I can see the same chart pattern in many diff stocks and know which one will work out or not.  A lot of it is just experience, knowing what the buy-side looks for when getting into a company, sentiment of certain sectors / firms, etc.  So all my charts tell me a lot… but not the whole picture for why I jump into / out of a stock.  That takes time…

  193. DIS – HAven’t thought about earnings yet.  I like them for a LT play that I will post later, probably on Phil’s page.

  194. Optrader-
    I picked up some QQQQ puts yesterday afternoon with a stop at 48, is this one that I should close out intraday if it breaks over the 200 dma?

  195. Mark
    Bulkowski does not look at fundies, but he is a big fan of industry group relative strength.  There is some research on his website that supports the contention that buying best stocks in sectors with the highest RS over the last six months is a very profitable trading strategy.  I look at the RS of the sectors on a regular basis as a back-drop to my trades. That said, I am more of an intermediate term trader.  I have no demonstrated talent for short term trading, which is one of the reasons I frequent this web site – to try to learn ST trading tactics/strategies.

  196. Q puts-I don’t know, you have to follow your rules. If your stop was at $48, then you need to exit when it is broken.

  197. Mark- Thanks for sharing your view is quite helpful=) do you see appple interday resistance @ 178?thanks

  198. Very frustrating morning, except for SU. All trends from yesterday did not hold.

  199. Very difficult to trade when things are up 3% one day and down 3% the other day.

  200. DB- I should grap that book today quite interesting!

  201. Sorry got logged off.  AAPL yes 178 is doable and less of a resistance level now IMHO (since it was broken yesterday)… R1 is 178.30ish… good point to watch.

  202. HANS looks like it is turning in our direction…I bought back the shorts in our vertical

  203. DB – I was always a LT trader (b/c working on the buy side in my prior life, I had to hold gains for 2 months… but could sell a loss immediately… go figure).  But now sell side not managing money, I’ve been fortunate enough to hone my day trading skills… very different, and you can’t have emotion. 

    Watch the screens all day, don’t play stuff just to play… you’ll learn / do well.

  204. mark, Got it thanks =), what kind of stocks are you watching now?

  205. HANS-I am keeping the vertical. The shorts have $2 of pure premium in them, while the longs have $0.6.

  206. HANS- I hope to re-sell the mays this afternoon

  207. Bees – I day trade ES only, don’t trade anything else anymore (b/c I can day trade futures only, have to hold something for at least 1 day in equities, options, or etf’s). 

    Other than that I like AAPL, GOOG, BIDU (so far… always hard to tell chinese financials), MCD, WMT, and some transport stocks.  Also like nat gas companies still…

  208. Mar- The reason you like transport stock (FEDEX,UPS)? Is because you see oil going down am I right ?

  209. MOS – critical time for it.  macd needs to come down to earth, rsi needs to stay here neutral, price needs to fluctuate daily between 50 and 20 dma (which both have flatlined)… if it breaks 50 then looking for $110 support.
    POT same sort of analysis.  MON, already failed 50 dma, 200 dma is roughly 103 when/ if it gets down there.  but macd and rsi ahead of MOS and POT by a week or so.

  210. not necessarily.  CSX / BNI – not dependant on oil, so they’ll be able to transport things cheaper.  Also if transports sector going up, it leads the DOW (I believe) b/c you can get moving without transportation, no?

  211. This bounce in the retailers is very surprising. These charts were looking very good yesterday. Anyone knows why we get this bounce today? Any bullish news from retailers?

  212. Op – you watching XLY?  Or just a bunch of different retailers?

  213. GRMN – once again found support at 40.  You could watch that stock daily and pretty much buy calls at 40 for a day trade every day.

  214. SU-All out!

  215. AAPL – once again having a hard time with it’s R1 at 178.30… but looking ripe to break it (bouncing off 89 ema over and over and 89/200 pointing up still).

  216. Just checking in… I’ve been in a slump for a while (racking up losses with no significant gains to offset them) so I decided I needed to take a break for a few days and reassess.  I was triggering stops too quickly intraday and making other stupid mistakes (i.e. not following the rules).  The intraday stops were definitely the biggest problem, as well as watching every tick.  I think that my position sizing was about right – but the account that I am trading in is down about 30% from where I funded it last year (due to major mistakes before I even started this portfolio, so I was getting freaked out about further losses and watching every tick, which was basically a self-defeating prophesy).  Basically I think that I got into a deathspiral of mental lapses (or a batting slump or something) – thus the need for a break…   I’ve been back at paper trading for the week.

    Not that anybody should consider anything that I may write (since I don’t have much experience and I’ve pretty much been sucking lately), but I plan on slowing getting back into positions tomorrow or more likely early next week on the following premise: we may have a short rally bringing the SPY up to the 1410-1425 level (around the 200 MA, which is downward sloping), but we are about due for a correction.  We’ve had a pretty big run since the Bear Stearns deal and the March  lows.  So after I reset and collect myself I will eventually end up back in positions with an overall Bearish bias.

  217. Op – I’d say a little dollar strength is helping, but if you’re looking at the discretionary sector saw this little technical blurb (for what it’s worth)

    A "Diamond Bottom" chart pattern formed on Consumer Discretionary Select Sector SPDR Fund (XLY on AMEX). This bullish signal indicates that the stock price may rise from the close of 32.39 to the range of 36.20 – 37.00. The pattern formed over 77 days which is roughly the period of time in which the target price range may be achieved.

    A Diamond Bottom is considered a bullish signal, indicating a possible reversal of the current downtrend to a new uptrend. Prices create higher highs and lower lows in a broadening pattern, then the trading range gradually narrows after the highs peak and the lows start trending upward. The technical event occurs when prices break upward out of the diamond formation, which confirms the pattern.  XLY

  218. hng10, sorry to hear that. Don’t hesitate to ask questions, would be happy to help if there is anything I can do. It is a good idea to paper trade for a while. I recommend that you only get back in with trades that you feel very comfortable with.

  219. Well, this SU trade was VERY nice. Now would love to see the retailers drop.

  220. Thanks, Mark. "Diamond bottom". It does sound fancy :)

  221. Op – agreed LOL.  I’m a techie, but not like these guys.  That chart makes sense and I watch for stuff like that but don’t chart it out.  Always nice to have a firm that that’s all they do.  They’re called Recognia for anyone interested (kind of like a FLY constant news feed… only all technicals).

  222. Talking about Fly, do you have issues accessing it today?

  223. SU .. Still holding 1/2.
    What would be next level to take the other 1/2 off?

  224. Op – no I got it, but I get all the feeds thru bloomie (included in the $2200/ month price).

  225. I do know BBD’s having trouble too though FYI with fly.

  226. SU-I just posted that I sold the last 1/3. Watching for now.

  227. Opt,  maybe more money to spend with crude falling and todays consumer spending came in higher than expected 0.2 came in 0.4,   IMO

  228. Thanks, russm. Consumer spending only rose because of higher prices, but apparently people don’t really care.

  229. OPT – SU – At times I have trouble deciding when to let things run, and when to get all out.  So I am interested in your "ALL OUT" decision on SU.  I was considering this as well, based on the fact that they have pulled back 50% from their last run up, and seemed to bounce off of the FIB(50%).  Do you use FIB’s and/or Support for these decisions, or something else ?

  230. Doug, it was just a nice profit and I decided to take it for now. -6% is a lot already in a day, we are very close to 50MA, and I saw some buying on Level 2. I might get back in, but I am not sure oil will keep going down like this.

  231. Opt, if oil falls, they will be able to push the "increased consumer spending" story whether it is likely or not.

  232. WSM-bought some puts. Stop above 200MA.

  233. FSLR –  ALL OUT – That was a fun trade

  234. FSLR-Doug, amazing. Congrats!

  235. WSM – I am seeing 200MA @ 27.75 and Stock at 27.97 ??  How far above is the stop ?

  236. Thanks OPT

  237. Opt, take a look at EJ bought some tuesday,sold today, maybe a little early but I’ll buy more on a little pullback, its a fun little stock.

  238. hng10 – Sorry to hear about your situation; been there too.  My track record so far with swing trade positions hasn’t been stellar either, but I attribute that to the learning curve (e.g. had to bail on my MATK position yesterday for a 1.1R loss, sticking to rules though the 5ma was telling me to close sooner).  It took me a while to really get the hang of Phil’s LTP style plays and that’s where most of my successes come from YTD, but still looking to add to my arsenal with swing trades in the near future.  Wishing you good success going forward.

  239. WSM-I have 200MA at $28. And will use my "eyes" to decide what is above :)

  240. EJ-Nice chart indeed. Some resistance at $18.

  241. SU-I can’t believe we got the exact low. That was lucky.

  242. CME-Hopefully it stops around $480.

  243. WSM puts-1/3 out. That was a big position/tight stop, so taking some money out fast.

  244. Thanks kc – And, its good to hear of people getting the hang of Phil’s LTP style.  I  really like that concept, and hope to implement it some time soon.  I figure the chart readings and other technical skills from this style should help in managing the short call positions over there.

  245. Opt, you think EBAY’s over-extended in this rally?

  246. EBAY-yes, I do. But it is difficult to buy puts here.

  247. >> EBAY-yes, I do. But it is difficult to buy puts here.

    Bacause of the momentum, you mean?

  248. HANS-1/3 out.

  249. Watching SU for re-entry. Probably when low is taken on 15 min chart.

  250. Yes, Arindam, difficult to buy puts in strong market.

  251. speaking of transports earlier… TRN, CSX, BNI (given along witht he rest of the market… ) but WOW!!!

  252. WSM puts-another 1/3 out. This trade is just making up for all the crap in retailers today :) 28% on very big position.

  253. SNDK – brakes up 28.8

  254. Optrader- SU previous low taken.

  255. SU-Thanks, Bee, I missed it. Just bought a little.

  256. Opt, I missed it too , the problem I have is when I focus on one stock, I always miss something out there that I should buy.
    I had HANS @34.35, R0.48, all out @ 34.6, is a day trade so is not option, and I miss a entry for WSM put.

  257. Any news on HANS?  Why is it so weak today?  You would think it would be strong like retail..

  258. HANS-I have no idea. It looks like every candle is a reversal of yesterday’s (CME, all retailers, HANS, etc..). Just have to be patient and wait for trends to develop. Most profits I have made lately have been daytrading.

  259. "Most profits I have made lately have been daytrading."
    That’s why I want to take profits quickly.

  260. OPT / WSM – I have trouble making money in the direction of the Candle, How you make great returns on WSM with Puts, on a day that it is trading up is quite remarkable …..  very, very nice …..

  261. SU – Pulled back right to the open for the day …..  I am glad we took these profits.  Time to get in again ?

  262. HANS is starting to look alive

  263. SU – 1/2 Position Stop at 5MA

  264. Doug, thanks, yes that was a nice trade. But seemed like an easy one. Up 6%, with a lot of resistance at $28 and resistance at 200MA. Seemed like there was a huge probability it would drop. Bought the puts between $2.3 and $2.35, sold last batch at $3.10. I had a lot of stock short as well, as it is difficult to get big fills on the options.

  265. MON/MOS/POT and MOO – They have all done their 50% retracement – amazing how consistent this is.  I wish I had the stomach to stay in the puts all the way down.

  266. Well this day got boring

  267. OPT and MARK – How are you reading the Agi stocks.  Do you feel there is more down side ?  This was a pretty aggressive selloff % wise.  I am thinking that they may dip further before they recover.  Your thoughts ?

  268. Opt, do you ever use  ALL or NONE when entering a trade like WSM  with larger amt of options, or is it OK to pay the extra .05 to get the ask amt;  it would seem  that  in WSM today,  it would have paid off

  269. Just got home from golf.  WOW!  What a day. 
    Taking profit on SNDK.  Unfortunately I never got a full position, but nice

  270. Need to get some calls, but very difficult to find many attractive companies out there.

  271. Covering up to about 80% on AAPL.
    Selling May 180 calls.

  272. i don’t use all or none. I just play with it.

  273. Albo, well done!

  274. Opt, thanks for WSM, I did get in and out quite fast, but it was a 2R trade, so well worth it today.

  275. Andy, let’s analyze it AH, but it should be more than 2R. Did you exit too fast?

  276. OPt:
    I went out to a lunch that cost me thousands ’cause of my last 1/3  of SU…
    What was your reason for selling the last 1/3
    A. Not being greedy?
    B. 15 candlestick patterns?
    C. why not revert back to 5 ma and trade the rest on a daily chart?
    I thought you would keep the last 1/3 until a daily cross above 110 area? if I had to guess?
    You look like a genius now…

  277. Lance, I explained it in a post above. Will try to find it again later. Timing was very lucky.

  278. Opt, yes I did… it was R2.38, but I did get out too fast, to be honest I was a bit intimidated by the number of contracts , so I felt better taking my cash and bowing to give thanks… SU today was perfect

  279. WSM puts-I will close the last 1/3 on that daytrade at EOD. Also, will reduce position in CME. I am mad at myself on this one for not selling another 1/3 yesterday at close after the drop. What was I thinking?

  280. Opt – Any thoughts on Pharmaceutical Holders (PPH)?

  281. WSM-Just amazing candle. This trade is turning into my biggest gain intraday of the year :)

  282. Well, GREAT day after all, thanks to great timing on SU and WSM. Lost all gains from yesterday on CME though.

  283. Well done, Opt!

  284. *METLIFE 1Q OPERATING EPS $1.52; ANALYST EST. $1.48      :MET US
    MetLife-MET trading halted, pending news
    *METLIFE 1Q OPER EPS $1.52                               :MET US
    *METLIFE 1Q EPS 84C                                     :MET US

  285. Opt:
    Which wsm’s are you using ?

  286. WSM-as explained, I took mostly stock and the May $30 puts.

  287. Lance, about SU, this is what I posted earlier. Let me know if it makes sense:
    "Doug, it was just a nice profit and I decided to take it for now. -6% is a lot already in a day, we are very close to 50MA, and I saw some buying on Level 2. I might get back in, but I am not sure oil will keep going down like this."

  288. Hey Guys,  Found this article but not sure its true, but interesting anyway, The S&P rose 3.59% on the first day of April. Since the bull market began in 2002,the S&P500 has averaged a gain of 0.42% on the first day of the month. In fact , the cumulative return of buying at the close on the last day of the month and selling at the close on the first day of the month in now 31.18% since 11/02. The cumulative return of buying at the close on the first day of the month and selling at the close on the last day of the month is 20.41%. So during the the current bull market , about 60% of the gains have come on the first day of the month.With those type of numbers , its hard to bet against positive returns on the first day of any month

  289. SWIM-Glad we do not play earnings again, might get some tomorrow morning though if it opens below $10.

  290. Andy, if you are around, it would be great if we could analyze your WSM trade. Might be a great lesson for everyone. I know you are happy with a 2R on it, but you should not be LOL. Maybe you can post your exact entry point, how many contracts you bought, what strike, what was your stop etc. Thanks.

