1. U.S. Futures


Watch me learn options... with Jrich

Discussion in 'Trading Journals' started by Jrich, Aug 7, 2017.

  1. Jrich

    Jrich Active Member

    Joined:
    Jul 25, 2017
    Messages:
    157
    Likes Received:
    94
    Im a relatively new trader, 2017 being my first year... I litteraly started with $30 on Robinhood back in January just to get my feet wet

    Ive been saving little by little ever since, and ive learned first hand how difficult this game can be to play with limited capital...... Then, one of my buddies here hounded me to learn about options

    So i did.... And from my perspective, its a much more feasible way to trade with limited capital..... Just think of an option as a penny stock backed by a real company:D

    Figured i would do this journal for two reasons:

    1) anyone new like me, or anyone who doesnt have 25G just laying around can lurk and get feel for weather or not options may be right for them.. or even join in and ask questions, the only dumb question is the one you don't ask

    2) maybe the more experienced option traders can jump in and save me when i screw up

    There are plenty of resources out there to explain options in detail, so ill keep my reasoning for choosing options short

    The name of the game is leverage!... youre buying contracts for pennies on the dollar, but they move almost step for step with the stock price..... say you buy some calls for 20 cents, if the stock price goes up a dollar, then those calls are now worth around $1.20.... but keep in mind, that leverage works both ways

    Another big advantage is having the ability to play both sides... by buying put options, you can play the short side without actually short selling the stock... this means no margin requirements and no unlimited risk... the most you can lose is what you put in

    And if you wanna get complicated, there are several spread strategies where you can profit when the stock does nothing.... but don't expect to see that here for a while, i follow the KISS rule (keep it simple stupid)

    Theres your basic run down, now ill post trades and thoughts when they come to me........ Thanks for following!
     
  2. Jrich

    Jrich Active Member

    Joined:
    Jul 25, 2017
    Messages:
    157
    Likes Received:
    94
    Before getting into the trades, ill touch a little on trading styles... I may be new, but ive done ALOT of research... and id recommend the same to anyone who wishes to put money on the line

    There are many ways to skin this cat, but the trading style that works best for me is centered around the methods developed by Richard Wyckoff

    Short and simple, its supply and demand trading... no mathematical indicators, no news, and most importantly no "hot tips"... Just judging the market by its own actions using price, volume, ranges and trends... and occasionally comparative strength

    For more information see: the internet
    (also id be happy to answer any questions i can about it)
     
    Timbo and bigbear0083 like this.
  3. Jrich

    Jrich Active Member

    Joined:
    Jul 25, 2017
    Messages:
    157
    Likes Received:
    94
    So right off the bat i screwed one up (i never said it would be easy)

    I still think its a good trade, i love these axis lines, where the previous supply line (resistance) becomes new support

    But...... this morning when i bought my calls (11 days out) at 27 cents, i failed to notice the 15 cent spread..... so... yea... instantly im down 15 cents (dont do that)

    Stay tuned... my strike is $5.50... SIRI trading at $5.60 and going up, see if i can pull this one off and break even

    Screenshot_20170806-152619.png
     
    Timbo, fireopal, tbw875 and 1 other person like this.
  4. bigbear0083

    bigbear0083 Administrator
    Staff Member

    Joined:
    Jul 14, 2017
    Messages:
    22,523
    Likes Received:
    4,437
    good luck @Jrich ... and thank you for creating this thread in here!

    i gotta say i am a big fan of your posts ... have been watching you progress since your early days at the other place and i must say you have really upped your game in a big way! good stuff man! keep up the great work!

    i hope others see this thread as well and also chime in ... i know we don't have much of a community here right now ... only a handful of members but hoping as we eventually do grow that this thread will be very popular.

    best of luck to ya!! ... i don't have much to add right now but i will definitely be tuning in regularly :cool:
     
    Timbo and Jrich like this.
  5. Jrich

    Jrich Active Member

    Joined:
    Jul 25, 2017
    Messages:
    157
    Likes Received:
    94
    Thanks man!... that means alot coming from a pro!

    Hopefully some shy newbies will see this thread and chime in...... i dont bite
     
    Timbo and bigbear0083 like this.
  6. Baggi

    Baggi Member

    Joined:
    Jul 23, 2017
    Messages:
    31
    Likes Received:
    29
    Just an FYI, anyone who wants to learn the general idea behind all the available options strategies out there, the options bible is called, "Options as a Strategic Investment" and I believe it's in it's 5th edition. It starts by telling you the book isn't for beginners, but I read it as a beginner and although it was confusing at first, it really starts to make sense as you delve into it.

    Even today, years and years and years later of trading options, I still pull it out and read up on certain strategies, like double diagonals and such. It really is a great book. A very dry read, there is no pumping or rah rah rah! type talk. It's just math and charts and telling you how options work. And some parts are leaps.
     
    Timbo, fireopal and Jrich like this.
  7. Jrich

    Jrich Active Member

    Joined:
    Jul 25, 2017
    Messages:
    157
    Likes Received:
    94
    9 days to expiration with theda (time decay) around 4 cents a day, i decided to dump and take my losses... - $170... ouch!

