My Five Cents that should help many traders:
There are super successful traders who can bullseye on a fast-moving stock, buy Naked calls, and exit at the correct time. Most are not. They are the 'outliers'. For the 'rest' of us who want to trade, here are some ideas./1
There are super successful traders who can bullseye on a fast-moving stock, buy Naked calls, and exit at the correct time. Most are not. They are the 'outliers'. For the 'rest' of us who want to trade, here are some ideas./1
If you think the stock is going up , some of the strategies I think work best are :
1. DIAGONAL : Buy A Naked Call 45 days and sell Sell call Weeklies . Gets you positive Theta And Positive Delta.
Example : BABA Buy Feb 240 Call / Sell Jan 8 Weeklies 250.
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1. DIAGONAL : Buy A Naked Call 45 days and sell Sell call Weeklies . Gets you positive Theta And Positive Delta.
Example : BABA Buy Feb 240 Call / Sell Jan 8 Weeklies 250.
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2. COVERED CALLS: Buy 100 Stock of BABA / Sell Jan 8 Weeklies 250.
3. POOR MAN'S COVERED CALL: Buy Deep In the Money Calls, Say Buy Feb 225 Calls / Sell Jan 8 Weeklies 250
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3. POOR MAN'S COVERED CALL: Buy Deep In the Money Calls, Say Buy Feb 225 Calls / Sell Jan 8 Weeklies 250
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4. Sell ATM Puts if you are willing to take ownership of the stocks. The entire premium is yours if the stock expires one cent above the strike price ( You can always close at 50% of the premium collected to avoid assignment)
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5. Sell Butterflies against high priced stock like Amazon (Jan exp Buy 1 long 3330 / sell 2 3400 call / Buy 1 3470 call)
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5. Sell Butterflies against high priced stock like Amazon (Jan exp Buy 1 long 3330 / sell 2 3400 call / Buy 1 3470 call)
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ADVANTAGES :
The above strategies gives you a positive Beta weighted Delta ( BWD) And the theta ( Time decay) is also positive which means, it works in your favor. You can keep rolling the short call or/and roll up the long call to lock in your profits.
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The above strategies gives you a positive Beta weighted Delta ( BWD) And the theta ( Time decay) is also positive which means, it works in your favor. You can keep rolling the short call or/and roll up the long call to lock in your profits.
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EXIT:
In all the above strategies, when your theta goes negative, then the stock has moved fast and hit the short leg. You can either roll it up and away ( ex : Jan 15 260) or close the whole position and open a new one. Rinse and repeat.
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In all the above strategies, when your theta goes negative, then the stock has moved fast and hit the short leg. You can either roll it up and away ( ex : Jan 15 260) or close the whole position and open a new one. Rinse and repeat.
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UNHAPPY PATH:
Unfortunately unhappy path is what takes up most of your mental capital. If the trade goes against you
1. Roll down the strikes all the way to make it a calendar (Close Jan 8 250 call and sell a Jan 8 225 to collect additional premium). /8
Unfortunately unhappy path is what takes up most of your mental capital. If the trade goes against you
1. Roll down the strikes all the way to make it a calendar (Close Jan 8 250 call and sell a Jan 8 225 to collect additional premium). /8
Be prepared for a whiplash reversal if you go this way.
2. Close the positions if some technical indicators reverse ( Macd histogram crossover / Parabolic SAR, short term moving averages etc)
3. Close the short leg and Sell a Call Feb expiration to make it a credit call spread/9
2. Close the positions if some technical indicators reverse ( Macd histogram crossover / Parabolic SAR, short term moving averages etc)
3. Close the short leg and Sell a Call Feb expiration to make it a credit call spread/9
4. The best option is usually the most painful. Just get out of the position. /10
A garden Vanilla Debit spread / Naked call buying all have negative theta and could also be used but could start losing value if the stock is flat or starts gently appreciating or depreciating ( which is the case most of the time)/11
#dontfightthefed
$trade $option $stocks $NQ $YM $DOW $CL $NG $AAPL $SPX $ES $iwm $rty $SPY $gld $gc $ZB $TLT
$trade $option $stocks $NQ $YM $DOW $CL $NG $AAPL $SPX $ES $iwm $rty $SPY $gld $gc $ZB $TLT
If you are a trader, check out my course on Udemy. It is dirt cheap, Udemy always has some sale on it. I promise it will be worth your money. I don't upsell, cross-sell, sell subscriptions, etc.
udemy.com/stockmarketsuc…
udemy.com/stockmarketsuc…
WHAT DOES NOT WORK :
A. I was a firm believer in being a contrarian, taking other side of the trade. That hurts a lot ( Ask anyone who sold a call spread on Tesla in 2020). These days, markets are algo driven with no emotions behind it.
A. I was a firm believer in being a contrarian, taking other side of the trade. That hurts a lot ( Ask anyone who sold a call spread on Tesla in 2020). These days, markets are algo driven with no emotions behind it.
Better to swim in the same direction of the market
B. Avoid Earnings play. If you have to, try using some defined risk strategies like spreads. It makes you money 9/10 times but hurts real bad the 10th time.
B. Avoid Earnings play. If you have to, try using some defined risk strategies like spreads. It makes you money 9/10 times but hurts real bad the 10th time.
C. Having Too many positions have several advantages like a small risk on any individual positions but my experience is that all of them will need attention at the same time when markets start reversing. ( That is exactly the day you will be called into a meeting by your mgr)
D. I hate Perma bears and gold bugs. They sound sexy and appealing but remember, the Fed is printing money like there is no tomorrow. Some day they will be correct
Most of these Perma Bears have endured so much pain, they quickly get out of their losing positions at 'breakeven' at best. Market corrections are violent, quick, and last only a few days.
HEDGE:
Buying a junk Put far OTM is a popular method, but that is usually a losing strategy. Better to buy some Put butterfly in SPX that could provide cushion during sudden market drops. This is not a cheap strategy though.
Buying a junk Put far OTM is a popular method, but that is usually a losing strategy. Better to buy some Put butterfly in SPX that could provide cushion during sudden market drops. This is not a cheap strategy though.
Remember /mes /mnq ,etc are some micro futures that can provide a nice cushion if some news-related crash happens after hours.
2020 is an outlier where anyone who opened an account made money. The market is designed to take $$ from the trading majority and give it to the elite few. So be careful and be humble.
If you chose to brag about your winners, be prepared to display your punishing losses
$amzn $tsla $bidu $baba $fb $ccl $aal $ba $nvda $amd $mu $shop $cmg
$amzn $tsla $bidu $baba $fb $ccl $aal $ba $nvda $amd $mu $shop $cmg
One more time, insisting that you check out the course on Udemy I built over six months of real trading. Udemy has a 30-day money-back policy also. I don't sell any subscriptions, cross-sell or upsell.
udemy.com/stockmarketsuc…
udemy.com/stockmarketsuc…
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