  291. I just looked a t a lot of charts, and I am feeling a little bit more bullish. Depending on job report tomorrow, I will look at calls. Here is what I like (I included Taiwan and Brasil from Film, great ideas):
    AAPL and GOOG after a pullback. I think they are both at resistance.

  292. Now, we are also at a very important EW pivot point at 1410. So, if job report is bad tomorrow, this could signal the end of this bounce. In any case, I think tomorrow should be a good indicator of what’s to come.

    SWIM Investools discloses informal SEC inquiry (12.48 +0.89) -Update-

    From 8-K filing: "The Company is cooperating with a non-public, informal inquiry by the U.S. Securities and Exchange Commission ("SEC") relating to representations by certain presenters in certain portions of their presentations at some of the Company’s seminars. The Company has been cooperating with and intends to continue to cooperate with the SEC. Because it is ongoing, the Company cannot predict the outcome of this informal inquiry at this time, and, as a result, no conclusion can be reached as to what impact, if any, this inquiry may have on the Company or its operations.

  294. Opt, Here is the trade in it’s gory details for WSM, stop was $28
    Bought 50 WSM May 27.5 PUT @ Stock price $27.90 for $0.90
    Sold 25 contracts @ $27.67 for $0.95 (this was around the time when you said you took out 1/3, at that time I looked at level II and I was not really seeing any definite movement down or up, so I decided to take 50% of the table
    Sold 25 contract @ $27.42 for $1.05 at this point I had to leave for a while and I was not really super comfortable, now when I returned, 20:20 hindsight is a great gift, I of course realized that this could have all been sold around +$1.20 per contract.
    Glad to hear all feedback, my calculations did indicate to take 195 contracts, but I just felt a bit overwhelmed about that size so I reduced it. On reflection I was a bit jumpy overall and should have stayed in much longer, but I knew it was a short trade from the start, so as I noticed the level II not really being very clear on direction and I did not find much help on the candles, I made the decision to get out and take my $
    Again glad to hear all feedback and hope the feedback can be a good learning experience for everyone.

  295. Forgot to add a $1.25 sale for all the contracts would have produced R8.33, so I guess I keep learning to be more patient.

  296. futures popped a second ago into this… now coming downish before employment


  297. futures up HUGE on this:  7:30 *U.S. APRIL PAYROLLS FALL 20,000; UNEMPLOYMENT RATE AT 5%

    CVX:  7:31 *CHEVRON 1Q EPS $2.48; ANALYST EST. $2.40

  298. May 2 (Bloomberg) — The U.S. lost fewer jobs than forecast
    in April, and the unemployment rate unexpectedly dropped,
    signaling that the economic slowdown didn’t gather pace at the
    start of the second quarter.
    Payrolls shrank by 20,000 workers, following a revised
    81,000 drop in March that was larger than previously estimated,
    the Labor Department said today in Washington. Economists
    surveyed by Bloomberg News projected a loss of 75,000 jobs. The
    jobless rate fell to 5 percent, from 5.1 percent in March.
    “So far there’s a mild start to the recession,” Aaron
    Smith, an economist at Moody’s in West Chester,
    Pennsylvania, said before the report. “The data we’ve been
    seeing is weak but it’s not deteriorating endlessly.”
    An average of 121,000 jobs a month were eliminated in the
    first four months of the 2001 recession, indicating that the
    current slowdown may be milder by comparison. Seven Federal
    Reserve interest-rate cuts and the arrival of government tax
    rebate checks may be enough to help consumers weather the slump
    in home values and jump in fuel costs.

  299. Can we short USO at the open considering the payroll number and dollar strength? I figured oil would have come off a bit with the strength in the dollar.

  300. Denis,
    I don’t know what is rallying oil, but I am sure this will give us a nice chance to pick up the other half of our SU puts at a bargain price

  301. Good morning Opt.  Are you taking a shot at SWIM or staying away because
    of SEC inquiry?   Thanks.

  302. Andy, I am working on an answer, as it is VERY important. Will post it later.

  303. SWIM-Staying away for now.

  304. Flipped SWIM for 60 cents.  Don’t try this at home.

  305. NVDA-Got some calls 1/2 position.

  306. TOS – Prophet chart servers are down.  They had problems yesterday as well.  They say they will inform us when they are up again.

  307. JOYG-Bought some calls-1/2 position

  308. NVDA and JOYG-Stops are at 5MA. So position are WAY smaller than the WSM position yesterday for example. We have plenty of room, and those are swing trades. No rush and we will probably add on a pullback to 5MA.

  309. NVDA just jumped.

  310. Blake ..
    Picking up any more SU puts if it breaks back under $110?

  311. WSM- Optrader are you looking at the same resistance as yesterday ?28?

  312. I was hoping to pick up at above 111 Denis…with a stop at about 111.25, but I don’t think it is going to make it up there

  313. Optrader-
    XLF calls on this dip?

  314. Andy, thanks for the info. I don’t think you would have had a 8R, but a 5R or 6R overall would have been possible.

    First, you did not respect the number of contracts. Why is that? Is it because of the number of contracts? If that is the case and you don’t feel comfortable with 200 contracts, then just go with more ITM. I have the $30 puts myself as I like a little bit ITM instead of OTM.

    If you buy 1/4 of the contracts you were supposed to, then what is going to happen on the next trade? Just because the stop is wider, then you are going to buy the number of contracts you were supposed to. And if your stop is hit, then your loss of 1R is going to be twice as big as your win of supposedly 2R (which was in fact 0.5R). How do you make money in the long-run doing this?

    Apparently you risked $250, and made $500. Your risk should have been $1,000 (if my calculation is right). Why aren’t you comfortable with that? That was the risk you were taking initially and you should not have lost more than that on this trade.

    If you are not comfortable with this number, then you need to reduce it. If you feel that you might go above 1R because of spilling, because you are not watching the market, or for other reasons, then you need to reduce your R. But you need to do it for all trades.


    Then, you did not let the trade run as it should have. If you don’t let your winners run, then you are not going to make more money than on your losers. Especially if you have a position that goes against you right away.

    Your profit on this trade was $500, and it should have been $5,000. That’s a huge difference! And it is only because of money management. It has nothing to do with entries. I hope this can be a great lesson for everyone to stop focusing on entries and overanalyzing charts and fundamentals. What good does it do to you to be right about direction if at the end you make 1/10th of what you are supposed to? With this trade, you should be covered for the next 5 or 6 losses that you might have. Instead you are covered for 1/2 loss. 

    if you trade like this you will need twice as many winners as losers to break even. If you had followed the rules, you would only need one winner every 4-5 losers.


    Sorry for being on your case, but this is the perfect example of why people lose money trading. Sure, it feels good to take a profit, but this is not what trading is about. 


    We have posted amazing results in this portfolio in the first month, when we were very lucky. All trades were posted live, and even if people don’t follow every minute, most of them were very easy to follow. 

    But still, I am pretty sure  that no one here got similar results. I am convinced that even people who followed exactly our entries did not have such results. Because then, it is all about discipline and it is very difficult for people to even follow some very simple rules. I know that some here let losers run WAY after we closed them, and got all profits from other trades killed. I am sure that some got as many winners as we did, but they did not follow money management and did not make as much as they should have. And I know that a lot of people here closed winners WAY before we closed our trades. Why is that?



    And even then, people ask me if I could flag the trades so that they can follow entries better. As if that would make a difference. I have no idea why we focus so much on entries. The goal of this portfolio was not  for people to copy my trades. It was to show how we need to trade to be successful. It’s a method before anything else. But still, we focus on specific trades. I wish everyone here could take their own trades and focus on what is important, instead of focusing on being right. Sometimes I even wonder if doing this is really helping people as it puts the focus on specific trades. 

  315. Opt
    Did you buy the NVDA May 20s or 22.5s? 

  316. It is helping me a lot Optrader

  317. Sorry about the ranting above everyone, and sorry Andy again for using your trade to illustrate these points. But this is probably the most important post in these comments so far. I really hope everyone can understand these concepts, even explained in my broken english ;-)

  318. NVDA-I bought the June $20′s at $2.85. But what is important is that stop is VERY wide, so this is a very small position right now. When we buy the second 1/2, closer to 5MA hopefully, then it will be a much bigger position (because it will be close to 5MA). We just position ourselves here, so that we don’t miss a big run if it happens, but still if it drops below 5MA we will still only lose 1R.

  319. Opt – Great tutorial.  Thanks.

  320. Optrader — MANY thanks for all you are doing here. This is invaluable learning for me. I don’t necessarily have time to follow markets intraday so understanding the reasons for entry and exit help the learning process – there is still a lot of experience and art to trading and not just the rigor. Of course I do like to try to make some money too and having the training wheels on gives me, and probably many others, the opportunity to move forward without taking too big a fall. Hopefully there is a day when I generate more of my own ideas and follow them through much better.

  321. Coach Opt
    We may be a little slow but we have a lot of heart.

  322. Opt-
    I posted earlier, but I think you missed it.  What do you think about 1/2 XLF on this dip with a stop at 5ma

  323. Opt, I humbly thank you for taking time to make the analysis on my trade and I hope it stands as a great example for everyone. I never mind being used as an example of how-not-to as long as the learning I get contributes to my future capabilities and independence. On that last note Opt I do think you will have to accept that over time people will come to this portfolio by firstly copying what you trade, when you trade and most importantly how you trade, I guess your aim and hope should be that over time people then start becoming independent, which is the process of most learning-by-doing we experience in life. The time taken to get there is different for everyone, some get it quickly others slower.
    I note in your post some disillusionment with what you are doing here, I can say for my own self that what you are doing here MAKES A HUGE DIFFERENCE to me and every day is a new learning experience and I am deeply grateful that you take the time to do this.
    Your points on the contract size and risk to take are 100% correct, I did not follow my own simple rules.

  324. There are only 2 reasons why traders lose money:
    - The fear of losing 
    - The search for the "good feeling" of making money
    We need to learn that taking a loss is normal and fine. This is why we let losers run but also this is the reason why we don’t follow money management rules.
    If our account is $100,000, our risk is $3,000 per trade and on a certain trade we need to buy 100 contracts to lose $3,000 at our stop, then why do we buy only 300? Because even if it is only 3% of our account, we don’t want to lose $3,000. Because we are scared of losing. Everything is related.
    Then we take profit at 2R, feeling very good about ourselves, because this is the feeling we are looking for. 
    But if the trade goes against us, we don’t take the loss of $1,500, because we hate taking a loss. And we let it run until it becomes $4,500. So in fact, we were so afraid of losing the $3,000 at the beginning, and at the end we lost more.

  325. I meant 30 contracts above, not 300.

  326. I am printing that one and putting in on my wall. Thanks again Opt.

  327. PT, I understand. It takes a LOT of time to get comfortable with these concepts and be disciplined. I had my share of losses, and also my share of winners and still going nowhere. I just don’t want small investors lose money. So while you are learning, please keep your R very small. Keep it as small as possible so that you will respect the number of contracts EVERYTIME. If your R is only 0.5% of your account and this way it just takes out the fear from all trades, then do it! Especially if it will allow you to let your winners run without feeling that you HAVE to take it.

  328. XLF-After reading Phil’s post this morning, I am not sure. Let’s wait until Monday, just in case he is right.

  329. EBAY-Any news explaining this drop? Not that I am complaining :)

  330. JOYG-great move, testing resistance.

  331. Interesting that dollar and oil are rallying…I just picked up some more SU puts.

  332. CNBC explanations for rising oil- "Since the economy is not as bad as we thought, consumers can afford higher oil prices".  that is funny

  333. Blake, do not obsess over SU ;-) Oil is still in an uptrend, even if that was a strong pullback.

  334. Thanks Optrader-
    I have a stop at 111.4 today.  Doesn’t it look like a good trade?  Come back up to the 5dma, and hopefully bounce off?  I will close it today if it doesn’t cooperate.

  335. Bees, sorry I missed your post earlier about WSM, that was while I was writing the long post. 
    Obviously, resistance is still the same at 200MA. I hope you traded it. I missed it this time as I was not watching.

  336. I guess I should actually move my stop to the other side of the 5ma and put it at 111.7, and adjust my position size accordingly.

  337. Blake, all trades are good trades as long as you follow your rules. Just take a look at USO, it does not look very bearish though.

  338. optrader, for WSM, I was watching it, and trying to get in may 30 puts, but like yesterday, it seems like I could never get fill is that because of low vol, and the bid/ask difference? Next time should I just pay for what they ask to get into these kind of position? cause when I first join the site phil always mention about we should bid 0.05/0.1 cent lower than the current bid price, does it make sense to u? or you have another set of rules? thank you

  339. Hey opt-
    Whatever happened to DM?  I haven’t seen him around in a long time

  340. Opt,
    Thanks for your comments this morning.  Teaching is a nobel, albeit often frustrating, task under "normal" circumstances.  Add money to the mix and it gets really crazy so thanks for keeping us centered.
    I also appreciate your perspective on SU.  My history is that I am very adept at letting my losers run so I’ve been working on getting clear on stops and exits.  Long story short, I got stopped out yesterday before the inventory report when SU did that little spike to 113.46.  Net on the trade was +1.3R…a profit but a poor exit that won’t sustain my account through the losers.  I want to take another swing at SU up in the 113-114 range so we’ll see what the next couple days brings.

  341. I thought that the retailers were going to jump much higher today on the jobs report, but BBBY is back to $33. Weird market.

  342. GME getting hammer today on no news that ican find , this stock seems to bounce back and with all the checks tho gov. is handing out aand the release of the new games coming out , Grand Theft Auto , I think it will come back sooner than later. Any opions? thanks

  343. DM is busy with school/exams.

  344. Bees. $0.10 LOWER than the current bid or higher? If you really mean lower, you will never get filled. I have had issues getting filled on WSM because of volume and this is why I went with stock yesterday. How many contracts were you trying to buy?

  345. Market looks weak.

  346. Andy, thanks for sharing your trade details so we all could learn.  

    Opt, thanks for sharing your wisdom.  

    It seems the mechanics of trading are not nearly as difficult to master as the emotions, and therefore, the self discipline.

  347. Opt, methinks you need your own K1 project so that you don’t have to keep repeating those kind of great posts and get worn down by new converts focusing on the entries.

  348. Opt, I have had a thought in my head that I can’t get rid of.  Remember back in January BEFORE the big drop in AAPL and others, you were commenting on all the options trading way below their THEO VALUE?  Then of course, they all tanked.  We really need to be looking out for those kind of signals.  I think over time that will prove to be a great indicator.  If options are trading above their THEO VALUE, consider that rather than it being a mistake, it is a bullish signal and vice versa.

  349. GME 1/2 position

  350. filmflam- "Converts"   LOL!

