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I mentioned this earlier, but will detail the trade because it is very close to the example OA1 is trying to explain.

After the BRExit drop I was pretty amazed that Barclays dropped 38% in two days. Sure when (if) the exit happens they'll lose business, but that's not going to happen for quite some time.

I purchased 1400 shares of BCS for 7.34 (this was two trades so this number might not be exactly correct).

I then sold 14 covered calls for July 16 at a strike price of 8 for 0.25. This means I collected a premium of $350 (minus fees). As long as BCS stays below 8 by the time these options expire I'll make a 3.5% return for the month plus whatever gain/loss I make on the stock itself.

If BCS climbs up over 8 and my options are exercised then I'll make 12.4% for the month (0.66 stock increase plus 0.25 premium on a 7.34 stock purchase). These options are priced extremely high right now. Typically you'll make about 0.5% per month selling 1 standard deviation OTM calls on markets and highly traded stocks.

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I bought 1,000 shares of BCS at just under 7.2 the other day. Now I don't really know what to do next. I know it's not guaranteed, but I'd rather put something in where it's a safe bet that I keep most of those stocks since I bought in so low. You guys seems to be able to keep most of your shares.

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You've got some options (see what I did there?).

Right now, July 16 Calls at a strike price of 8 are $0.45. Owning 1000 shares you can sell 10 calls and collect $450. Right now the 9 calls are virtually worthless; so you're stuck with the 8 calls even though there is an even chance they get exercised. You can sell 10 covered calls and collect your $450 in premiums giving you a 6.25% return for the month. IF the stock climbs to above 8 by the time your options expire that means that you'll possibly sell your 1000 shares at 8. This makes your maximum return 17.4% for the month.

Another option would be selling Aug 16 Calls at 9 for $0.25. There is definitely less of a chance of that getting exercised and you are compensated less because of it.

I'm pretty happy with 17% being my topside for a monthly return. You can always buy the stock back, rinse, and repeat even if they get exercised.

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BCS closed yesterday right at 8.00, but dropped to 7.92 after hours when my sold options expired. 12.4% return for the month. August 8 calls are selling for $0.40 and 9 calls are selling for $0.15. I haven't decided which way I'm going this month. I'll think about it and make a move on Monday.

OA1 - Cup & Handle question

I was scrolling through companies in some stock screens and I found HNH from one that was based on Free Cash Flow. Is it a good example of a Cup & Handle breakout?

So, I'd like to learn what to look for in trade volume to help my entries in exits. I like to make what I consider conservative options trades, mostly selling cash secured puts waiting on opportunistic entries and exits. I have been trading SBUX the last 4 months, and while the stock is trading lower than it was 4 months ago I've net about +3.7% in that time making about 1 trade per month. I'd like to be able to double these returns, yes I realize that would be considered extremely rare but It really doesn't feel out of reach.

What are the main volume indicators to look for? Right now I don't use any indicators, only candlesticks. I usually browse through day, week and monthly candles before opening a position.

I like to trade options on individual companies, not the index, any advice on how to read volume of the broad index and the individual stocks to find better entries and exits?

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OA1 - Cup & Handle question

I was scrolling through companies in some stock screens and I found HNH from one that was based on Free Cash Flow. Is it a good example of a Cup & Handle breakout?

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It is missing volume thus far to confirm. Major support right at $26 with a two "pole" day resistance showing just shy of $30. This is the kind of move that I would take an option risk trade to have little capital invested and easily convert a portion or all of it only if it ends up above $30 by expiration. HOWEVER, HNH does not have options. That most certainly is a large cup &handle so if you have studied the company and everything the SLI acquisition means for it then an entry at $28 or under with a stop at $25.80 would be the trade.

I avoid most stocks that eliminate my ability to hedge downside risk. A cheap $25 Put (in this example) would save thousands against a stock collapse. I would imagine if it did trade options a Sept $25 Put would cost $25 or $0.25 per share. So you could say if I bought the stock at $27.75 I am willing to pay $28 (stock plus Put cost) for eliminating most of the risk.

TWTR with bullish flag again trying to breakout. Same volume question although (disclaimer reminder) I'm already long average entry price $14.88.


And a note of caution - we aren't looking at stocks that are at lows. They are trying to break to new trend highs after a decent run. I would say stocks pressing these upper trend ranges appearing to be further breakouts are more than likely going to fail and drop back to find new support levels. The easy $ was entering at 18k. I've locked in (and will be locking in) a bunch of the gains and hedging other shares into close Friday and early thus far this morning (eyeing others throughout the day).

BTW - I would be interested in learning any poster who entered around 18k and how much you are up. I had zero losers, which should be the norm. Lowest % gain was 8% and highest % gain was 68%.

I got in on the KMI action around 21 (meant 20, oops), but I wish I would've done more research earlier on when you first made the call. Got in a little late, but it's hard to complain with how much growth it has already seen! Been doing a lot more research on options, and I am starting to get close to the comfort level of starting to use them to leverage some of the sideways actions and start building some bigger long positions in certain companies.

