tailgatetimer10 said:

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Geez, why didn't you tell us it was going to reverse when the market was on a downward trend?!?!

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Hey I was underwater on my $14 entry and made a option trade to reduce my average holding cost. I didn't exactly time that perfectly.

Remember I was prepared to buy more at $12 or $16. We'll see if this becomes a true reversal bottom or just another wave move.

Assuming it has to do with the Buffett speculation?

IrishTxAggie said:

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Assuming it has to do with the Buffett speculation?

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Well someone bought a crap-ton of GE yesterday but the Buffett news is driving it today - as well as a really nice technical chart.

I wish I could mirror oldarmy1's trades but on a smaller percentage overall

COAg15 said:

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I wish I could mirror oldarmy1's trades but on a smaller percentage overall

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Here's one I'm entering right now.

SQ April 6 $53 Strike @ $0.29

Everyone wanting to trade options can get free trade access with that Robinhood App some people posted. Free stock trades and option trades. Very nice for people wanting to start small. I checked it out personally because I was looking into their end game i.e. how do they plan on monetizing all the free trading customers. I set up an account and haven't received a single marketing piece yet.

I tested the app by doing some trades and it was easy and smooth. For a free service and no fee access it makes sense for many. And if people are going to join it share with each other because each of you get a free share. I got AAPL! My wife and daughter got Sprint. ROFL

I use Robinhood as well, if you sign up def use a referral, both parties get a random free stock.

Let me know if you need there referral code, however I'd use oldarmy referral code as he brings more to this thread

What's your exit strategy on SQ?

I've gotten Sprint and Sirius... F you for getting Apple!!

Got April 6 $53 strike at $0.26.

I'll ride as well

klsmith89 said:

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What's your exit strategy on SQ?

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Was going to post that. I have a stop loss at 19 cents and a sell limit at $.69

And you guys share your Robinhood codes between yourselves. I don't use it other than the testing I did to validate the platform.

tailgatetimer10 said:

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I'll ride as well

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I'm still very wet behind the ears with options trading. Just now learning the ins and outs and working on not being so freaking greedy. That's burned my ass more times than I care to admit. I'll probably be following a lot of oldarmy's posts more closely until I get a better grasp on it since I get to work from home for the next two weeks until I'm in Asia again mid-April. Appreciate the free lessons here oldarmy! Would love to buy ya a few drinks, dinner in Houston and/or invite you to my tailgate if you make it to any games this year.

Could someone give me the "Options for Dummies" using the SQ trade that's being discussed?

aggielax48 said:

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Could someone give me the "Options for Dummies" using the SQ trade that's being discussed?

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Options are the right to buy or sell shares in the future at set strike prices. Buyers or sellers pay a premium for the right to do so. Easiest example is to use a stock trading at $50. If you were to think the shares were going to go higher you'd buy a call option. Each option leverages 100 shares of the underlying stock.

The premium you pay will be based on how far out the option expires. Common sense says the further out expiration the higher the premium. The April 6th EXPIRATION SQ $53 Call option is trading right now at $.026 cents. So 100 shares leveraged X .26 cents = $26 for every 1 Call option. The stock is trading at $46.75 so we have a $6.25 spread between the Call Strike price and the current stock price. If SQ breaks the intraday support set on volume (which is what had me enter the trade) then the premium will drop from current 26 cents to a marked (estimated) 20 cents - therefore we placed a stop loss of 19 cents to let the stock challenge intraday support without losing our trade.

Based on volume, % decline over a 3 day period, sector analysis complicated by China/US tariff concerns created a technical oversold on SQ. All of this with the potential to see a rebound spike put the trade into actionable status.

Time decay is the other main variable in premium price. When entering an option trade you generally are seeking the expected move within 2 days of entry. Each day that we sit stagnant the premium will decay by a factor, for the simple reason that the time to reach the Option strike price loses proabability. Stagnant prices are the option traders worst nightmare, which is why you generally are seeking oversold big moving price points.

The option gives you the RIGHT to buy SQ up to close of business April 6th (in current example). You are not required to hold the option or buy the shares - hence the word "option". What most option trades are doing is leveraging 100 shares for each option, looking for that oversold rebound that sends premium value spiking and sell the option at a higher premium than bought.