  351. Blake, on SU, and in general, I usually give myself some room above/below 5MA. That’s something I decide with my eyes, but on SU for example, that would be around $112-$112.5

  352. Optrader, Yesterday, I was trying to get 17 contracts, respect to my account size.But it never get fillled, I was worry about shorting stocks, cause what IF they just pop up and hit the stop, and I had to cover it much more higher than the orginal planned stop. Or should I just set the stop as 28.09 to let it breath ? yeah I mean lower, sorry for my broken english =)

  353. Film, I am working a post about trading rules. Will put most of it in that post.

  354. Film, Opt- Hi guys, I decided to pop in and see what was happening, and noticed the comment about a reference area for Opt’s stuff. I’ve been working on the long-anticipated wiki, and we could easily section off an area for Opt’s stuff.

  355. Bees, 17 contracts should be easily filled in the spread. Just don’t go lower the bid. Usually I go right above it. In this example, if you are below the bid, then you will only get filled after the stop is taken…
    You have to decide how much room you give to your stop, but for example yesterday mine was at $28.15..

  356. FIlm, great idea about Theo value. We need to be careful about options pricing though, as it could be affected by spreads.

  357. Thanks Opt-
    Those are the things I need to focus on the most now. 
    HANS vertical working well again

  358. BA – It is back at the 5MA – Meeting some resistance at 86.  Looks like it may pull back a bit from here

  359. *prayer* Let AAPL drop $20 today

  360. Film – I think your comment on THEO VALUE is a good one.
    I would suggest when options are trading below THEO VALUES it is mostly a measure of low
    volatility.  This would suggest that the market could break big either up or down.
    In January, it broke hard to the downside.

  361. thanks alot opt.

  362. HANS-yes, this vertical is working extremely well. I like trading those more and more. You still get the same opportunity for direction, but you don’t get killed by Theta.

  363. In general, my thought on THEO value is that if you know something the market doesn’t and you want out, THEO value will rat you out.  That is obviously what happened in January, I am looking for the reverse this time.

  364. K1, I think you are really Clark KENT.  Every time I think your name, you appear.

  365. Opt,
    Re Hans- I almost think it is a necessary safety for these trades when the Imp. Vol. on the option chains is as high as it was/is on HANS.  I think the Imp. Vol on the Mays was close to 90% when we started the vertical

  366. Film- LOL!

  367. SU-  Look at that nice kiss on the 5ma

  368. Blake, Agreed. I also like them on expensive stocks like GOOG, BIDU, etc. where you can sell way OTM that still have some value.

  369. OPT –  I was just looking at a WEELY chart with a 5MA (Weekly) – It seems to me, that respecting the Paradise discipline on the Weekly charts with options that are two and three months could work out quite well, with a lot less churn on trades.  For companies like AAPL, GOOG, BiDU, FSLR …. ie big movers, the strategy looks like it could be very profitable.  Have you you traded the weekly charts with your system ?  What are your thoughts on such a strategy ?  We can discuss AH if you prefer.

  370. AAPL-That was some run! Just sold the last stocks I bought around $120 for my parents. 50% in 1 1/2 month. I think we are due for a pullback now.

  371. Doug, we had this exact discussion with someone else sometime ago. Great strategy!

  372. Ok, so I finally got a chance to sit in front of the computer during trading hours.  I got back into a lot of positions, I think I am balanced.  I bought June’s for everything and went with the following:

    PUTS: CMP, CME, SU, RIMM, and SPY (may)

    Not all full positions yet.  Basically, my premise is that while the commodity markets are going to be volatile, we need to make more food and that means more fertilizer and Europe needs to ease their ban on GMO foods.  So, they will need fertilizer and advanced seeds.  I would like to short ADM, but I missed it a few days ago when I didn’t get a fill, so I will look for a bounce.  Also, most of that food is going to be grown in Brazil, but I am loathe to chase EWZ calls this week, so I just have that stock in some accounts.  Of course, I will soon be loathe that I didn’t chase.  

    My plan for the weekend is to come up with some new LTP allocation for some OTM leaps that will not be sold until Nov. 2009.  And I will only consider covering when they are ITM.  Like if DIS hit 45, I would cover then.  Hopefully, ToS will get Prophet up and running and I will be able to make a whole presentation out of it.  But, I think I need to start making some bets on CRAZY targets for a major market rally.  And the only way to make crazy targets are with All-data charts on Log Scale.

  373. optrader, would you mind explain a little bit more on setting up a vertical? is there anything I have to keep in mind or things  I need to watch? Do we just trade fron month contracts on those?

  374. K1 – Optraders own area is a great idea.  By the way, do you continue to mine the daily discussions for "words of wisdom", or was there a cutoff date ? ….. and is there a way that we can help you with the K1-project ?  It must be quite the task  to keep up with it  …

  375. Doug, I totally agree.  I have been BEGGING for AAPL and GOOG to come back to their 5 week MA’s for two weeks now.  That is about 166 next week which would be the level AAPL really broke out from after earnings.

  376. Doug- I’ve been a bit busier with my "day job" the last few months, but manage to grab links to some of the very interesting stuff that comes across the comments. If/when the wiki finally comes together, then all of us members will be able to post our thoughts, ideas, and comments. I’m sort of curious to see how it comes together, because at the very least the wiki should have better search features than the main site currently provides.

  377. Film, I like your portfolio. POT and MON represent 50% of the calls though, and they are highly corollated. I did this with retailers and realized that it was not really worth it. The issue with this is that when they move against you, you tend to focus on them because it is an important part of your portfolio and you don’t keep an open mind about everything else.
    Also, would love to hear your view about CME, as I was ready to dump my last puts.

  378. OPT/FILM – On the weekly’s would you do stock, or options 2 and 3 months out ?

    Film – I hope that you are right, Historically once they pick up momentum AAPL and GOOG rarely have significant overlap week to week.  The MACD and the "AWESOME" Oscillator (TOS) show that GOOG and AAPL are just getting started on the Weekly’s.

  379. CME is tough.  I am in June, so that gives me a little leeway.  I think I need to dump by EOD if not under 480.  A test of 495 on Monday seems likely.  I hear ya on the POT and MON.  Will think.  Out of time… Baby.  :D

  380. Id’ do options 3-4 months out at least.

  381. Opt, I see NVDA earnings on 5/8 (thurs);  we should keep in mind that next week if we hold closer to that date

  382. Opt, on Nvda, what do you think of June20/May22.5 spread. Cost is 2 but can get some theta depreciation.

  383. BZP, nice hammer yesterday but today on a big run. Hope it will pull back to 5MA.

  384. NVDA – Level 2 – Big BID Sizes – Yet stock is not moving around much now

  385. Doug – didja see this?

    VIDIA: Hearing NVDA upgraded to Overweight at Lehman

  386. here comes some volume:


  387. Just listened to AGU’s CEO on CNBC. Added it to my list on bull watch.

  388. Arindam, not a big fan of calendars. I like directional plays.

  389. Verticals-Bee, same strategy as naked calls. Use delta of total vertical to calculate position size.

  390. The delta on my HANS vertical correrspond to a 1 point move, but it is only up 32 cents, that is great!

  391. Blake do you still hv SU put ?

  392. Yes Bees I do.  I will have to close out the extra I picked up today if it ends up here by the end of day.  It hasn’t hit my stop, but I have a tight stop on it, so the position is bigger and don’t want to hold it over the weekend.

  393. blake, is your trade base on 5ma? I bought 110put @ 2.9 , hold it for 2 hours, I had my stop @ 112.5 , still thinking should I hold it over the weekend.

  394. Noticed that on the HANS vertical as well. What I really like about those, is that you can pick some ITM strikes that have almost no premium and sell some ATM or OTM. You just need to be careful, if you are feeling very bullish to keep enough strikes in between. But you can always roll the higher strike higher.
    I really don’t see many disadvantages to those, except spilling and commissions.

  395. Bees,
    Yes, mine is based on 5ma, but my stop was at 111.7.  I would like to hold mine too if it closes under 5ma, but i don’t know what will happen over the weekend, so a big move up will hurt me bad.  For me, it is safer to just close it out by the end of day.

  396. Opt – I am certainly no technician, but my take on FSLR is that if it does not retake 5MA to the upside, then it would appear to be headed lower from here. Is this a reasonable conclusion? Is it worth a position – especially on Friday afternoon?

  397. I am considering rolling my SU puts to Junes, then selling Mays against to lower my delta, if it closes below 5ma, but not sure yet.

  398. Is that a bad idea Opt, as long as I obey my stop?

  399. FSLR- Blake – I like that trade as well.  I made out well yesterday on the Puts, I am interested in taking another ride down.

  400. Doug-  I am not in FSLR

  401. FSLR-Sure with a stop above 5MA. 
    Blake, yes it’s fine.

  402. Sorry Blake …..  I meant SEM

  403. FSLR – ALL In no 270 Puts

  404. Doug — had FSLR puts yesterday and did well (could have been better but bailed since I had to leave). Caught a little upside today, but too late to the party. Now it looks like FSLR is not going to make it back up to 5MA so looking to try puts again, but will wait for a bit more.

  405. OPT –  TSL – I cannot decide if it will now follow its major trend and break down, or if this is a Bullish flag pattern and getting ready to move up.  Your thoughts ?

  406. SEM – I am in ….  lets hope the technicals don’t lie …. :)

  407. TSL-I have no idea LOL. You need to wait and let it get out of the flag.

  408. NVDA-Strong

  409. NVDA – did you get a full position ?

  410. AMAT – 1/2 IN on Calls

  411. NVDA-Someone asked earlier about a calendar, and I might have answered a little bit too fast. The June/May 30′s does look very interesting. $0.40 for one month. I would do not cover all of it though.

  412. NVDA-I have 1/2 right now, unfortunately.

  413. Agree Doug!

  414. NVDA – Me too … but it looks good for a pullback ….  It does not usually trade that far from the 5MA

  415. OPT/Andy – That analysis this morning could not have been more timely.    I had not been resizing my positions for the second purchase after buying 1/2.   I would simply buy the same quantity again.  Looking back, it makes no sense, but that is what I was doing.  So now 1/2 IN means 1/2 the RISK ….. not half the position size …..  this will make a difference in my Money management.  So thanks for that !

  416. Nice close on NVDA at HOD.

  417. Good week of making money an learning folks …..  thanks ……  have a great weekend !

  418. I second Doug’s remarks! ! !  Thanks.

  419. Great weekend everyone! We got some good trades this week, let’s do it again next week.

  420. Good week, see you all on Monday!  I ended up covering more than half of my SU puts for the weekend.

  421. Doug
    I agree, what I was doing was calculating the position size at start and then whenever I added the second 1/2 I would make up the difference, however I disagree with you that 1/2 in doesn’t mean 1/2 the R, if we are to get the correct position size this is what I would expect it to mean exactly. Take an example:
    NVDA (not a trade I am in, but just as an example).
    1/2 in would be 1R instead of 2R with a price and a stop of 20.89 and a related delta for MAY 20 of .81 (let’s say 1R is is $1000), this would at stock price $22.40 be app 8 contracts
    Next 1/2, let us imagine we move forward 2 days and we decide to add the 2nd half. Stop is now $21 and price is $23, that would be an additional 6 contracts, this would be based on 1R of $1000 and same delta
    Thus our 2R in this case would be $2000 no matter what.
    If I got it wrong please do point it out, thanks.

  422. Opt, One question which I have is that you stated in your response to me that my profit was only about 0.5R, so I am not entirely sure how you get to that, my R calculation is simply profit / risk and if I had $250 in risk and $500  then my R would be 2, but you stated 0.5, which means you take risk / profit, this I do not understand, as a profit of $5000 as you indicate ends up with an R of 0.05. So to me there are to things to note R is simply the measure of the profit in relation to risk, then there is the % gain in relation to total portfolio, which would be profit / portfolio size,  I re-read Van Tharps chapter on position sizing for % based systems like the one used here and his statements seemed to confirm what I am stating here. Please educate me if I am missing something, thanks.

  423. Optrader:

    how can I download your portflio? cannot make it work.

    Also: my previous question was: how do you use what you call MA ?
    I cannot find the spot where you explained this.

  424. Andy,
    You bought 1/4 of the position you were supposed to buy. So yes, if you consider R as the risk on THIS position, then you made 2R. But if you consider R as the risk that you should take on ALL positions, 2% or 3% of total portfolio, then you only made 1/2 R. 
    When you calculate your total result for the month for example, you can’t say that you made 2R on this trade. You did not make 5% of your all investment profit on this trade.
    Does it make sense?

  425. RMM,
    Portfolio is on top of this page, no need to download anything. 5MA strategy is explained in K1 project in great details.

  426. Opt, ok makes sense, I thought I was going balmy..
    Now, how do you then adjust when you take 1/2 a position, is the example I wrote to Doug correct? If it is that means a bit of adjustments when you close the trade off at the end to get the actual R return on the trade and not just the 2 legs as independent trades.
    Also I have read and re-read the statements about why traders lose money and I feel like I am pealing an onion this weekend to look into the motivations etc. very interesting insights.. thanks again

  427. When you start the first 1/2, you take 1/2 R, then another 1/2 R on the second 1/2. The position size will be different on each 1/2 because the distance to the stop will not be the same. But R does not change. R never changes, it is always 2% or 3% of your portfolio (or less if you feel more comfortable with less). And 1/2 R never changes obviously.
    I have difficulties following your post to Doug, but I think that’s pretty much what you said.

  428. Opt, it was, thanks…

  429. Opt, as an initiative I don’t mind creating a spreadsheet you can publish as a model for trade entry and closure calculations for people, it may be very helpful for community as a whole and may resolve a number of questions from everyone, if you want me to kick this off let me know by emailing my very corny email address

  430. Andy, if you mean position sizing, sure go ahead, but I am working on one myself.

  431. Optrader- I read your post above regarding position sizing , "When you start the first 1/2, you take 1/2 R, then another 1/2 R on the second 1/2. The position size will be different on each 1/2 because the distance to the stop will not be the same. But R does not change. R never changes, it is always 2% or 3% of your portfolio (or less if you feel more comfortable with less). And 1/2 R never changes obviously."
    Let’s say I got the first 1/2 and when it pull back near 5MA I am thinking of getting the second half, and the risk is $500, and now the first 1/2 in my portfolio is losing money now let’s say $ 300, so when I am trying to get the second 1/2 my risk would be $200 ? So I will have to do the math again am I getting you right ?

    Thank you

  432. If your R is $500, then you should risk $250 on the first 1/2 and $250 on the second 1/2. There is nothing more to it.

  433. Andy & Optrader

    I definitely would be interested in the more detailed  spreadsheet…

    Columns would be the Stock, 1/2 entry share price, option selcted, time of entry delta, option price, second 1/2 entry share price, 2nd entry delta, 2nd entry option price, Stop 5MA, share price exits & corresponding option price: 1/3, 2nd 1/3, All Out
    Would be good to standardize the portfolio to a 2% R, we know it will be better gains with a 3%. This would help facilitate position tracking and performance calculations.
    Would be all for this and could help out as well.