Thanks OldArmy1 and others for all the help on this thread. It has opened my eyes to a whole different avenue of investing that is really refreshing and fun.

I bought KMI at 18.30 and Shell at 51.97, been cycling some other stuff here and there, but overall been quite happy with the last couple of months.

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TWTR with bullish flag again trying to breakout. Same volume question although (disclaimer reminder) I'm already long average entry price $14.88.

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No kidding on TWTR volume! The stock sat around all morning until about 11am then exploded with volume and traded upward into the green. I had options expiring Friday that I was ready to just blow out this morning when nothing was moving. Instead, I decided to wait and see what the rest of the day had in store. Glad I did! I sold them into the rally for a nice little gain.

I've been watching Twitter, but I say hmm looks like a bottom, then it goes lower, is $14 really the bottom? I didn't have enough confidence but I like the options premiums.

Completely my pleasure! This is what was intended when getting involved on the board. TWTR volume signal hit pure right on the breakout. (BMK - I do believe TWTR has seen its bottom. HOWEVER - Following my rules I sell whatever number of shares I need to in order to be 100% market invested dollars as the stock rises. If I hadn't traded a boatload of Call Options, and only had the stock average buy price of $14.88, then I would be selling 50% of the shares at $29.76. I have a much lower factor than $14.88 due to some well timed options trades, including diving on Friday calls the moment the volume signal fired off today. Yet another disclaimer (I closed those options around 2:46pm) and am within $0.21 cents from selling 50% to own long-term shares on the market makers dime.

Quick note on the HNH inquiry. It did break out but the TOTAL volume was under 10k! I couldn't buy a position if I wanted to on that... And getting out would be impossible.

JJMT - On Options vs. Stops on new stock entries it all depends on the value of options. I pointed to KMI's tight range creating suppressed option pricing and being a huge advantage for trading call and put options pre-breakout. That is now gone with the move. Valuation on options are now more neutral, so if I were to want to enter the stock I'd do so using the stop strategy.

I hesitate to post this trade I'm in but it only broke out to new highs at low price so I'll do so. I have tried several times to speak with CEO David McGlade to no avail. I typically like to confirm a few things on new stocks I'm interested in and rarely have an issue. Not so with McGlade to this moment. If I could speak with him and was satisfied I'd likely triple my holdings (you out there David?).

Stock symbol is "I" Intelsat. Now here is a test for the forum. Knowing the most important variable I use, for entry into a stock on my watch list, on what day did I enter the stock?

Gotta be Mar 2 on 20x avg volume

Oldarmy - had several questions for your options trade on KMI at the top of previous page. Understand if it's too much detail though.

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Completely my pleasure! This is what was intended when getting involved on the board. TWTR volume signal hit pure right on the breakout. (BMK - I do believe TWTR has seen its bottom. HOWEVER - Following my rules I sell whatever number of shares I need to in order to be 100% market invested dollars as the stock rises. If I hadn't traded a boatload of Call Options, and only had the stock average buy price of $14.88, then I would be selling 50% of the shares at $29.76. I have a much lower factor than $14.88 due to some well timed options trades, including diving on Friday calls the moment the volume signal fired off today. Yet another disclaimer (I closed those options around 2:46pm) and am within $0.21 cents from selling 50% to own long-term shares on the market makers dime.

Quick note on the HNH inquiry. It did break out but the TOTAL volume was under 10k! I couldn't buy a position if I wanted to on that... And getting out would be impossible.

JJMT - On Options vs. Stops on new stock entries it all depends on the value of options. I pointed to KMI's tight range creating suppressed option pricing and being a huge advantage for trading call and put options pre-breakout. That is now gone with the move. Valuation on options are now more neutral, so if I were to want to enter the stock I'd do so using the stop strategy.

I hesitate to post this trade I'm in but it only broke out to new highs at low price so I'll do so. I have tried several times to speak with CEO David McGlade to no avail. I typically like to confirm a few things on new stocks I'm interested in and rarely have an issue. Not so with McGlade to this moment. If I could speak with him and was satisfied I'd likely triple my holdings (you out there David?).

Stock symbol is "I" Intelsat. Now here is a test for the forum. Knowing the most important variable I use, for entry into a stock on my watch list, on what day did I enter the stock?

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Can you post a chart circling exactly what you are looking at or identifying as a signal of confidence?

Which stock BMK? OR just in general? And are you asking about a breakout signal confirmation like TWTR today cause I can use it for that one although that is/was an intraday signal in the broader scope of anticipated move.

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Which stock BMK? OR just in general? And are you asking about a breakout signal confirmation like TWTR today cause I can use it for that one although that is/was an intraday signal in the broader scope of anticipated move.

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Id be interested in volume signals on daily chart for multi day positions, 3 to 20 day moves of a few percent from resistance or breakouts. Any links to good resources or books with signals that work are also appreciated.

All I could say is thank you. It's actually really motivating to see successful trading real time.

NOTE - You may say "you sure know a lot about day trading for never doing it". To quote Quigley from "Quigley Down Under" Just because I said I never had a use for a pistol doesn't mean I didn't know how to use one.

