Thank you for furthering my understanding of them. I appreciate you taking the time to explain it!

I encourage you to subscribe to the Option Alpha podcast and to watch the Step Up to options series on TastyWorks. You can get a free app for TastyWorks and the videos are all there.

Ragoo said:

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I encourage you to subscribe to the Option Alpha podcast and to watch the Step Up to options series on TastyWorks. You can get a free app for TastyWorks and the videos are all there.

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Agree on all counts except for sometimes trading options over stocks. There is no single answer to right or wrong use of straight options.

It is WHEN you buy the options and WHEN you sell the options that make the strategy viable. Through this sideways period my ROI on straight call options is 172%. Buying options when a stock (or the markets - my largest returns were on straight SPX options purchased on retests) are at major support, if it holds the bounce is more immediate and the option premium.

If that major support breaks unless you have set stop losses your losses are going to be in the thousands. If I had an option I have limited my loss to hundreds. Again - it's WHEN you enter and even when entering an option you should have a pre-determined stop loss.

SWN - wanna see whats going on? Minute chart shows the resistance is hit with volume every single attempt. Either we have a short seller or someone who bought the farm content to dump each time it reaches these levels. That's a pure of a chart as you can get on seeing whats up. I hope its a short seller because when it breaks they become the fuel for a overinflated move.

Would a 5.5 call 3 or 4 weeks out be A good decision considering this?

Agree.

You can also synthetically go LONG a stock purchasing an ITM option.

By doing this your risk is lower and you use less capital to enter the "long" position.

Ranger222 said:

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appreciate it oldarmy. I'm just soaking in everyone's input on this thread.

by the way your old friend GILD is looking nice.....a lot of action in August 75 C today.



Few other charts I'm watching --

Mercadolibre looks ready for a massive move up. Almost broke out today.



Entered FedEx as it broke out of this box today



and of course AMD this week, if it closes, breaking out of a 15 month consolidation.

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Mercadolibre down 7+% today...time to jump in?

tailgatetimer10 said:

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Would a 5.5 call 3 or 4 weeks out be A good decision considering this?

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I would wait until a clear break to $5 and pay the little extra premium versus entering a straight options at resistance that is holding.

tailgatetimer10 said:

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Would a 5.5 call 3 or 4 weeks out be A good decision considering this?

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a 5.5 call on SWN expiring 29 days is $0.10 per share or $10 per contract. From today's level that is a 13% move in the underlying just to have the opportunity to purchase shares at $5.50. Makes no sense to me. This trade has a 15% PoP at expiration.

You could buy the 4.5 call that currently has $0.36 of intrinsic value and $0.16 in extrinsic. The delta is 73 so for every dollar movement you only realize $0.73 in profit. This has a 36% PoP at expiration.

If you think the stock is going up buy the underlying long and sell the coveted call for the 0.10 @ 5.5 and an 84% PoP.

Docusign (DOCU) with a nice beat on earnings and they raised guidance as well. Stock up over 6% after hours. I typically don't buy IPO's but bit in this one due to the shear volume of business out there they could capture.

I'm in BPMX at .25 cents on Old Army's support call. My cosmetic dermatologist buddy originally told me about the stock and he loves their new drug. But remember, this company has no money and needs to find a stratigic partner quickly before they go broke first. Very very risky stock. I'l probably lose all my money on it but if it works, it could really work.

Take a look at EVH (Evolent Health) if you want to see revenue numbers exploding. They sell cost control software as a service to hospitals, pharmacies, doctors etc. I bought this stock 6 months ago and put it in the lockbox. Could something go wrong? Of course. If they don't sign up 15 new clients each month the stock will go down, but it's a great business so I took a shot. It was up again today with a weak Nasdaq. So very good relative strength. I really like this stock.

I love when stocks follow their trendlines. Its so satisfying for me in a weird way. Meli has a fake out breakout yesterday, but closed below the breakout line. I almost entered yesterday, but I'm much more cautious now waiting for confirmation, requiring the stock the close above the trendline. So today we got the big red engulfing candle. However, it closed the day at the support level it has maintained for six months. Thus, it remains on my watchlist with no action taken yet.

Also watch that black line seen just below the red line -- that is a longterm trendline the stock has held since Feb 2016 when it started this run at $90. It may want to touch that in the next few days - couple weeks before rocketing up. It hasn't touched it since late October 2017.



AMD had a big red day today and finished with a bearish engulfing candle. A few months ago I would have panicked sold my positions I just entered in earlier in the week, but I'm expecting AMD to re-test its previous resistance, maybe tomorrow and even into next Monday before getting back on the upward trend. If not in yet, I'd be looking to buy at $14.5 I've been trying to practice only buying half positions on these breakouts, and expect to buy the rest on test of previous resistance - support. The whole semiconductor sector SMH was weak today as money rotated out of tech and into energy.

Bullish engulfing on CPB with a potential gap fill down the road. May be something to keep an eye on, even though I'm not a fan of the industry.

pfo said:

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I'm in BPMX at .25 cents on Old Army's support call. My cosmetic dermatologist buddy originally told me about the stock and he loves their new drug. But remember, this company has no money and needs to find a stratigic partner quickly before they go broke first. Very very risky stock. I'l probably lose all my money on it but if it works, it could really work.