  434. William, I am sorry but I am not going to fill out all this information. I just don’t have time, especially real-time. I am going to repeat it again, but the goal of this portfolio is to learn how to trade. It is not to copy my trades!
    I don’t think it is too much asking to let you pick an option and find what the delta is.

  435. Holy cow William.  Why don’t you just post your username and password and we will all just trade your account for you.  

    Just kidding.  But, that is a ton of info that while educational, may not actually improve your results.  I do think that a lot of people, myself included, wonder aloud about some things and then someone actually puts in a lot of work to find the answer for me, then I find that I am not really that interested in the answer anymore.  I think that spreadsheet could be beneficial to you, but a lot of the info could be back calculated by you.

  436. Film – did you get in ISRG ?

  437. I did.  But, I am not so sure that I am happy about it.  Been looking at LT charts all weekend.  If this doesn’t move up right now, it ain’t gunna.  A lower low Monday and Tuesday would chase me out for sure.

  438. A brand new week and some one is going to make a armored truck load of money this week. It might as well be us!

  439. I have decided to drop MON from my list of bullish stocks.  And likely POT as well.  As soon as either show any weakness, they are gone.  I was looking at LT charts this weekend and they are both very scary.  Especially POT.  That thing needs a retrace in a bad way.  POT puts would be a good candidate for a Phil strategy of selling premium, as I think that thing has to gosideways or down for a year.

  440. Film- I have it as well, looks like a lower open today.

  441. OPT – Are we switching to June Options Today ?

  442. Bees, I will hold MON on continued strength, but will exit by $121.

  443. June options-yes.

  444. FSLR – Looking good this morning.  Besides SEM and I, did anybody else get in the Puts ?

  445. Good thing I covered my SU puts Friday.  Still hurts though

  446. Bees, I closed MON calls.  It touched the intersection of downtrend line and resistance from 4/24.  Good a time as any to take my profits.  I am out of this name for a while.  Better plays out there.

  447. FSLR puts-Congrats everyone who got them.
    SU-Glad you covered some Blake, not sure these commodities are done running. I will close the 1/2 by EOD.
    CME-Film, I hope you did not get short. This chart is looking strong.

  448. Opt-
    Yeah, I need to ban SU from my list of plays…Overall I have lost quite a bit on it and keep coming back for more.

  449. JOYG-1/3 out.

  450. Film
    1.  Could you post a link to your Apple Manifesto
    2.  Would you explain how you use Prophet to provide the "clarification" you discussed

  451. Dan, click my name.  I think how I used prophet (to make the charts) will become obvious after looking at the website.

  452. Opt, funny you should mention.  Why yes, I am short CME.  Only a little bit, but that is enough to hurt.  I agree it is looking strong.  Since the portfolio is hovering at the same overall price all morning, I will wait for a pullback.  Thank god SU stopped going up.

  453. SU-1/3 out. Slowly getting out.

  454. CME-Well, you might get some resistance here around 50MA.

  455. Film
    Read your manifesto.  Nice work.  Thanks

  456. NVDA-1/3 out. Protecting some of the profits.

  457. AAPL-I am ready to get fully covered even in LT. This chart is getting parabolic.

  458. Wow did I make a mistake this morning!  I put in an order to buy WSM puts at the open if price was above 28.  Got filled, but the market spread on bid/ask must have been huge because my fill price was absolute garbage…another lesson learned there…

  459. Opt:
    I know you use the ma 5 for position sizing
    For bbby where is your stop?

  460. Blake, this is very weird. I noticed some weird printing on WSM. The stock running suddenly above $28 and then retracing. Be careful placing this kind of order on thinly traded stocks like this. You don’t know, someone might even run it just to get you.

  461. SU – gonna have to start looking at calls of Friday in advance of weekend rent-a-rebel action. Guess that is when the police and military (the guys with guns) get the weekend off for their part-time work.

  462. BBBY-It has just been sitting around 5MA. Will exit on a break of the flag.

  463. JCP making us happy today. Maybe this time it will print an ugly candle without reversing.

  464. Opt-
    They got me really good…These things really aggravate me, but I only blame myself for making such a stupid order when I know not to trus market orders….I could not get to the computer during the market open so I placed the order to play the resistance.  I got really screwed by it, but I guess it just teaches me not to do it again.  Very aggravating though

  465. AAPL-Ok, I am fully covered in LT portfolio. That was an amazing and I don’t want to be greedy. Sold a mix of $180′s and $185′s.

  466. Blake, hopefully it comes down enough to make the trade profitable. But very bad idea to place this kind of market order. I am serious, I would not be surprised if someone saw it and run the stock.

  467. Thanks opt, well, i won’t do that again… hopefully I will start making money soon instead of learning lessons.

  468. SIGM-Strong again. Was on my list but did not get in. Let’s see if it takes $19.5

  469. OPT – NVDA:  Seems not to want to pull back more.  Two questions

    1) Are you considering another 1/2 Position anytime today

    2) If we do get a favorable buy for another 1/2 position, I assume we would buy June’s and not May’s … correct ?

  470. NVDA-I would wait to get closer to 5MA before buying the other 1/2. And yes, Junes now.

  471. Opt
    one question for existing positions in May, would you at times roll the contract to the next month, if the trend is good, but we just need more time?

  472. film- sorry I missed your message this morning, I bought ISRG MAY 300c @ 6.3 friday and sold it all @ 7 , was trading NVDA this morning, close down the trade with 1.2R gain. I was thinking about GOOG last friday, and it pops up this mornig. What are you currently watching ? = )

  473. SIGM!

  474. Andy, yes I would.

  475. Optrader, are you looking at the current pullback for SNDK beside SIGM? looks strong this morning.

  476. I like SIGM’s chart much better than SNDK, but SNDK was on my list as well. I can’t believe this huge jump on SIGM. Will have to wait for pullback now.

  477. SIGM-Pullback on 15min chart am I right ? Optrader,  trade with 15min chart seems like quite profitable, it treat me quite nice last 3 days .

  478. CSX, BNI trying to stay above their 5 DMA’s.

  479. AAPL day traders – once again, nothing technical about it (extreme sarcasm font)

    R2 supported it over and over, now slow buying up along the 89 ema.

  480. Mark- for CSX, BNI which one do you prefer more if you have to own 1 , cause to me if oil is hitting all time high , then people might turn to these kind of companies for transportaion ..

  481. Bees – you know that’s a great question.  The reason I brought these two firms up 3 months ago was b/c of their LT charts.  They were forming beautiful Cup with handle formations since July ’07 (CSX especially)… when you see these over a long period of time it gives the stock some technical LT momentum… hence why the were able to confirm and keep going higher.  SO now I think both can go higher… but just like anything, if I am a big institution that bought CSX on that big volume bar in mid march at the 50 dma (or $50) and a slow moving stock like this made me 30%… I’d think about taking some gains here. 

    If you like these companies LT then look for another test of it’s 20 dma (like it’s done over the past 1.5 months).  If it tests again and pops off it then enter and ride for a bit IMHO.

  482. Mark- Thanks for sharing your views, I Was thinking to get intoBNI for a swing trade with 5MA, seems like I miss the entry on 15min chart this morning, maybe I should have buy some when it pull back, but for BNI options don;t have much VOL on June’s contratcs, do you own stocks instead?  Other than AG sector , is there any thing you like now? Thank you so much.!

  483. Bees, on SIGM I might just buy little by little if/when it drops. With this kind of move you might get a lot of volatility, so I’d be careful in getting all in, or even all 1/2 in at once.

  484. got it opt, thanks!

  485. Boring day.

  486. I am very angry with myself today for repeating previously made mistakes…

  487. SU to me is like kryptonite to superman

  488. Bees – I only trade ES.  I can make $50 / contract on 1 point move in my favor.  I shorted it at it’s pivot point this morning when it couldn’t break thru (10:15) and internals looked weak at 1415 and bought it back at S1: 1407.  Made 8 points or $400 / contract.  I only played 1 contract so shorted for $1415 bought back at 1407 for a 56% gain (not including commish).  If I had more flow I could have shorted 100 contracts and made $80k… much sexier to me then traditional options / equities. 

    Caveat: I’M A PROFESSIONAL.  futures trading is highly leveraged and you gotta know how the players play.  It’s ALL risk management  and entries / exits. 

    So my non-invested two cents is ags still a good LT play.  I know Phil says it’s a bubble (and it is ST) but he compares it to RE which is a completely different KIND of bubble.  RE does not need to be consumed (there’s only so many people)… commodities do.  I posted a link Friday I think about fertilizer… here it is: 

    Interesting map of fertilizer growth and it’s use compared to 10 years ago

  489. Optrader- WSM near 200MA again.

  490. bbd
    I think the Celts are in trouble after this series but I did get tickets to the first two games.  I think the Lakers take the whole thing this year.

  491. Any news on SWIM ?  Their options are attractive if we think they can make it back to 12.

  492. Mark- ES is not a stock right ? trading ES , are tehy any different then trading stocks? I am still really green, but would really wanna know more about it. would you tell please tell me more? Where should I start looking at ? Thanks

  493. APOL an STRA been following these two for awhile ,APOL selling off today on Below Avg volume they have been in a small up trend , might be worth watching . Anyone else think so. Thanks .

  494. Bees – ES = S&P 500 emini futures.  I only trade futures (b/c I’m legally allowed to day trade them… and that’s my style) and b/c I understand the broader market and how it reacts to news.  If you were ever curious to try and trade these paper trade thru TOS or something for like 3 months AT LEAST… 50/1 leverage will kill you if you don’t konw what you’re doing.

  495. Mark , got it let me have a look after hours seems interesting but 50/1 sound a bit risky ..

  496. Out of SU and CME puts.  Out of POT and ISRG calls.

  497. AAPL-At key level on 15 min chart.

  498. BTW was writing fast and I’m sorry didn’t write correctly.  It wasn’t a 56% return but a 28%… and 100 contracts would have made you $400 * 100 = $40k not $80k.  Was talking to a buddy while typing and got completely bass akward.

  499. OPT / MARK : Thoughts on the technicals of IGT.  they have a history of bouncing at the 34/35 level and sunning to the Mid 40′s.  They have done it 3 times since mid 07.   They did, however. recently miss earnings expectations.  (.34 est – .22 act)    Thoughts ?

  500. CME-Now you exit when I am thinking about going back in as it is printing a shooting star LOL Oh well…

  501. Film-  SU- I think you exiting is all we needed to get it to start moving down today. lol

  502. AAPL-Amtech upgraded them this morning. Aren’t they the ones who downgraded to sell and $130 target 2 days before earnings?

  503. let’s see what happens at Q’s $48.5

  504. Opt:
    I have the BBBY position open and nothing happening…
    I have the Aprils..
    Should I automatically close out and redo with May’s now?

  505. Lance, well you are the only guy left with some Aprils ;-)
    I guess you mean May’s, and yes you can roll to June’s.

  506. Qs broke 48.5

  507. Well, I am glad I could help Blake.  I didn’t like the look of that chart.  I have SPY puts if oil tanks the market.  CME is tempting, but I will be happy to get back in if some selling strength returns.  As long as we are within the body of that giant hammer candle on 4/22, I don’t want to be in it.

  508. If Q’s break these levels here, there is really not much support.

  509. Bees, there is still a lot of support in that $48.4 area.

  510. lol film-  It takes a lot more than that to help me today

  511. Optrader, Are you looking at getting into anything in this fall ? I just find out the R return I got these days are from day trading 15min charts.

  512. Bees, I have been playing the Q puts a little bit today, but did not post about them because these were quick trades. Watching it though as I see bearish patterns now on daily chart as well. Not anything for swing trades yet though.

  513. FWIW, on my 15-min chart, I had a trendline that AAPL was pushing against for several days.  Finally broke above it decisively this morning.  Now testing it.  IF it holds, look out.

  514. Opt – GLUU starting to look interesting again?

  515. optrader, when you play Qs, do you buy in contract that have delta of 0.5 or more for day trade? and do you consider 0.45 as tight stops?

  516. Optrader I mean 0.15 typo I am so sorry.

  517. GLUU-I still have a 1/3, but yes it looks interesting here. I don’t know why it dropped so much today though.

  518. Qs-Yes, I buy ATM, and usually just use high of candle as stop. I don’t like to play breakouts on it, I prefer to wait for bounce and then use the new high as stop.

  519. Opt – Maybe it has something to do with their CFO resigning last week.
    Always a caveat for me.

  520. CFO resigning is old news.

  521. Anyone interested, there is a nice short on Q’s here with stop at 48.65

  522. FSLR –  They still look strong to the downside.  i am going to be disciplined and stay in the puts until they close above the 5MA.  The weekly chart is now reinforcing the down trend.  This could continue to be a good trade.

  523. Yes I am interested in the Q trade …  did I miss it already ?

  524. Q’s – I am not seeing the obvious short … what are you looking at ?

  525. When I say "nice short", I mean nice easy stop. This is a risky daytrade for fun, as anything can happen in last hour. I just like trades that have obvious stops.

  526. CLF-someone thinks numbers will be good tonight, I will be gone

  527. Q puts-Got out at pretty much breakeven. What a boring day. Should have played Golf.

  528. SOL – Optrader, what do you think about SPL?  Showing relative strength vs. other solar stocks and still reasonable priced though a bit over 5ma.

  529. SOL-I would wait for a pullback, that’s big candle today.

  530. well that sucked, see you guys tomorrow

  531. HK- running before #’s on Wed

  532. Going to go watch some paint dry, see you guy tomorrow.

  533. SOL – Thanks.  Yes, wish I’d checked them earlier in the day, LOL.

  534. 6R loss today from my own stupitidty

  535. 6R loss??? Is that because of your WSM trade? It closed well below $28.

  536. Optrader-
    Yes…My fill on WSM was AWFUL!!  I had a meeting that I had to go to so I placed that stupid order..that was meant to be a daytrade if it got hit.
    Also, SU got me again.  I cannot stay disciplined with this one, I follow the rules on every other position, but I break them for SU and it burns me.  I closed it out, closed out WSM and need to clear my head.  I really need to start following the rules…everytime I start, I break them a couple of weeks later.

  537. Sorry about that. It’s difficult to stay disciplined. But it is the only way to improve your results.

  538. This is how I know I’m not ready yet Optrader-
    When I follow your trades, I follow the rules and it works out great.  When I try to do my own, I break the rules and end up in disasters.  Every time I tell myself that I will not break the rules, and then I do it, and try to ignore it….don’t know why I am like that, but I have to break myself of it and am having a very difficult time.  And it is so obvious that it leads to failure, yet I still do it.  Hopefully today was the last time.  Sorry for littering the post with this, just venting.