You WANT to understand the keys day traders use (volume, technical indicators, information, news etc) because it serves as an occasional check up on the macro swing trades longevity. Today TWTR demonstrated that buying is still flowing in. Now you could wait until the end of the day to know that but given the chart set up like Friday I have no issue trading a day option on a pure signal as described above. It produced an 18% return in under 45 minutes.

So unfortunately I did not buy into this guy before today. I have a couple of questions.

You say this is exactly what day traders love, but how would an ordinary person expect this big break out (to buy in before it occurs). Also, what now after you see the break out? Are you exiting your positions or expecting this to just be the beginning of a nice run up?

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So unfortunately I did not buy into this guy before today. I have a couple of questions.

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How about showing a little respect and courtesy before spouting off questions?

By saying "this guy", I was merely informally referring to Twitter.
You would know this had you have seen the numerous other posts I've made on this thread asking OA1 questions and thanking him for his wonderful advice and help.

Gotcha, sorry

No worries. I admit, probably not the best way to phrase that sentence..

Several things. I need to make a clear, definitive contrast between a MACRO trade trend reversal opportunity, a trend reversal opportunity and a breakout opportunity.

1) A MACRO trade trend reversal is when all of the information I used on the major markets have aligned to signal a confident entry in the face of the existing trend (bull or bear). There are 1-3 of these on average a year. We are on pace for 4-6 this year, which is not surprising given the election year and economic chaos. I trade 90% of my capital at these moments. (DISCLAIMER - All 90% doesn't go in at the same time. It's extremely strategic and HEAVILY leveraged with options.)

2) A trend reversal opportunity is when a single stock signals it's bottom (buy) or it's top (sell/short). Right now this is where most people should be investing their time, mainly on beaten down stocks, that have lagged the macro breakout.

3) Finally, a breakout opportunity is when a stock has reached a resistance level DURING A TREND MOVE and is on watch for a further breakout.

I take the time to write this because it's important that you don't confuse a post about a simple breakout move versus a trend reversal.

Having established these definitions I'll try to respond to klsmith's question on TWTR. TWTR trend reversal was in the $14's when posted. Everything after that, including today, would fall under #3. So the question you are asking is how long will the trend continue, and maybe even should I enter now? I think TWTR will achieve a monetization model. One of my very first posts on this board was on FB (actually it started on the Football board in reply to someone asking "if you were given $25k today where would you invest it?", to which I posted "put it all in FB") FB had similar issues but I had studied the model intensely and saw what the leadership was implementing. I see the new leadership (that have come in over the last 2 quarters) making excellent decisions, to do the same.

Really pay attention to how stocks react to the "bozo" analsysts for underlying support for a stock. In the last week we had two analyst bad mouth TWTR. One of them sent the stock down $0.60 cents the day after hitting new trend highs. It bounced right back up above $18. I want you to see when that happens and realize what that is telling you. That one move on a stock is more valuable than any book you can read. It tells you that only the weak got shaken out of the stock because they don't know what the heck they own it for. So yes, I see TWTR moving higher on a trend. IF it meets your objectives in higher reward with some more risk than some industrial stock then I'd look for any pullback as an entry point.

Are you saying you spoke with Jack Dorsey? Just how much capital are you trading?

Interesting post on I. The balance sheet is a nightmare, 60% held by insiders, 30% short, giant PEG. I see the inverse H&S breakout with vol and the breakout of consolidation range today. But, if you're looking to double up on your trades, you wouldn't just be trading small H&S stuff, must be some insight on their future earning potential?

Bozo analysts ! Self filling prophecy of the markets.

Thanks for the chart. I'll take some time to review it and some other live charts and be back with questions. Am I correct in that a similar volume and price action occur on the daily charts too?

Yessir. And on that note it's off to bed.

If we have a pullback I will post my suggested buy-in targets for some stocks. Some of those would include lagger stocks feeling the deepest impact hangover from BREXIT such as BCS. It filled the June 24th gap on July 18th and if market has profit taking I see it sinking back to the $7.40 area where I would take a call option approach. Stuff like that.

TWTR doesn't seem to care about a pullback so far as it is challenging new highs day over day. Right at resistance as I type.

Why Intelstat? What within their economic model tells you their earnings won't continue downward?

I is actually profitable on a pro-forma basis, and generates positive free cash flow. Their debt maturities are far enough out that it shouldn't be an issue for the next year or two. Long-term, I think their balance sheet is going to be a problem. An EV to Revenue for a products company of 6x is nuts, and it's solely a function of their debt.

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Why Intelstat? What within their economic model tells you their earnings won't continue downward?

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Told you I was hesitant to post it. It falls in high risk/high reward based on their leaderships maneuvers to tap into the global architecture, especially China. If it can gain traction in those markets the 100's of millions of potential users would completely flip their revenue model. They just completed the restructure which is a big part of the recent move. As posted I have not been able to connect with their CEO. If/Once that happens I would make a decision on investment strategy.

TWTR 1st attempt to break resistance failed. Peaked above 2 day highs and quickly fell back on volume selling. But then equivalent buyers poured in support creating a day trade "v".

Attempt #2 underway.