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BPMX at 28 cents premarket. up 11%

That's what I like to see. I made it in at a .2408 average. Thanks for the suggestion OA

Amd down 2% premarket

leoj said:

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Amd down 2% premarket

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AMD perfectly filled that 2nd gap up on June 1st and will now fill the gap down from the open today. That's when we'll see what AMD has going on trend. Check Ranger's chart for a good reference on breakup/breakdown narrowing wedge. Nowhere to hide.

AMD is a daytraders dream. Check the 2 gap ups that perfectly filled. Then after filling that 2nd lower gap it quickly reversed and closed the mornings opening gap down. I even traded that 2nd gap fill with daily call options and just closed them for 34% gain. Extent of my day trading.

What do y'all think about AMAT if it goes down to the 48-49 range?

AMAT is really in a wedge pattern:
- higher lows at support
- lower highs at resistance.

I would want to see a breakout to the upside (confirmed with volume) in the neighborhood of 53. Otherwise, it's just playing between 50 and 53 until a sign is shown which way the market is going.

Sorry, can't post a pic of the chart.

leoj said:

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Wow. You just buying calls?

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Re: TWTR - buying calls and going long, son.

OA1,

What do you think of OKTA calls right now?

I'm looking at the July 20 calls for strike price of $55 for $1.60.

oldarmy1 said:

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leoj said:

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Twitter going to hit a ceiling eventually?

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Not anytime soon. Trend with ebbs and flows to $65 is where I'm targeting.

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Got in at $41...hope your ceiling of $65 is accurate

Ragoo said:

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oldarmy1 said:

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Ragoo said:

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well, i've made my first seemingly bad trade. sold put options in BBY last week for a high premium with a high IV. This week the price has slipped below my strike and then massive sell off this AM. I rolled these put options out 3 more weeks, collected another $0.34 in premium credit and bought myself some more time for the stock to come back up or for theta to help me out.

Puts me in the trade longer than I really want but I can stay in the trade and hopefully not lose. Depending on how this works out I can roll again in the future collect more premium and again and again until hopefully the premium collected offsets what I have to pay to get out of the trade and I walk away without losing money.

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When you have some time would you mind writing up the rolled option strategy? I've kept the posts to simple buy call/put options, along with some covered call strategies, but the rolling stratgy is key to success.

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I sold to open Put options at a strike and collected premium. I think $2.70 per share. They expire tomorrow and with the action in the stock price i would have had to purchase the shares at a price MUCH higher than current value. Effectively this would have closed my option position and I would own the shares at a cost basis of Strike - $2.70 which still puts me upside down on the trade.

So, I bought the options back at current market value, and sold the same put, same strike out another 3 weeks with a total net credit to me of $0.34. So now my breakeven is Strike - $3.04. Still upside down to current market value of the underlying, but if we see the sell off stabilize and price comes back up I can still potentially close the trade out at break even. I may even be able to keep kicking the can down the road until my total in premium collected is enough that i can hold to expiration or buy the puts back cheaper than my total premium.

Note: i would not have rolled the options another 3 weeks if I also did not receive a net credit.

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update here, still riding this one.

Lesson here is to manage position size. i thought this was going to be a winner at earnings so I went "all in". Sold 5 contracts @ $78 strike for a handsome premium. Then the stock tanked. After rolling out 2 more weeks my break even on the underlying is $74.48 so headed in the right direction. Options expire next week and I have not been assigned yet, so hopefully a good sign especially if the price keeps moving up. Note: I do not want to get assigned.

Since I am trading cash secured instead of on margin I have been on the sideline riding this one out. :/ I might need to change that but also change strategy to selling put credit spreads or short bullish credit spreads they are also called.

A credit spread acts the same as selling a naked put, which is what i have been doing, but you are also buying a further out of the money put to offset risk. Sell a put, buy a put capping your downside risk.

Not a bad week

Took a position in NKTR at $52.70. I think it got way oversold this week.

WestTexAg12 said:

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OA1,

What do you think of OKTA calls right now?

I'm looking at the July 20 calls for strike price of $55 for $1.60.

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Yo WestTexasAg...apologies for missing this. Let me look at the stock and get you my take this weekend.

WestTexAg12 said:

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OA1,

What do you think of OKTA calls right now?

I'm looking at the July 20 calls for strike price of $55 for $1.60.

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seeing a 25% PoP

Side note:

What app is that?

IrishTxAggie said:

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Side note:

What app is that?

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https://tastyworks.com/
https://www.tastytrade.com/tt/

The Big Short this week:
Tapestry (TPR), which owns Kate Spade.
The brand goes into toilet with more upcoming news.

SlackerAg said:

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The Big Short this week:
Tapestry (TPR), which owns Kate Spade.
The brand goes into toilet with more upcoming news.

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what news?

From Q thread. Spade involved with child trafficking thru charity.

SlackerAg said:

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From Q thread. Spade involved with child trafficking thru charity.

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Oh lord, the Q thread stuff is getting to the B&I board now?

SlackerAg said:

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The Big Short this week:
Tapestry (TPR), which owns Kate Spade.
The brand goes into toilet with more upcoming news.

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TPR is up 2.3% premarket

WestTexAg12 said:

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OA1,

What do you think of OKTA calls right now?

I'm looking at the July 20 calls for strike price of $55 for $1.60.

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Didn't gleen a lot from reading on OKTA. Technically the huge volume last 4 days is hard to read. If its a pullback on continued trend then entering calls right now as it sinks towards the previous breakout makes sense. You get better premium price buying as it sinks in.

SWN approaching $5