  539. Blake, I am reading this book called MINDTRAPS, which was recommended by Van Tharp, it is really a great read, he basically outlines the book as follows. Investors/Traders start by following someone elses trades, if they don’t bankrupt themselves at this point they will want to be independent, so they go on the search for the holy grail of systems, they invest ’000′s $ in this search, most never arrive at anything usable, however should they find something, they will then start working on the most important aspect of trading, your own psychological make-up, what makes you afraid, etc. as the reflective trader will start seeing that it is internal responses that has the responsibility for most success/failures in the trading work. He states this work is the hardest of all and his book is basically all about MINDTRAPS for traders..
    It is a great read, not a page turner, but very reflective and helpful as a guide. Can also be bought as new from van Tharps site.

  540. I created a spreadsheet, heavily borrowed from Opt’s original sheet, I added a few items to it, the top section is for current trades and the lower section is for closed trades, I would suggest that you keep one section per month. I tried to add a few trades into the sheet as examples, anyway glad to hear feedback and hope it can be useful for others.

  541. Andy, do you have a link to Opt’s original sheet, I must have missed it? I would like to see the original as well…

    BTW, nice google sheet :)

  542. tlsvet, I don’t recall, I think it was in the first post that opt opened for the portfolio..

  543. Well done, Andy! And great post too.
    Blake, I know it is difficult, but trust me you are on the right track. One day it will turn around. The last couple of weeks have not been easy to trade, there is no direction, so don’t be too harsh on yourself.
    Remember that the most important thing while you are learning is capital conservation. Reduce your size to the point where you can make decisions freely, without thinking about the money. Get a couple trades going, and then you’ll feel more comfortable. It is also VERY important to take some losses at 1R, just to learn to accept it. So reduce R to the point where you don’t care at all if you lose R. The mind works like this, and once you’ve taken the loss a couple times you realize it’s no big deal.

  544. Optrader-
    Thanks for the kind words.  This is a very frustrating thing for me, but I love trading so much that I can’t quit trying to be successful at it.  I hope you are right and it does turn around for me.  In the meantime, I think I will do exactly as you say and just reduce R, and start taking it.  It is really funny for me to see these weaknesses in myself.  I can logically see that I need to except the small losses and move on to the next play, but when it comes to the moment, I completely throw away my logic and act on some stupid hopeful dream that everything is just going to turn around and start doing what I hoped it would do…This of course, never happens.  I read the Van Tharp book and he says to really spend some time evaluating yourself, and I thought I had adequately addressed it, but I now know that I did not.  I think in the last two weeks I have learned more about myself in trading than the last few years.  I have identified several things that I did that were costing me a few percent every week, and when added up, make quite a bit of difference on an annual basis.  Now more importantly I have learned that I havew a serious problem with cutting losses.  I have been in denial on this point, and now I have finally accepted that I have a problem, I guess that is the first step.  Hopefully with your help, I will eventually start seeing some consistant profits.  Thanks again for all of the direction.

    Andy,  thanks for the advice as well.  I will pick up the book for my next read, as I obviously need some help with this.

  545. Blake – Sorry to here about the tough day.  Never a fun thing to deal with.  This is clearly a difficult job. 

    Opt – I am not sure if it would be asking too much, but (sometime) would you be willing to share your general background and give us some insight into your process in becoming the master-trader that you are?  How long have you been trading?  Not trying to pry, but just curious about how you got to where you are.  Just ignore this post  if its unacceptable.

  546. Andy – Thanks for sharing the spreadsheet!

  547. Opt, and what was your address and vacation schedule?  Just kidding, hng10.  I couldn’t resist.  I am curious, too.  =)

  548. JOYG – To open down.  This is from

    06-May-08 07:05 ET
    In Play
    Joy Global now expects FY08 EPS of $2.96-3.22 down from $3.15-3.45 (consensus is 3.41) (78.64 ) : Co lowers their EPS guidance $0.19 to $0.23 for FY08 (Oct), sees EPS of $2.96-3.22 vs. $3.41 First Call consensus; reaffirms FY08 (Oct) revs of $3.1-3.3 bln vs. $3.23 bln consensus. The co anticipates that higher purchase accounting charges related to the acquisition of Continental Global, and charges associated with the expected early termination of a maintenance and repair contract will adversely affect its earnings per share guidance for full year fiscal 2008. Preliminary asset valuations associated with the purchase accounting of Continental Global, are higher than previously estimated. The additional charges resulting from these higher valuations are expected to reduce earnings per share by $0.05 to $0.06 for the full year, with the majority coming in the second fiscal quarter. When evaluated before the purchase accounting charges, the results of Continental continue to be as planned. The maintenance and repair contract covers equipment that includes a dragline delivered in 1996 and includes provisions that mitigate the customer’s risk associated with buying the first of the new 9020-model dragline. The amount to be expensed will include the write-off of related assets plus anticipated transition costs, and is expected to adversely impact earnings per share by $0.14 to $0.17 for the fiscal year. The co believes that the expected early termination of this contract will establish certainty regarding the future financial performance under provisions of this contract.

  549. JOYG-Well, that’s not good.
    Hng10, I’ll write a little bio later in the day :) Nothing unacceptable with that.

  550. JOYG-We will get out on a bounce. No point in staying in.

  551. Major levels here: Q’s 48.40 and SPY 1390-1400

  552. JOYG-All out. Was not bad at all.

  553. CME-Looks like I should have bought back the puts yesterday on this ugly candle. Will keep watching.

  554. Q’s 48.36

  555. Opt- NVDA near 5MA.

  556. Out of JOYG calls.  -6%  not bad at all.  Thought it was going to be
    much worse.

  557. NVDA-Yes, I saw that, but earnings are in 2 days, so I think I am good with 1/2 position. Not worth the trouble for 2 days and market looks crappy.

  558. -6%? You should have a profit on those. You mean -6% for the day?

  559. See that drop on the 15 min chart when Qs broke the 48.4 area? This is why it is one of my favorite instruments to trade.

  560. Optrader, Do you trade Qs all the time ? cause when I read K1 you are only trading it when market is in a specific condition am I right?

  561. I trade Qs usually when I see some levels that are tradable, or where there is some volatility, or when I don’t feel like holding things for swings because of market conditions, like lately. There are very good for daytrades as well because of pennies increments and you can easily buy a couple thousands contracts and get filled right away.

  562. optrader, so Qs you usually have tight stop on them ?

  563. We need WSM to break $26.9

  564. Qs-Yes, tight stops. I think it is explained in K1

  565. Unfortunately I entered the JOYG trade after you did.  Bought the Jun 75′s for $6.80
    and sold at $6.40.  Probably entered too far above the 5MA?

  566. So real fast, Hng10, I am a french guy, moved to the US in 1994 to do my MBA at Florida Tech, then moved to L.A. and been living here since then, spending 70% of my time here and 30% in the south of France (St-Tropez). I am 40, married with a beautiful little girl (3 year old). 
    I used to be a serial entrepreneur. Owned an export-import business, then a video renting machines business, a dating website etc. I would start the businesses until I got bored and then sell them. I have always been trading, been fascinated by it since I was a kid, but started full time 6-7 years ago. Been living from it since then. I would say that my profits have been really consistent in the last 3-4 years.
    Started the ST Traders group with Tom2OC, was a great experience with some amazing traders. I like the idea of a community. Also, I was very fortunate to learn from some amazing traders and maybe, now that I am successful, I can give some back and help small investors fight the big guys :)
    I started this portfolio because people kept asking me to give them private lessons and I just don’t have time. Obviously I am not doing this for money for now, as even when we start charging it won’t represent anything substantial compared to what I can make just trading. But who knows, maybe something great will come out of it. If it can just help some people not repeat  the stupid mistakes that most traders make, then I am happy with this.
    And to answer Film, we are going to Napa next week for the week, Tahoe in July, and Ixtapa end of August ;-)

  567. Thanks Optrader.  Believe me,  everything you do is appreciated!

  568. Except your vacation time.  We don’t appreciate you abandoning us for your family.

  569. Thanks! Opt.
    Andy can I get a copy of that spreadsheet that I can edit and use .
    I was only able to look at it.

  570. Opt – What are your thoughts on DBA? 
    Looks like it’s breaking recent downtrend and moving aboe 5MA?

  571. I just can’t believe the retailers are not dropping here.

  572. DBA-Yes, that’s a bullish chart.

  573. SIGM-Up another 7%. That’s 20% in 2 days, on no news.

  574. Thanks Opt!  My curiousity has been satisfied. . . .

  575. OPT – FSLR:  I guess I should have stayed with the one day up and one day down rule.  Today it is up big, and I am down 2.5R and counting.  There is no news that I can tell.  As you can see it just ripped through the 5MA.  I am going to wait until the end of the day to decide what to do.  I am still bearish on the stock, but these are May puts, and I now have theta working against me too.   Do I have any other creative options, or should I just play by the rules and see where we end up ?

  576. Doug, I don’t know. Really, like I said many times, this is why I don’t short Ags and solars right now. You never know what can happen and they can be up 5% any day. Too much gambling for me, and I would rather play them on the upside in this environment. Now, if you are still bearish you can roll your May’s to June’s. There is also a strategy I like, which would be to sell twice the number of puts you have and buy the higher strike. This way you would turn your position into a vertical, lowering your BE point significantly. But more important than anything, respect your strategy and your stops. You can bearish for days and the stock can go up for days.

  577. Opt. I think the retailers are holding up because of the the pending rebate checks. If and when we have a up day in the markets, all the powers to be will come out of the woodwork telling us your trip to Wal Mart saved our economy,

    just my 2 cent worth.

  578. Lance, I seem to need to insert an email address to allow other to collaborate, I think if you have a google account you can take a copy of it into your own google spreadsheet and also export to xls if you wish

  579. Rebate checks-Yeah, probably. Again, I don’t see people rushing to WSM to spend their $600, but hey, the market is always right. Just seems that it has been a ton of bad news lately that would really hurt the consumer.

  580. Optrader-
    I am going to be very busy with my day job for the next couple of weeks and don’t have time to efectively manage this portfolio.  I don’t have any long term holding yet, I have been using all of my cash to trade with.  Any suggestions on where I should stick my money until I can finish up this project at work?  AAPL?

  581. Retail – odd, but must be big money betting on rebound
    Several Folsom CA small businesses recently closed doors while there’s a doubling of Broadstone shopping center  under way… nearby strip mall bulldozed to be replaced by a quadruple sized strip and there are 100 new stores going in just north in Roseville at the Galleria mall.

  582. Andy- Would you mind if I ask you how can I download the spreadsheet file from the web ? Thanks.

  583. Blake, I don’t have many recommendations at this time. I am totally covered on AAPL since yesterday. I have CELG too, but it’s been up so much as well lately. I don’t know, I want to see where the next move is going to be in the market first.
    Cash is a position.

  584. Blake, buy AAPL at least 3 months out, any pullback is temporary.  I would say the same with GOOG.  My two cents.  In fact, my favorite play on GOOG is Sept 700 and Sept 750 calls.  I have orders in to buy if GOOG gets down to 560.  These have a very good chance of being ATM or near the money come July, and then you can sell the July’s to cover earnings and suck up the IV.  I would strongly advocate buying directional plays with stops for the next few months.

  585. "US retailers report comparable store sales for April on Thu. Thompson Reuters expects sales to rise 2.3%, after last year decline of 1.8%"

  586. Not many calls I like here, so just watching for now.

  587. nyx  strong today

  588. NVDA-Sold another 1/3. Just reducing size before earnings.

  589. SU short awfully tempting here.

  590. All
    Let’s make the spreadsheet business simple, if you want it, email me at and I will send you the excel version. AND NO COMMENTS ON THE CORNY EMAIL ADDRESS LOL!!!!
    SIGM made my day, I had an existing position for OCT expiry, part of the LTP positions, so I can start selling against this at 2 strikes above my holding, love it.

  591. OK, that’s a very resilient market. Can’t believe we are up with so many bad news and oil going crazy. Been feeling that we are missing some trades, but it is better to miss some than lose some. Will keep watching with a bearish ST bias.

  592. NVDA-Sold last 1/3.

  593. GLW-Sold last 1/3.

  594. Bought some COF Jun 55 puts.  Staring at resistance going back to December.  Also right at trendline resistance on the weekly going back to mid-2007.  If it gets to 58, I will stop out.  If it gets to 59, I will go long.  Because if it does, that means that THEY are not worried about the consumer.  But, I think that is highly unlikely so I buy puts, no?

  595. I agree Film  — I entered some June COF puts on Friday.  My stop is around 57.5.  So I am hoping today’s massive run mellows.  I also picked up some MER puts.

  596. MA at R2 second time again… ATH

  597. film I am in with you but only 1/2 position. @3

  598. OPT – FSLR:  Thanks – I guess I feel that if it does not come my way by the EOD, I will just take my loss.  I do not feel strongly enough about the bearish direction to DD or throw more money at the trade.  I think I will be better served looking for a good trade elsewhere and letting this one do its thing.  I just need to be quicker at taking my profits on these types of stocks. I appreciate the thoughts …   I am also here in LA ….  enjoying the cool weather for a change  :)  ….

  599. Well, I thought I was in a half position, then my computer yelled at me that I bought more.  Turns out I somehow pressed buy two separate times as two different prices.  Definitely going back to half position as soon as I can get out at no cost.

  600. MA – big volume bar thru R2, let’s see if it holds… entering even higher highs and trying to stay above 300…

  601. Film, did you figure out where the Level II quotes are in ToS, I am in training mode, but can’t find a decent search facility on their help files

  602. AAPL looks very tired here.

  603. Level 2 in TOS: just select "market depth" by clicking on the little dot by "STK"

  604. Q’s-Trying a small short here for fun. Short at 48.90, stop above 49.

  605. Small position though.

  606. Thanks Opt, I knew I had used it before, just couldn’t recall where it was.

  607. NYX-PT, that’s a nice breakout indeed.

  608. Opt, I am just watching for EOD strength or weakness here.  As I look back over AAPL’s daily chart for the last year or so, most reversals were either doji with drop or big candle up with equal big candle down the next day.  So, I am taking doji’s as a SERIOUS overnight risk.  That would mean a pullback to 184.80-ish.  Also, the EOD strength has been incredible the last few days.  If that fails to materialize today, I will be closing half my NT calls.  The level two on the July 220′s has been showing strength all day with the large bids on the buy side almost all day.

  609. Opt, check out those candles on the daily chart of RIMM.  That just screams reversal to me.

  610. JOYG is now green. Crazy.

  611. RIMM-I agree, that’s ugly.

  612. Level II in TOS
    You can also left click the "letter" next to the price window on the upper right hand of the chart. It goes straight to Level II in one click.

