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3) This extended tight range it's had creates lower option values. That gives me easy access to leverage a large block of options to complete my holdings AFTER it signals a breakout. Let's say it breaks $19 Tuesday. The July 29th $20 calls are sitting at $0.10 cents! I can leverage 100k shares of KMI for $10k. I'm not overly keen on sharing this with the world, so please understand why I am using this one stock example, in real time this one time, for educational purposes.

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On this trade:

What action to the downside or as you get closer to expiration would make you dump the options? Do you have a stop? Or would you exercise some of the shares at a loss? How would you manage this trade if it does not go as you hope?

What is your strategy with the options if it breaks 19 with volume? Sell the options, exercise all of the options, or a portion of each? How quickly after being in the money, before expiration, would you take action?

How did you determine that best value was with the Jul 29 $20 call with a .15 Delta instead of say the Aug 05 call with a .18 Delta, or Aug 12 call with the .21 Delta? I can do the math and see that if KMI rises to 20 by Jul 29, the Jul 29 calls have the highest return, but I don't know how to incorporate Theta or how to calculate Gamma.
- Part of this question also arises from looking at the technicals. I can see the cup and handle into a flat parallel channel with volume concentration right in the middle of the channel, showing support and resistance and market indecision. I can also see the ascending triangle from the bottom of the cup. That ascending triangle aspect ends around August 19 - so to me I would want a little more time on the options - but again I dont know how to value Theta and Gamma...

Last question is how do you take fundamentals into account? It has good price to book value, but the other value based metrics are pretty bad.

Thanks!

Forgive me for piling on, but lets say KMI moves above 20 and you exercise your option to initiate a long position.

What percentage of your position will you sell covered calls against, what price levels will you pick for your calls, and how far out would the expirations be?

How do you manage downside risk:
- Will you set a stop in this scenario? For all or just part of the position? How low behind 20 would your stop be?
- Or will you buy puts (using the premium from the calls)? At what price would you buy your puts?

Let's say after the 20+ breakout, you don't have a stop and you didn't buy puts because you want to hold this position longer term. The broader market has a correction after this rally and it pulls KMI back down into the 17-19 range. Setting aside the unknown technical setup at that point, lets say you believe in the position and that the market direction will continue up - so you are thinking about averaging down, would you Sell Puts? Also, if you Sell an ITM Put, would that be European style (only able to be exercised at expiration)?

I don't know enough about other strategies like straddles or time spreads or butterflies or vertical spreads, etc, to be able to ask something about using those strategies.


Seems like a good strategy, if your initial position gets exercised, would be to sell $24 calls on 50% of position, and use that premium to buy $20.5 puts on 50% of the position. If stock drops back into parallel range, you could sell puts around the $17 support...although that might prevent you from buying back a 50% position if it doesnt drop to $17....

Has anyone ever tried (with success) taking advantage of decay in leveraged ETF's in market neutral positions with the theory that decay of the short position will win out?

Here is an article that explains the concept.

http://www.alphaplot.com/a-guide-to-shorting-leveraged-etfs/

In theory it makes a lot of sense but seems incredible complicated to maintain.

Sometimes you can plan, study, investigate and position like a mad man. And then sometimes the good Lord just says "Here ya go!"

http://www.marketwatch.com/story/southern-to-buy-50-stake-in-kinder-morgan-natural-gas-pipeline-2016-07-10?mod=industries_twitter_new&link=sfmw_tw

Thanks for the reply oldarmy. One more for you to look at. How about MU (Micron Tech)?

MU, like AMD, in that sector both are showing reversals. MU is in the vein of those "laggers" I referenced.

Note PSX did not participate in the big move above 18k. Proceed with caution although a new bull leg would result in it basing support and moving higher.

I'm headed out of the country and back Friday. Everyone have a successful, safe week!

AMD's run up is on hype and expectation regarding their new low cost GPU. I don't see much real difference between that and their past offerings. Suspect they'll continue to be smashed by Intel/NVIDIA.

Having worked in the semiconductor industry, that is an accurate assessment. Intel will continue to own x86 processors, while NVIDIA/Qualcomm is all-in with ARM.

Anyone looking into SWHC (Smith and Wesson). Probably way to late to the game but do we see this moving higher with the current situation?

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Anyone looking into SWHC (Smith and Wesson). Probably way to late to the game but do we see this moving higher with the current situation?

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SWHC and RGR (Sturm, Ruger & Co.) passed my screens & is on my watchlist.

What's up with American Airlines?

I'm started using the trading simulator on investopedia last Wednesday and it is up 21% since then.

I "bought" 5000 shares at $27.75 on Wednesday and today it is up to $33.56

I don't know..haven't looked but congrats! All boats rise with the tide but thats a strong move. Out of the country until Friday but trading works everywhere.

Lots of amateur investeors following this thread with 401k money on the sidelines as market continues to climb while missing out on dividends.