    While it looks like i was right, $5.50 is the bottom.. it also looks like supply and demand are in balance at this point... no telling how long it could sit here... and when it comes to options, time is money

    Live to fight another day

    Screenshot_20170809-095559.png
     
    Timbo likes this.
  8. Jrich

    Jrich Active Member

    Joined:
    Jul 25, 2017
    Messages:
    157
    Likes Received:
    94
    For my next trade, i must be crazy to even think of shorting a defense stock with the current state of global affairs......... but i don't trust this one, and ill explain why

    Screenshot_20170809-101447.png

    Ive seen this pattern of manipulation many times when i followed penny stocks, here is an example of the same scenario with a NASDAQ listed stock

    Screenshot_20170809-101519.png

    I actually made some money off this run up... then it went from hero to zero in one month

    The biggest give away is the change in character... on both charts, look how frantic the bars become at the top...... this is a sign that the strong hands who contributed to the mark up are shifting ownership into weaker hands, aka the public

    This is known as distribution, and if im right, it means excess supply will push prices down near where the mark up began

    But right now there is a 15 cent spread on the $12.50 strike.... and im not gonna make that mistake twice!

    If that spread tightens, im in
     
    Timbo and bigbear0083 like this.
  9. Jrich

    Jrich Active Member

    Joined:
    Jul 25, 2017
    Messages:
    157
    Likes Received:
    94
    Well that was quick, got in at 65 cents

    Smaller trade this time, so if im wrong it wont hurt as bad
     
    Timbo likes this.
  10. Jrich

    Jrich Active Member

    Joined:
    Jul 25, 2017
    Messages:
    157
    Likes Received:
    94
    Lookout below!

    Screenshot_20170810-090016.png
     
    Timbo and bigbear0083 like this.
  11. Jrich

    Jrich Active Member

    Joined:
    Jul 25, 2017
    Messages:
    157
    Likes Received:
    94
    Doubled up today, dropped my average by 5 cents.... 8 days to expiration now, judging by this volatility i should be able to take profits in 3
     
    bigbear0083 and Timbo like this.
  12. fireopal

    fireopal Member

    Joined:
    Aug 8, 2017
    Messages:
    99
    Likes Received:
    58
    Great thread ! :) Have been very interested in learning more about options but wanted/needed to start playing that other (short) direction first which i just recently started doing so you have me watching you learn so i can learn from you :D
     
    Timbo and Jrich like this.
  13. Jrich

    Jrich Active Member

    Joined:
    Jul 25, 2017
    Messages:
    157
    Likes Received:
    94
    Glad i can help.... you can sit back and learn from my mistakes :D
     
    fireopal and Timbo like this.
  14. Timbo

    Timbo Active Member

    Joined:
    Jul 14, 2017
    Messages:
    155
    Likes Received:
    63
    Go tiger go....:cool:
     
    Jrich likes this.
  15. Timbo

    Timbo Active Member

    Joined:
    Jul 14, 2017
    Messages:
    155
    Likes Received:
    63
    By far I have made more money with contrarion plays. UAL. DLTH, HTZ were my biggest to date. Took some losses to, a few BAD ones. Nothing is safe in this game, options have more leverage BOTH WAYS.. I like VIX,SPY FAS,FAZ along with a few others. If/when we get a sizeable correction I will most likely load up on a few call leaps.. As smart as you are you will do great, ease into it..
     
    Jrich likes this.
  16. Jrich

    Jrich Active Member

    Joined:
    Jul 25, 2017
    Messages:
    157
    Likes Received:
    94
    Thanks T!

    Yea, ease is right.... i came in a little hot on that first trade... lesson learned!

    I have a list of movers i watch for trades every day, then i have a bull and a bear list of trades which im waiting patiently for the right moment

    HTZ is on my movers list too... and a few others ive watched long enough to get a feel for

    P
    CHK
    SIRI (we're not speaking at the moment)
    CARA
    AKS
    MTW
    IMGN
    KTOS

    and then a few new ones i dont know verry well yet, like SHLD and AMD
     
    fireopal and bigbear0083 like this.
  17. Jrich

    Jrich Active Member

    Joined:
    Jul 25, 2017
    Messages:
    157
    Likes Received:
    94
    When playing the contrarian, do you have a hard time finding contracts with reasonable spreads?

    I've noticed the lower volume strikes usually have bigger spreads
     
  18. fireopal

    fireopal Member

    Joined:
    Aug 8, 2017
    Messages:
    99
    Likes Received:
    58
    This one made me laugh out loud b/c i haven't been speaking to SIRI for years now - used to be one of my favorite trades way back when it was new!
     
    Jrich likes this.
  19. Jrich

    Jrich Active Member

    Joined:
    Jul 25, 2017
    Messages:
    157
    Likes Received:
    94
    Another OUCH!

    Closed KTOS puts today for 15 cents (45 cent loss)

    Options lesson #1: even when youre right, you can still be wrong

    I could have recorded a profit from that 50 cent drop in share price if i had gone deeper in the money with my put.... Delta (relation between option price and stock price) was only around 60 cents for my contract, the next strike up was over 90 cents

    But there's always a bright side... When you learn the hard way, you never forget
     
  20. Timbo

    Timbo Active Member

    Joined:
    Jul 14, 2017
    Messages:
    155
    Likes Received:
    63
    Sorry for taking so long to respond. UAL was my biggest winner this year. Don't remember the spread, the closer the expiration usually is a little tighter, depending on volume. I bought several ex dates w some a little far out, went red for a few days but I knew the selloff was way overblown. Sad that the fellow got drug off the plane, but knew the news/fluff would settle down. It went on to set a new high "I was LUCKY there" so my OTM calls became deep ITM and that's where I hit the jackpot.
     
    Jrich likes this.