  613. TOS – here is a really nice setup that I got from one of the TOS trader lounge Wednesday sessions that the TOS traders use
    1) Go to Trade Tab / Trade Grid
    2) On the right hand side of the Trade Grid, you will see a drop down to the left of the SYMBOLS button with Boxes on it
       Select Three Boxes Horizontally
       You should have three box panes inside of the Trade Grid
    3) Pane 1 – Click on little blue arrow next to the symbol box and chose Gadget/News
     Pane 2 – Select Gadget/Level II
     Pane 3 – Select Gadget/Dashboard ….. or Gadget/Chart
     I run 4 panes on a wide screen and show the dash board and the chart

    4) Synchronize symbols
      To the right of the symbols box, set the color box to "RED" on all of symbol boxes on the TRADE TAB
      including the one in the STOCK and OPTION QUOTE pane
      Now when you change the symbol in any of the Symbol Boxes it will change everywhere
    5)  If you are using the small chart – set it up the way you like it.
       I show intraday 15 min, no volume
    6)  Go back to the Grid Box drop down on the right, and save the grid with a name

    7) Optional – Charts TAB
    I also have a saved Grid that displays Weekly, Daily, and 15 min charts next to each other
    The symbols are all set to RED
    When I input the symbol once in any of the available symbol boxes, my entire Trade Tab and Charts Tab display information for that symbol.  Saves a lot of typing and information layout is very useful.

  614. ToS level II – you can also expand the trade grid (top fifth/left side) on the trade tab.  You can watch level II for 3 stocks.
    Optrader – I’d also like to thank you for all your efforts in helping us learn your swing trade method.  Much appreciated.

  615. Opt:
    I you entered Sigm at 21 where would you sell the 1st 1/3
    Is it chartreading or based on R’s
    or just an emotional tool  to stop worrying about picking the perfect exit ’cause you still have some and a reminder to not get too greedy?

  616. Also should the June 20 put volume of 6x call volume concern me?

  617. Lance, I would sell the first 1/3 now.

  618. No, don’t be concerned by volume of puts. Could be anything, like a cover to long position.

  619. DOug, thanks for posting this. This is pretty much what I use as well, but I only have 2 panes. I don’t care much for the dashboard.

  620. Lance, about SIGM, I would have sold 1/3 at 50MA. But not taking some off here is really greedy.

  621. I really don’t want to watch Level 2 for 3 stocks at the same time LOL.

  622. Look at SU…Glad I closed that out…even though I am still mad that I got in it to begin with.  Tempting me again, but I will not play SU anymore

  623. So, I bailed on July 220′s.  Variety of reasons, but I agree it is looking like it needs a rest.  Also, I will try to post a picture in a minute, but if you look at the move from 115 to 186 as a rally with a "flag at half mast" then we have completed the move.  Just a thought.

  624. Opt – using the Chart in the trade grid  - although small, when setup as as 15-min intraday with a 130 period ma (ie 5 Day MA) is quite nice when using a lap top.  I am with you on the dashboard …..

  625. Opt – thanks for the bio and congrats on making trading your full time work. I am envious though on 3 months in the south of France. I am in Monte Carlo every other fall (for a conference – believe it or not) and it is just a great place to visit and even better if I wasn’t working.

  626. Film – trying to learn TA. Regarding RIMM it looks to me that it has to go to 129.5 ish for the reversal, but 130 and above maintains the upward 5MA and would be a possible pullback entry point. Not trying to disagree, just trying to learn and test my judgement.

  627. OPT – DBA – the June open interest seems very low.  July is 5 to 10 times the interest.  Would you advise trading July for this reason ?

  628. Yeah, the reversal isn’t confirmed.  It is just three unattractive candles near ATH’s that are on a gap up.  That is a lot of reasons to be cautious or even a little bearish.  Personally, I have a single Jun put as I now have no AAPL longs to balance it out.  So, I am not making a big bet, my biggest bet right now is COF puts and some Daytrade AAPL puts I am trying (foolishly) again for the 3rd time this week.  I was getting bearish but Q’s and SPY holding up well so far.  Will see what the final hour will bring but, I am trying to avoid being long when Phil says, "Cover."

  629. DBA-yes, I would go with July.

  630. Q’s-let’s see if they run the stops.

  631. GS also seems to be at a critical level(both 5ma and 200ma)

  632. Optrader-
    Watching the Q’s at this level, does the volume tell you anything?

  633. Q’s-I am out. Might get back in if it stops at $49.20.

  634. CSCO earnings tonite will set tone for QQQQ’s tomorrow

  635. Q’s-back in. Stop at $49.2. Very small position again.

  636. I’ll try the Q’s too.

  637. MON – any thoughts. Small candles but ok volume and 5 ma turning up.

  638. SU..
    I guess this will either look like a double top at $121 or a breakthrough to new highs after oil report.

  639. NVDA
    Why did you dump this one, Opt? Earlier you were just reducing. I didn’t see anything related to its not being viable trade any more.

  640. _flo_ earnings are tomorrow or the day after so I think Opt’s direct statement has always been "I don’t play earnings".

  641. NVDA-CSCO earnings tonight, and then NVDA’s earnings tomorrow.

  642. Well, another boring day for me. Pretty much flat. One small loss on Q’s daytrade and one small gain that exactly made up for it.

  643. According to Briefing, NVDA reports tomorrow after close not today.
    Interesting comment from GS on SNCR quarter on
    "- Goldman Sachs notes the iPhone has very quickly turned from a blessing to a curse with SNCR’s outlook reduced for the second quarter in a row due the product. 2Q2008 guidance now implies that iPhone activations have dramatically decelerated over the course of April, likely as consumers prepare for the 3G iPhone launch widely anticipated in June. However, the company’s 2H2008 outlook does not reflect any meaningful recovery in iPhone activations relative to 1H. GSCO believes management has simply thrown in the towel in attempting to meaningfully forecast iPhone contributions due to the near-term erosion in activation visibility, and they, therefore, expect this is the "kitchen sink" quarter."

    SNCR gets paid for ATT IPhone activations.  Apparently a large number of IPhones are being "unlocked".

  644. Watching STP today

  645. Also watching AGU

  646. AGU-1/2 in

  647. STP-1/2 in

  648. OPT – out of curiosity – What did you use as your stop for the first half of STP ?

  649. Doug, I used 5MA.

  650. STP-you need wide stops, small positions, because it is very volatile. Down 4% already from opening.

  651. 49.20 has been a pretty strong line on the Q’s.

  652. AGU – Optrader, just wanted to confirm that you entered AGU when it dropped below the intraday 5ma?  Your entry point is still quite a bit higher than the 5dma.

  653. We’ve got retail SSS tomorrow, so we need to take a hard look tonight at what we want to keep. I am leaning toward getting rid of JCP puts, maybe BBBY depending on chart today, and keeping WSM.

  654. KC, what do you call "intraday 5MA"? It has to be defined by a time period.

  655. KC, yes you are right, I entered quite above 5MA, same on STP. This is something I have been thinking a lot about lately. I want to get more into positions that are already very strong (or very weak for puts). I think it is one of the most difficult part of trading (at least for entries) and probably the most rewarding. 
    I am a true believer of "Buy high, sell higher" as opposed to "Buy low, sell high", and I think most great traders follow this strategy. Very often we are scared to get into position, and we wait for a pullback, which I think is a mistake. I was watching SIGM very closely at the end of last week, waiting for the "perfect entry", as if there was one. And I missed a 25% move!
    So if it is far from 5MA, I am trying to still get in, the stop will be wider, the position smaller, and I can give it some room. If it pullbacks to 5MA and I still like it then I can buy another 1/2.

  656. AGU  entry – Oops, sorry; I meant intraday 15min moving avg.

  657. I don’t look at MA on 15 min chart, only on daily.

  658. >5dma entries – So this is a new system you’re following.  I’m still trying to understand/follow on your 5ma strategy. LOL  When you have time, appreciate if you could share on what criteria you decide to enter >5dma; seems it would have to be at least partially fundamentals-based?  Thanks.

  659. OPT – I could use some specifics for "Wide Stops".  I used to use 2xATR as my default before using 5MA.  I have to study my last months of trades, but as of my recent f’up on FSLR (3R loss), I am back flat in my account.  I believe that my stops have been too tight, and my positions too large.  So when the trades have been going against me, I have been unable to contain the loss to R. 

    STP as an example
    Stop at 5MA for me was 2 under the price.  This is the ATR or STP right now.
    I am inclined to make:
    Normal Stop = ATR or 5MA which ever is greater
    Wide Stop    = 2xATR

    I know for you this is second nature, but some guidance as to what you are thinking when you "eyeball" the stop would be very helpful.

    This weekend I will be looking into my trades to see if I can identify a pattern in my losing trades, and see if there is a pattern I can learn from.  Thanks

  660. STP – Pulling back some more

  661. AGU-1/3 out

  662. Doug, 2ATR is fine for a wide stop as well. I am not eyeballing stops though. When entry is far from 5MA, then stop is automatically wide.

  663. STP-As we know from trading so many times before, it is not unusual to see moves between 5% and 10% intraday.

  664. Doug, What were your entry and stop on FSLR?

  665. KC, I am still following the same rules on 5MA. I am just not too worried about entering if price is above 5MA significantly already.

  666. Q’s-Going to retest 48.60?

  667. OPT – My entry was 273.9 with the stop at (5MA) 279.95

    May 270 puts had a delta of .43.  My R = $2000.  This gave me 8 contracts, I rounded to 9, so that I could sell in 1/3 increments.

    Looking back, the ATR(5) on that day was 17.  So I should have used 291 as my stop.  The position size would have been 3.  Seems conservative, but maybe with this volatility it is advisable.

  668. Tempted to open a new QQQQ put position

  669. OPT – Interestingly, if I had used 291, I would still be in my trade with the 5MA pointing down and not hating life right now …. :)

  670. Doug, first your stop should have been higher than that if you want to use 5MA. I always give myself some room, looking at the chart, you want the stock to close significantly above 5MA, so if you take the exact value of 5MA as stop, there is a big chance that you will have more than 1R loss.
    Then, I would have gone with the 280′s. When you are in the middle like this, it is safer to go with ITM. 
    Other than that, I still don’t see how you got a 3R loss on those. Can you please explain? You want to avoid this kind of losses at all cost. That should be your priority.

  671. STP-second 1/2 IN.

  672. Opt: I know you use the stop for position sizing…
    buy if STP hits 43.67 in the next 15 minutes are you all out?

  673. 43.67???

  674. Doesn’t the ma (5)  of stp read about 43.7?

  675. Lance, I don’t understand your question. This trade is extremely simple: if STP closes significantly below 5MA, then I will be all out. I will close the trade and take my 1R loss, be happy that I was disciplined and move on. There is nothing more than that.

  676. 5Ma is at 43.2. For a significant close below 5MA, it would have to close approximately below 42.5 looking at the chart. 
    Anyway, it has to CLOSE under this number. So even if it drops to $43 in the next 15 minutes I will still be in.

  677. Lance, I think there is something wrong with the data you are getting MA5 on STP daily is now $43.29.

  678. Thanks for clearing up my misconception!
    The stop on the table above was throwing me off and I need to change my thinking!

  679. Andy I had it set on ema  and just changed it to sma  lol

  680. OPT – from my trade confirmations

    Entry $10,620 (9@11.8) – Stock at 273.80  (Delta @0.43)
    Exit      $4,770 (9@5.3)   – Stock at 282.81
    Loss    $5,850        =  2.93R
    In theory the stock moved up $9.01, and with a delta of $0.43 the option should have moved -$3.87
    Yet it moved -$6.5 ……  68% more  ….. is this because of Volatility decreasing ?

  681. Lance, I think Opt looked at STP as it jumped out from the start with a big gain, the nicely consolidated back above MA5 and taking the position on now, we are ready for the trend of the stock to take us higher, if not at the end of the day, assuming we close below the MA5 we can close out the trade, shrug shoulders and enjoy a nice cold beer. I found that when you do the trade, take a moment after the position is opened and kind of step back and watch yourself and the position and make a mental preparation that your 1R is already lost and see how that feels, I did it last night on the first QQQQ put and it made a big difference in how I treated the first exist and loss, I jut kind of did the close out, no real discussion. Then opened the second one and almost made up for the first loss (cause was an urgent diaper change required :-)  ), anyway good luck.

  682. Lance, the stop is 5MA on the table above. But please read my post to Doug about FSLR and leaving "some room". We don’t exit exactly at 5MA, so you need to take this into account when you calculate size, so that your loss stays below 1R. 
    Looking at the chart, you decide what is "significant" and usually it will depend on the volatility of the stock. you can’t stress-out when a stock like STP moves 5% against you. If you do you have an issue with position sizing.
    I am feeling that I repeating the same thing over and over again, but it feels like people have the same issues. You need to look at the picture and get out of the intraday trading. If you take a loss, big deal. Everyone needs to reduce their size so that they trade with a quiet mind!!!
    It is very weird but lately I almost wish I can take many 1R losses in a row, and then have a big win just to show everyone that it is what matters. 
    I really encourage everyone to look at all trades in the portfolio, and at the results we are having (I will calculate R’s on closed position probably tonight). This is why I don’t want to start a new spreadsheet. I want everyone to realize how we make money in the long run. Now the question is: "Do you want to make money on our current trade or do you want to make money consistenly?"

  683. Andy, great post! I am sooooo convinced about this that I want everyone to understand it.

  684. Doug, that’s what I thought, you should have had such a big loss. The option went down much faster than the stock went up, and that’s what killed you. I am sure that the higher strike of the puts did not lose value so fast. When you are OTM and the stock goes against you then the option loses premium real fast. Especially on these stocks with high premium and on front month. I great strategy for those is to go with the vertical.
    Do you have TOS?

  685. STP-1/3 out.

  686. STP-I hope this can be a great lesson about discipline. We did not panic, we did not worry, we followed our plan, and we are now ahead on the trade. Whatever happens from now, we don’t know, and the best we can do is manage our trade by following our rules.

  687. Doug, I meant you should NOT have had this big loss.

  688. WSM-breaking down. Let’s get below 20MA

  689. Here goes the Q’s as well. Maybe we can drop to .40 from here.

  690. Opt:
    I was looking at csiq?
    Do you ever look at the breakout work of FREE  ?

  691. EBAY-That’s a nice breakdown as well.

  692. stocktiger-no, I don’t know them. Will take a look.

  693. Opt
    Do you queue up entry and exit trades in your ToS account.  For example, when you want to get into 2nd half of a trade, such as STP.  
    If so, are they contingent order, eg contingent on underlying stock price or non contingent, based simply on option price that you put very high or low and simply change to something more realistic when you want to execute. 
    Do you put in limit order (average between bid and ask) or do you put in a bid or at ask?

  694. Dan, no I don’t put any orders in. I just do it live. I usually go between the bid and ask and if I don’t get filled I move it fast if I really want to get in.

  695. For STP on the second 1/2, I placed the order right above the bid and the stock kept falling so I got filled.

  696. OPT –  I am taking a way four things from this exchange

    1) When in the middle of strikes use the ITM option
    2) Be way more conservative with STOP placement with the volatile stocks.  I will use the ATR to help me determine this until I get a better feel.
    3) Keep adjusting how I position size until I see the majority of the losses, due to a one day move against me, stay within 1R
    4) If I do not have "Quiet Mind" trading, then something is wrong

    I will let you know how this goes.