I bought 100 SQ's at $.29 cents. That is $2900 invested to leverahe 10000 shares of SQ. If I get stopped out I lose $1k. If I get the rebound to my target I make $4000 ($6900 gross - $2900 options cost).

Makes sense?

Was just talking to my dad (my other financial guru) and him and I are looking at a sizable short on TSLA... Thoughts?

I wasn't expecting a flat day, yet here I am staring at a training bra.

I would have been all over a $13.50 Call Option expiring tomorrow if I hadn't been in a meeting. For a day trader GE was a perfect storm opportunity. It gave a tight Darvis Box opening. It had a clear break above that signal for entering the option at a crazy low premium and volume exploded right when it should after the breakout signal. Day traders buy 10k-20k-30k+ shares on those signals and ride it until they see volume resistance patterns. Look at the perfect head and shoulders top intraday. Exit and go party.

I would have leveraged 1000 GE options on that chart and dropped my holding price into the $12 range.

Need the markets to hold serve today for options trades to stick. Imagine having 10k shares of SQ with every 10 cent move being $1000. If the support gets lost it would woosh down 50+ cents and $5000 later you're wondering what you should do.

This is why I am more than happy to risk $1000 during periods like now.

Liquidity break on markets. Need volume soon or we're gonna go for a ride down. A lot of options traders see that signal as an exit. I'm sticking with the SQ strategy.

Oh wow, I wasn't expecting a multitude of responses before I could check again. That's pretty interesting, and you're synopsis at a high level of what options are is spot on and helpful. I use Robinhood now for stocks, haven't tried options yet.

I just got the option functionality on Robinhood. It's pretty easy and obviously no fees is great. Picked up a couple of the SQ just for fun and education.

Here is my robinhood code for new users.

http://share.robinhood.com/joelc136

I can vouch for RobinHood as well. It's a great app for someone new to trading, or with limited funds. When I first got interested in the stock market years ago, I set aside $500 to play with. The fees just ate me up. Robin Hood is nice in that aspect. It's not great for research, or in-depth information. However, for what it is, it's a pretty great app.

https://share.robinhood.com/jamese678

SQ allowed us to stick and see if we can get an oversold pop tomorrow. It's flat to +$0.08 after hours so thats good news.

I thought for sure that it was broken this morning. Then it just consolidated the rest of the day.

What makes you think this is a bottom?

FriscoKid said:

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I thought for sure that it was broken this morning. Then it just consolidated the rest of the day.

What makes you think this is a bottom?

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RSI oversold indicator, volume and chart.

It just dropped $0.54 after hours

Down AH's on low volume and small blocks.

$0.39 cents down now. Not a lot of volume so could be day traders panicking on follow through. Wash these out and see what we have premarket.

So noob question. What went down this week?

I know you were reviewing the wedge, and as explained, it was going to drive the market one way or another. Was the potential trade war the stimulus that drove everything down?

I just would like to learn more of what happened, as I'm learning, bc I made plenty of mistakes this past week or so which eliminated any gains I made since January.

You said volume was gone regardless of how the chart pattern looked. I can see that on the picture.

Also, mid day, on the MACD chart the MACD crossed the signal line and the short play was dead?

It still looked like a really nice bear flag late morning.

It was flat all day... Why would the bigs (institutional) stay out at a pivotal point and after so many day of volitional trading and the VIX hitting 24 today?

oldarmy1 said:

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$0.39 cents down now. Not a lot of volume so could be day traders panicking on follow through. Wash these out and see what we have premarket.

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SQ ended after hours trading +6 cents. Futures up a little now.

Futures green at 2:45am central.

SQ $47.80, up 40 cents on the bright green futures.

With markets closed tomorrow and time decay on premium we need a move close to $50 today. I'll be selling into anything closing in on that mark which should see the option hit towards the 69 cent target.

Markets need to help momentum by breaking upward, which is what we were/are looking for in entering the trade.

Now multiply this one trade across 14 others I did and all in options. Total being risked $18k with all but 1 to the upside this morning. Total underlying stock values being leveraged is $237k.

That is how I trade thin when at major support. Happy trading!

Thank you for all the insight you've provided across this thread and others. It's truly an education.

I'm just starting to explore the options world - as in, I'm just beginning to do some reading to understand how they function and how to trade them. Any recommendations on good books/sources of information besides surfing around the web and reading articles?

Do you always go that far OTM?

And Trump with the Amazon tweet 1 hour before premarket