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Spent free time over the last couple of days running all the data and adding in currency devaluations thus far. Result is the reversal indication comes in at 50%. What that means is a net-neutral on market direction. Assuming the DOW breaks 18k again I am calling off the automatic short signal due to this change.

In fact, having 4 short opportunities work out to perfection, I will now buy undervalued sectors or stocks if we break 18k. That's the smartest trade opportunity because a break above 18k with these new readings would be a bullish indicator. Yup, I'm willing to predict should we break above 18k it will result in another leg higher in the markets this time. That's what the ripple effect of BREXIT has provided shorter term. A macro change.

I'll post a few specific stocks I've narrowed down, for a position.

Appreciate any other trader/investors take on the markets.

Happy 4th!

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Point is I don't argue with "you can't time the market" people. We don't need to perfectly time the markets.
We simply capitalize on the macro movements. This last cycle we had 4 macro trades posted and all worked 100%. The most recent one in play is that I would NOT short 18k and IN FACT predicted a new bull leg. We hit new highs and resistance came in, so its premature to declare that is confirmed. Nevertheless, the readings and study that said we would spike if 18k was hit this time allows for 48% gains in huge option trades in confidence. Those profits are now on the books and risk is off the books for holding KMI shares long.

I am not posting the total net result of the macro trades versus buy and holders. Any gump with a lick of sense can estimate the fact that the macro trader kicked the funds collective rears the last 12 months. Not even debatable.

Happy trading!

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Lots of amateur investeors following this thread with 401k money on the sidelines as market continues to climb while missing out on dividends.

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If they are "amateurs" and even bailed on the last 18k (pre-Brexit), and they "followed this thread" then they are back in 2 days ago. If they followed 4 cycles ago then they are well ahead of any dividend accumulations or fund fees.

I consider myself an amateur, for sure. I haven't pulled the trigger on any of these short positions because they confuse the hell out of me, but I bought a lot post-Brexit. Every post Brexit purchase is now significantly in the green.

You should have zero short positions.

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You should have zero short positions.

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Oh, I understand that. I just never pulled the trigger on them even back when we were talking about them. I should have said that I never shorted anything.

1,000 posts in the best thread on TexAgs!

I'm an amateur investor as well and love this thread. Thanks to oldarmy1 and the others! It's been educational and appreciated, and I hope we keep it going.

No price overlap to yesterday, however todays action looks a bit toppy. The 60m wicks look toppy, could not break to new highs today with repeated attempts, buy side volume decreasing, momentum decreasing. No real selling yet, but this wave looks near exhausted and ready to setup for an intermediate correction for a few days. VIX holding up to the past 2 days of buying. I will swing short for a day or two if we get some volume and price overlap. Not a steep pullback.

Another note, VIX has been flat to increasing over the last 2 days while the market continues higher...

Just bought back in! Let's see how high this rocket can fly.

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Just bought back in! Let's see how high this rocket can fly.

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Dow futures +169. Are you singing "i believe i can fly"?

Day trader dart board day for lagging stocks. They'll be in scourering gap and go trades like packs of rabid wolves.

FOMC member, Mester, yesterday said helicopter money was an option if rate cuts and QE don't work. Her ale met with Japaneese officials to promote helicopter money. New PM sworn in, who appointed lead Brexiteer Boris Johnson as Foreign Minister. BRExit will be happening. BOE failed to cut rates, but seemingly promises to do so in August. Lots of talk to prop up markets. And greed.

Yesterday was first day with any price overlap, which I was looking for first top signaling. Second doji candlestick in a week with failure to touch 5 ema in 5 days. I'll let you look at last few times this has happened - but lower bollinger band gets tagged. These lower gaps will get filled.

what is helicopter money?

Imagine the Fed as a helicopter flying around over your town, dropping cash to anybody and everybody. They are proposing something similar to that where the Fed just hands you money (but most likely in the form of tax credits).

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Imagine the Fed as a helicopter flying around over your town, dropping cash to anybody and everybody. They are proposing something similar to that where the Fed just hands you money (but most likely in the form of tax credits).

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Helicopter money requires fiscal stimulus, not just central bank intervention.

2100 consolidation area will likely re-test, pre-empted by a tag of the 5 EMA, which we have not touched in 5 days running. The average correction after 5-7 days without touching the 5 EMA is steep, and also corresponds with the 2100 area. ES right now is hitting the 1.618 fib from the 09 low. VIX bottoming. Equal weight says this rally is close to done as well.

Bought VIX hedge into close. Jul 20....$12.50 strike

Bough VIX AH today. Think it bottoms either today or first half of next week.

Attempted Coup underway in Turkey. Of course the news breaks after hours.

http://www.foxnews.com/world/2016/07/15/gunfire-reported-in-turkish-capital-amid-reports-possible-military-coup.html