    Yes I use TOS ….. why ?

  697. If you use TOS, instead of using deltas for calculating the position size, you can use the analyze tab.

  698. If any of you have Q puts, it is a good area to take some profits, around 48.40-48.43.

  699. Or 48.39 :)

  700. If we break this area, then next stop is 48.2

  701. More of a pause than a bounce so far.

  702. Here we go.

  703. Good Idea on the Analyze tab …..  
    If I use Sigma as the +/- on the live, then my position size is 3 for FSLR, not 9.
    This is much better …. I will use this from now on ……  thanks

  704. AGU holding up very well so far.

  705. Damn, missed the Q Trade …. too concerned with position sizing …..

  706. Glad we sold our GLW and NVDA yesterday

  707. Doug, I did not publish a Q trade this morning. I think everyone knows here I have been trading the puts though. Hopefully I am not the only one.

  708. Doug, you can use the analyze tab, and it is fine. What I use myself is "Theo Price". Go to the "trade" tab, then in "information layout" select Theo price. Then in the middle of the screen, just change the price to wherever the stop will be. You can also change the date. Usually I take one or 2 days out as it is usually when we get stopped.
    Then the "Theo Price" layout will show you the price of the option at stop and you can then calculate the position size.
    I recommend this to anyone using TOS !!! Sometimes deltas are not that precise because they change with time and with movement.

  709. Q’s-200MA, where we bounced exactly yesterday, is at 48.11

  710. let’s see if we bounce at 1400 or if we can get Q’s to 200MA.

  711. WSM-DIE!

  712. Q’s-Take more profit at $48.11 !

  713. I am all out of Q’s. Will wait for another entry. That was huge!

  714. Also took 1/3 out on WSM puts.

  715. OPT – Thanks –  I really like the analyze tab.  I used to use this when position sizing spreads.  I did not think to use it for calculating viable stops.  I like seeing the slices above and below Live with Possible P&L Targets.  Once I pick the target move against the trade, I just adjust the position size until I get my R in the P&L column and then the trade is ready to send.
    This is very clean and informative for me.  For now I will use this …. thanks for pointing me in this direction

  716. Hope everyone here is well covered as well and has a lot of puts.

  717. That Q ride looked like fun …..  congrats  to all that rode it …..  :)

  718. Doug, I have the feeling I was the only one :( Come on, someone tells me you played some Q puts!

  719. OPT – I have been too inwardly focused, and preoccupied with other trades that have bad position sizing.  Why are you more concerned about the downside and what can I do in the next hour to cover and/or what puts would you recommend ?  SPY puts with a portfolio beta balance ?  3/4 delta cover ….. or full ?

  720. In Q’s again. 48.15, stop at 48.21. Being greedy, but with small size.

  721. Sorry Opt-
    Too busy over here for Q day trades, though is would have been much more profitable than my salary for the day.  I kind of got a promotion at work.  I design oil wells, and my last came online at 29,000 barrels per day, so now they have given me more responsibility.  Not sure if I like having more work to do.  Hopefully my schedule will loosen up in a couple of weeks.  It would be nice if I could find a start up oil company that was willing to give me some ownership in the company instead of being underpaid because I am young.

  722. Doug, like I said yesterday charts turned bearish. This is why I sold all remaining calls yesterday. If you look, the portfolio only had puts yesterday at close. As posted, I also covered my AAPL in LT because this chart looked tired. This is why I bought some calls this morning (STP and AGU) for balance. 
    I like Q’s and XLF puts for balance if you have too many calls in your portfolio. I have been playing Q’s because I think AAPL and GOOG are overextended here. I also like retailers for puts, but it is risky as we have SSS tomorrow. I also like EBAY and CME.

  723. GLW could be a good candidate as well. I love the company, but this candle is ugly.

  724. JOYG too. Let’s remember that we got out yesterday because they lowered guidance (and we are very happy we did now).

  725. Congrats, Blake!

  726. yes, you could have made more on the Q puts. That was a 11R profit :) Too bad it won’t be in the portfolio.

  727. Alas – No Q’s for me either . . . Too busy with day job today.   But I do have lots of MER and COF puts that are finally making me happy :)

    I am quite light on calls.  I picked up 1/2 AGU.  Not too sure about STP right now.   5 MA may still be down and I imagine that at some point soon oil has to give, which may bring the solars down too.  Do you still like STP down here?

  728. CME-Bought some puts.1/2 position.

  729. Anyone getting on CME. Be VERY careful. Remember that this thing can move $20 in a day, easily. Size accordingly.

  730. I don’t know if congrats are in order Optrader,  my company likes the work that I do, but they do not like to pay me for it.  If I were 10 years older they would pay me what I deserve.  I may need to switch companies soon.

  731. OPT – I am thinking of getting a combination of QQQQ and XLF puts for cover.  I assume because of the need for short period of cover, that I should get MAY’s.  Is that correct ?

  732. Hng10, it’s all about balance. I agree with you on STP, but I need to have some calls in my portfolio and it is a chart I like so far, so why not those? Yes, it can go down fast, but it can go up fast as well, so I know it and I know my risk.
    if it goes down too much, then I will be out and will find something else for balance. In the meantime I will probably have made a lot of money on puts. Congrats on MER and COF!

  733. EBAY real weak. 50MA is at 29.60

  734. We need to break 48

  735. DOug, anything you are planning on keeping overnight I would get June. For daytrades I am still playing May’s on Q’s. I usually don’t keep index options overnight.

  736. Q puts-1/2 out

  737. Q’s all out. 3.5 R on this trade. What a great day!

  738. They tried real hard to close it at 200MA, big buys on AAPL at the close.

  739. Last trade was small position, so after adjusting it is only 2.8R profit. That’s still a 13R profit today just on Q’s ! And that’s without WSM, BBBY, EBAY puts…

  740. Very nice Opt!  Congrats!
    I hope those Q trades pop up again tomorrow when I’ll have a chance to jump on board…

  741. I hope everyone had fun, and at least was well covered.

  742. CME-That was a very nice close. Hopefully we get some follow-through tomorrow.

    15:12 *HANSEN NATURAL 1Q INCURRED COSTS $6.3M                :HANS US
    15:12 *HANSEN NATURAL 1Q EPS 29C                              :HANS US
    15:12 *HANSEN NATURAL 1Q EPS 29C                             :HANS US

  744. I would not say well covered, but better covered in the last 1/2 hour of trading.  I am having one of those weeks where my calls go down and my puts  go up.  Even with the puts I placed for cover in the last  1/2 hour …..  I am down.  Let’s hope for a better day tomorrow.

  745. HANS down 6 in AH

  746. HANS down big, CROX up big. Not worth it for me. But I’ll be watching CROX for entry tomorrow.

  747. Opt
    On playing Qs today.  Was your entry signal the price crossing below the 5dmav?  And waht was you exit signal?  What was your stop, and did you use the stop to set your trade size, or do you have some other mechanism for setting trade size for the Qs in your portfolio?

  748. Opt
    Re Qs.  What is your normal entry and exit signal, just in case today was not normal?

  749. Dan, you can take a look in K1, there are a couple posts there where I explain my strategy in trading Q’s. I don’t play breakouts, and I don’t play 5Ma on those. I short bounces or I long pullbacks. 
    Today, I bought some puts at 12:17, when Q’s where at $48.78, with stop above $48.85 (high of previous 15 min candle). I sold the last batch at $48.11 (200 MA). 
    Then (and this one was published), I bought puts again at 2:57 when Q’s where are $48.15, with stop at $48.21, which was above high of candle. Sold 1/2 at $47.90 and the other 1/2 at $47.94.
    Take a look at the 15 min chart and let me know if it makes sense.

  750. And yes, of course I used the stop to determine the size. I do this when I am planning the trade, usually at least 5 min before I place it.

  751. optrader-
    I really like playing the Qs because they are so liquid.  It seems like you don’t have to deal with a lot of the other problems, like intraday volatility changes that you see in some of the other equity options, and there is practically no slippage between bid/ask.  I think this is something worth learning well for me.

  752. Opt, in your 6:11 post you said
    <<Today, I bought some puts at 12:17, when Q’s where at $48.78, with stop above $48.85 (high of previous 15 min candle). I sold the last batch at $48.11 (200 MA). >>
    is that the 200 minute MA you’re referring to here?
    I’ll go review the k1 Project too,
    many thanks.

  753. Wow, that run-up to earnings for HANS really played out perfectly.  I promise I will get back on the hunt for good charts.  Been pretty obsessed with fine tuning my LTP plays this week.

  754. Opt
    Took a look at K1 description of QQQQ.  I must confess, I am a bit dense here.  Still struggling with your entry points.
    As I dunderstand it, you "look at the candles on a 15 min chart, looking for reversals and breaks from ranges, using high/lows from candles as stops."    From this description, I think I understand how you set the stop losses – very tight, at the top (puts) or bottom (calls) of entry bar.   But I do not understand the entries, nor the profit stops. 
    I have three questions:
    1.  Why did you enter at 12:15 and at 2:57.  What made you decide to buy puts as opposed to calls at that point in time?
    2.  Why did you exit those trades when you did  (how did you determine when to take your profits)? 
    3.  How did you size them in terms of number of contracts..
    I apologize for being dense.  And I do appreciate the time you are taking to educate me, as well as your other students.
    Thanks again…. Dan

  755. Opt
    Re Qs.  In studying your method, what has me mixed up is this.  You say you countertrend trade, ie, I short bounces or gol ong pullbacks.  But I do not see any bounce when you shorted today, at either 12:17 or 2:57.  All I saw was a bearish continuation trend.  There were no 15 minute green up candles, except at 12:30 and 12:45, after you shorted.  And no green up candles at 2:45 or 3:00. ??
    Thanks for your patience.

  756. Opt-
    Are you planning to short this Q bounce this morning?

  757. Opt-
    Also, Would you look at BDCO?  It lloks like it could be a fun stock to play one of these days.  I don’t really like it here, but maybe if we ge another set up in the future.

  758. Dan, I will look at entries in details later during the day when I have a minute. But basically I just wait for a bounce with new intermediary high on 15 min. It does not have to a significant bounce. Entries are not important. What matters is to have a nice stop. I wait for a bounce to turn and when it starts going down I use the new intermediary high as stop.
    Blake, I don’t know if I am going to short Q’s yet. Will just watch for now. Don’t need to trade them everyday and I prefer to balance my portfolio with puts in individual stocks rather than indices.

  759. BDCO-I like the chart, what do you know about fundamentals?

  760. Opt – Thanks – Dan

  761. BDCO-  Oil pipelines, some production and exploration.  They mainly produce from fields in shallow water in the Gulf of Mexico.  Pretty much old reservoirs,  that still have some oil in them.  The business plan is to be very economical, have lower overhead than bigger oil companies so that small fields that may not be profitable for a giant like Exxon or BP are profitable for BDCO because they have lower costs.  I do not know any of the financial numbers related to the company.

  762. WSM-Breaking down

  763. After being so patient, it is nice to see the retailers, especially WSM, really drop in the last couple of days. Looks like people just decided they are going to pay the CC bill with the rebate checks instead of $300 pots.

  764. WSM-50MA is at 25.25

  765. Anyone knows why Ags are weak this morning?

  766. Not shorting the Qs this morning Opt?

  767. JCP DIE!

  768. Blake, I have just been focusing on retailers. There are probably some opportunities to short Q’s though.

  769. Q’s you can buy puts here with a stop at 48.23. Go with small position though, as there is obviously a big fight at 200MA (48.10).

  770. Or if you want to be safe and go with much smaller size, you can use 48.37 as stop.

  771. HANS-I wanted to get back in and play a bounce but forgot about it. Arrrggghhh.

  772. Opt – on the Q trades, do you automate your stops?

  773. I like to play Q’s though when I see something obvious in terms of support/resistance. Around here there is only the 200MA and 48.40, so we could just trade around these 2 forever.

  774. I never automate stops. let’s be clear, I am not into Q puts personally and I was just answering to the second question from Blake this morning.
    I am not really sure I like it that much that people are focusing on this and daytrading. You need to only trade when you have a very setup.

  775. Gotcha

  776. Q’s I am in

  777. Stop at 48.31

  778. 48.10 holding real strong.

  779. WSM-here we are 50MA

  780. OPT  you still in the Q’a

  781. Q’s

  782. Q’s-out at .34

  783. Q’s-That was a bad trade anyway, getting in like this with no real point of resistance around. It’s ok, we can give back 1.2R.

  784. It is very important to not trade when you don’t have to and I was not disciplined.

  785. JCP-Added some puts.

  786. Q’s back in. Stop at 48.50. I like this one better, but going for smaller size after first loss.

  787. At least you guys can see the strategy, and Dan, that probably answers your questions about entries. And if we have to take another R loss, it will answer questions about exits too :)

  788. Still in. Watching to see if they just run the stops or if we get a last kiss goodbye and then a run.

  789. 48.57 is 5MA on the daily.

  790. looks like it wants to fall

  791. JCP-Bought more puts. I am now back to almost full position. I just don’t understand the bounce here. I have nice stop too above 5MA and will close everything if it closes strong.

  792. STP-Another 1/3 out.

  793. PCP looks interesting here…

  794. Q’s-1/2 out

  795. OPT – When you trade the Q’s do you ever look at the 1 min charts, or are all of your decisions made by looking at the 15min, and the Level II

  796. Here we go :)
    let’s see if we get to 48.10. And what happens there if we do.

  797. I sometimes switch to 1 min chart around areas of sup/res and around my stop. Not to make a decision or pick a level, but to look at "speed". Get an idea to see if there is a strength if it is just going through stops. Well, that was a weird print right now.

  798. GOOG is pretty strong and holding it so far.

  799. Well, that was some fake.

  800. Q’s-bought back 1/2

  801. Stop at 48.6

  802. I mean bought back the 1/2 that I sold at 48.3. Still got the initial 1/2 as well.

  803. This is really a weird market. Been for a couple weeks now. No direction really whatsoever.

  804. CROX-Bought some calls. 1/2 position.

  805. All out on Q’s.

  806. Q’s-Back in. Third try.

  807. Stop above $48.70

  808. AGU-Another 1/3 out. Reducing risk ahead of crop report and AGs were weak this morning.

  809. Opt, not sure if you watch tick on nasdaq, but the q’s almost move in tandem, with a slight delay, tick has been flying up and down all day.

  810. Q’s-1/2 out.

  811. Feeling like a scalper today, but I had to take the 2R profit on this one. Puts me pretty much breakeven for the day, and I can play with the 1/2 left.

  812. I don’t follow Nasdaq. Just a different set of stocks, but very similar. I like the liquidity in Q’s.

  813. GOOG helping us real good now.

  814. GOOG at $580 is critical.

  815. hi opt
    don’t you think goog chart is looking good to short at end of day?

  816. David, yes it does, but I like the fundamentals too much here. There are a lot of companies that I would rather short. Anyway, if it drops we make money with Q puts. If we get a weak close today, then I think we will be back to a "Short the bounces" strategy.

  817. OPT – I rode that last ride down with you, but missed the last bar down.  I got out on the upper shadow.  Good lesson, I should have waited until the candle finished printing.
    Although the Q’s are down for the day – they are trading in an up channel.  Should we try the calls for ride up ?

  818. thanks opt

  819. CELG-I usually keep some kind of position through earnings, but this time I am going to sell everything. Can always get back in tomorrow.

  820. Doug, no I am not playing calls right now. I just feel that AAPL is very toppy here and Goog’s chart is turning bearish. I still have 1/2 puts on the last position but will close by EOD as I don’t like to keep them overnight.

  821. Optrader-
    Would you qualify this as a breakout on EP

  822. EP_Yes, it is a breakout.

  823. do you like it?

  824. look at the 1 year chart on it

  825. BBBY-Broke 20MA :)

  826. I like it on a pullback. What about fundies?

  827. BBBY, about friggin time…. :-)

  828. BBBY-let’s hope it does not bounce from here, but I am glad we got out of this flag anyway.

  829. EP-  Biggest gas pipeline network in north america.  Have a significant amount of gas production as well…mainly in Texas.   I used to do a lot of work for them a few years back in the feild.  Basically, they ruined a lot of their wells in about 2001 by flowing them real hard to make it look like they had more gas in their reservoirs than they did.  This made them look really attractive because everyone thought that they had more reserves.  It was discovered that they were faking their reserves, stock price tumbled.  MAJOR restructuring, now they have about $10 billion in debt left that they have been slowly paying back.  They are also taking good care of their wells now.  It will be a great long term investment as we start using natural gas more and more as an alternative to oil.  Their biggest payout is from their pipelines, they get paid based on volume of gas going through their pipelines, but their oil and gas production side is doing much better as well.

  830. Thanks, Blake. What the reason for the jump the last couple of days?

  831. announced that their 2008earnings would be "sharply" higher than previously expected.  That’s all i know, other than natural gas prices going up

  832. David How are you?

  833. Will sell 1/3 CME puts by close. Just taking some profit out.

  834. hey bill, everything good

  835. Blake-There are much better Nat Gas plays than EP.  No real production growth to speak of.  IMO

  836. Drop me an email when you get some time.  I will do the same tonight.  Miss our chats

  837. Well, that was another very nice day, thanks to puts in retailers. Very small profit on Q puts for the day. Lots of work for nothing, but yesterday was huge, so I won’t complain.

  838. Optrader-
    Suppose you enter a 5MA position (following all the rules), and then unexpectedly you have to go to a meeting. What do you do with the position, set conditional stop order, just close it, or leave it as it is and hope for the best (hopefully not the last one :) )

    If this was already asked and answered, I apologize.

    I’m mostly lurking around here, but couple of days ago I put my first (and very own) 5MA position (HPQ), and today I had an unexpected (and long) meeting. So I started wondering how are you handling such situations…

  839. If you can check before EOD, I would just leave it. If you are not sure, you can always place a conditional order.

  840. Thanks.
    That’s what I did today, I left it alone (I knew I should be back at least one hour before closing), but was kind of unsure in that approach. And just to feel better I set an alarm to send a msg to my phone…

    7:45 *CIRCUIT CITY TO EXPLORE OPTIONS                  :CC US, BBI US

  842. Hello
    Is anyone here today?

  843. Dan, I am here, was wondering the same… very exiting to see what happens with the Q’s today.. real struggle around the $48 mark can’t really see what is winning just yet, maybe we will just be sideways the whole day… let’s see. Got into to Q’s this morning for protection and play..

  844. I’m here also.  Andy when you say got into Q’s I assume you mean the puts.
    What do you pay per contract?  Seems very expensive to me for the moves
    you typically get.    Thanks.

  845. good morning, andy I just wonder how would I download the spreadsheet you made on the web ? thanks

  846. Andy
    Surpised market is as strong as it is, given AIG, Oil, and Export numbers this morning.

  847. Right now I selected the $48 put, that was pure premium play, it is with a very tight stop, but I have some longer AAPL, which I didn’t want to sell against, so I figured the Q’s just in case we get a major breakdown somehow due to Oil. Doesn’t seem to be the case right now, but it is Friday, next week with opex, I guessed that there could be some profit taking on the heavyweights on Nasdaq.. But hey what do I know… do like how that candle is being taking apart though..

  848. Ooooops. Had a little bit too much to drink yesterday. Just woke up.

  849. Dan, me too, to be honest $125+ oil (not sure where it’s at right now) should put a huge lid on things, but the markets may be looking outside of this bubble for now (again not sure what they are looking at.)

  850. lol optrader

  851. Opt, une cafe pret e trois sucre and you will be right back on track.

  852. Looks like they still want to save the 200MA on Q’s and 1390 on SPY.

  853. Do we know why JCP and WSM are green this morning when everything else is red? They were down a lot yesterday so we could expect a small bounce, but is there another reason?

  854. Coffee is on the way, Andy LOL

  855. Don’t get it, TRINQ is up, VIX is up GOAX is RED and Q’s don’t seem to care, I must get some better indicators. If you have any idea’s let me know.

  856. Very weird. AAPL and GOOG are dropping and Q’s are holding.

  857. Opt
    MDR, CBI, GLDD, SGR all look weak to me as a group. Do you have any thoughts on one of these being a good short ?

  858. Andy, we noticed the same about AAPL and GOOG. I am not crazy about TRIN and VIX.

  859. Opt
    QQQQ being driven by RIMM I think, up on JPM shipment forecast shipments in FY10 and FY11 (Countering yesterdays in-line for next qtr) and Boy Genius Report on expected BlackBerry 9000 announcement on May 12 at WES 2008 in Orlando,

  860. Opt, you think Q puts if it gets up to about 48.50?

  861. Blake, I am just watching for now. Could go either way today.

  862. At this point I’d rather see a break and then trade than trade in this range.

  863. Opt:
    stp : nothing happens until days end when we see a close significantly below 42.95 right?

  864. AAPL and GOOG are now both below 5MA. 5MA is pointing down on GOOG. But 200MA is not far for support.

  865. Opt – Yesterday you bought 1/2 position in CROX.  Didn’t see it posted.  Are you still in?
    Current thoughts?   Thanks.

  866. STP-Yes, Lance you are right. I am not too concerned about it. First we only have 1/3 left and it is just trading in a channel. I don’t see a significant breakdown.

  867. OPT – can you go a little deeper into your issues with the VIX, and waiting to get out of this trading range … Thanks

  868. CROX-Ooops, I forgot to post it. Give me a minute and I will. Yes, I am still in. It is obviously a very small position as we were very far from 5MA. Will be happy to double at 5MA. This is part of my new strategy explained 2 days ago. I get in with small position and wide stop when price is already significantly above 5MA. So if it keeps running I have a small position and if it does not I am not really concerned as stop is wide and I can get more at lower level. If it drops all the way to 5MA, and I double down, and it keeps dropping and I get stopped-out, I still only lose 1R.

  869. Thanks, Opt.   BTW when trading in a $10-11 stock.  Do you usually buy the stock instead of
    the options?  I’ve never had much success trading options on low -priced stocks.

  870. VIX-So many people use it, but in my experience it is not a reliable indicator. What do you do with it? Do you go short when it raises? Most of the time it raises after market drops. 
    I mean it is a tool like another one, and I think everyone can use any kind of indicator as long as they have a plan (Like :"I enter when VIX is touching its high BB, I exit when etc..". I just don’t feel that saying "VIX is raising, so the market is going to go down" means anything, but that’s just from experience as I have seen the opposite happen so many times.
    On Q’s I would like to see a breakdown below 48. Not playing yet as I have enough puts to profit from a drop anyway.

  871. Albo, it depends if the options are liquid or not. You can easily trade options in DNDN for example.

  872. Op – a tangent to your VIX comment.  We just hired an Options Sales Trader here at my firm, and he just got back last week from the Options Industry Conference in Vegas.  He said there was a rather in-depth discussion over whether the VIX will even be around in 5 years (b/c it’s value is still misunderstood / mis-interpreted).  FYI…

  873. Opt, are you not a fan of using the techinicals of the VIX chart as a sort of leading indicator?  For example, VIX currently in downtrend with a collapsing ATR, a break above could mean several days of increased selling pressure, but failure to break the 20dma could propel the market higher.

  874. FILM – there in lies the rub.  you just stated that the VIX "failure to break 20 dma COULD PROPEL the market higher".  Does the market move b/c the VIX does?!  Or does the VIX move b/c the market takes it there???

    The Chicago Board Options Exchange SPX Volatility
    Index reflects a market estimate of future
    volatility, based on the weighted average of the
    implied volatilities for a wide range of strikes.
    1st & 2nd month expirations are used until 8 days
    from expiration, then the 2nd and 3rd are used.

  875. Mark, I am not surprised at all. Film, how could the VIX be a "leading" indicator? It is an "expectation" of future volatility. First, who knows if IV reflects the actual risk? And if it does, how is that an indication of where the market is going?
    Then, I could also say that when VIX is high, there is so much anticipated volatility (or fear as other people put it), that it might mean we have seen a bottom. Anyway, like I said, as long as your are consistent and include it in a trading plan, I have nothing against it. But I don’t believe it is a leading indicator and my experience has been that it is pretty useless. At least for me. But anyway there are no leading indicators :) So why not use this one. Everything in the market, everything in a chart represents the past, not the future.

  876. Here goes AAPL.

  877. OPT-  Thanks,  I misunderstood your comments on the VIX …..  I thought you were not "crazy" about what the VIX was telling you ….  not that you did not like the VIX as a tool ….. :)

  878. Added to EBAY puts.

  879. OPT- can you switch to a new posting next week it takes forever to scroll down.

  880. optrader, I was looking at Ebay puts, for this one our stop will be a close above 5ma am I right ?
    I was looking at Jun 32.5p, for a delta @ 0.75, doe sit look too high for you ?

  881. BBD, yes, I am planning on doing it. But why do you need to scroll down? "Reload" should take you back to bottom. And CRTL "Page down", should get you directly to bottom of page.

  882. EBAY-We have had this position for a while, with some good profit and I am just buying back some of it that we sold. yes, keeping stop at 5MA. I have no issue with getting options with high delta. It just means that you are going to buy a very small number of them.

  883. $48.10 is like a magnet.

  884. ATVI – nice jump on sales of Guitar Hero

  885. HAHAHA, I read your responses to my question about the VIX and I was thinking, "I didn’t say it was a LEADING indicator."  So, I went back and looked, YES I DID.  Sorry.  I am going to say that I don’t think it is leading in the sense that it predicts the moves of the market.  I think it is leading in the sense that it can point to a change in trend that may be lasting under the right technical formations.  In the example I gave, the VIX would be "breaking UP."  If that move was coupled with a technical break DOWN in the SPX, then wouldn’t it add weight to the change in trend as opposed to a divergence where the market breaks a technical level, but the VIX maintains its trend.  I guess that is what I meant not a leading indicator as much as a coincident indicator used to add weight to a potential future move.  Or does that just sound like parsing words.  It makes sense in my head.  ;)

  886. CME-Testing 460. let’s break it!

  887. optrader, I got a question, this week I am trying on my own to make a free trade, my risk is 1% of my whole account which is $346 ( do you think I should increase it to 2%, or do you think that ‘s fine? ) last week I have some nice profit from day trading SNDK with stocks not option with the margin power I had. But these week I make a few 1R loss from daytrading ALL and BNI, I am glad that I respect my stop if not I am having a 2.3 R loss for each of them, for daytrading , I just simply use the 15min chart method for entry, do you think that’s bad idea? Today this morning, I try to trade MON according to 5Ma, because it is still pointing up , so I get in 1/2 @ 119.30 (jun 125 @ 5.5) and my stop is 50MA which is 116, according to my risk I can only get 2 contracts, and I had only 1 in  @ 119.3, and I never get the second half, all this morning this position is lossing $40 and until this moment I have a profit of $10. I use to feel like most of my profit is coming from daytrading 15min chart, and seems like I do bad on swing trade, is that because my R is not large enough for my positions to breath or I did something wrong here? Thank you so much .

  888. Bees, I’ll answer that better AH, but I don’t like daytrading too much. But if it is where you make your money, then go for it. About swing trades. you need to consider them as swing trades, give them some room/time, and not watch them so closely.

  889. optrader, thanks looking forward for your answer, I really want to learn from you and know what’s wrong with my swing trade, I will do anything to improve my trading result.  thanks for giving me a hand.

  890. Opt, got one for you.  Look at the verticals for RIMM in June.  The put spreads are trading 10-15% below THEO and call spreads are 10-20% above THEO.  Is that common?  I am looking to initiate a bearish play on RIMM today as a hedge against GOOG/AAPL calls.  Also, I like the bearish rising wedge and a doji on the weekly at its high from Nov-07.

  891. Well, the more I loaded, that looks to be rather consistent across multiple symbols.  Must be how they calculate that.

  892. FIlm, are you looking at Theo in TOS?

  893. Good weekend all, I am out for the day

  894. yes, opt.  All the vertical THEOs are consistently "mis-pricing" the spreads.

  895. Film – I am not seeing this.  Are you sure that you have not played with any of the adjustable settings on the trade tab.  Hit Reset to be sure.  I am getting the prices right on Theo.

  896. Theo in TOS is NOT a theoritical price based on Black Scholes or other formula. It is just the mean between bid and ask.

  897. Film – Here is what I am seeing for RIMM

    RIMM Put spread 130/135   6.63/9.10 = Spread is showing Nat=2.35 and Mid=2.47  … so the Mid is correct.  What are you seeing for this spread now that the market is closed ?

  898. opt- is that because of my R is too tight and I didn’t let my position to breath

  899. Doug.  You were right.  Sorry for the snipe hunt.

  900. Have a great weekend all.  Please spread nasty rumors about RIMM, if you can.   Thanks.

  901. RIMM- has a drug problem

  902. I heard RIMM had more than a drug problem, well better not say too much…. Good luck Film

  903. Oh and that phone they are supposed to release, well…….

  904. quick drop in…

    MER analysis

    AAPL/steve- i’m worried, but whatever- i’ll just b like ‘"OH YEAH! u sell me AAPL at 150 first…no jinxes"

    the pythagorus square…that’s an awesome joke film…going to have some drinks w/ nerds, so it may come in handy.

    PEAce OUT!

  905. Bees, I really don’t understand what your issue is with your MON’s trade. Seems like a very valid trade to me, with a good stop. What is it that you don’t like about it?