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Tuesday, June 20, 2017

Recent Strategies $GOOGL $QQQ $DIS

It has been quite a while since I last posted results of the algorithm.

Unfortunately it had stopped working. And I'm not referring to bad results or any of that. It had just stopped sending me notifications each morning. Just like that, it broke.
And my IT guy did not have the time to check it out, so I kind of let it wither and die.

I did however learned quite a few things in option strategies lately.

I did read quite extensively on options about two years ago (back when I had dreams of being a Wall Street trader), but that adventure did not do well to my bank account (to make a long story short, I ended up blowing my account... twice!)

It was a good thing I had that experience of failure, because as a starting day-trader, I had too much emotions involved. I was eager to win every trade, and win big at that! I looking to capture five-baggers and more using lotto options. I was, plain and simple, an idiot, swooned by the magic and fantasy of "Mr. Market".

But then, something unexpected happened this year.
I have been taking classes for an investment manager license. In Israel you must pass two exams and undergo 9 months of training to get your official license to manage other people's money.
I enlisted to the program just out of my pure interest in the stock market. I did not think I was about to learn something new, but was intrigued to get to know other players from the industry and hear about the different options (literally and figuratively).

And so, after 6 months of classes where we learned about options strategies, and pricing of bonds and options, I can honestly say I look at markets differently now.
It is as if I can see "the Matrix", I can feel how certain strategies will do better, and how a simple Call or Put are just taking full-on risk without thinking.

And so, last week, which was a pretty volatile week, having seen Goldman Sachs' report on the tech industry, and having seen all our favorite stocks - which are now dubbed FAAMG (for Facebook, Apple, Amazon, Microsoft, and Google (Alphabet)) - take a big dump on investors, I decided to try my knowledge in the market and searched for some opportunity.

So, I was thinking that the volatility was justified, given how these stocks just sailed higher and higher for weeks on end. Therefore I decided that this time it's not going to be BTMFD (buy the motherf***ing deep) and Nasdaq's to drop has finally come.

So for last week I constructed about 4-5 different strategies. For each one I was selling puts and calls to gain from premium loss and eventually bought them back at lower prices.

FOR ALL THESE 5 STRATEGIES I BOOKED PROFITS OF $280 IN A SINGLE WEEK.
That was huge for me! Until last week, I was used to making a profit of $300-$400 on 1 option call or put and then losing it all and then some from all the other options I would buy.

The strategies I used varied. There was an Iron Condor, a butterfly, and a simple bull/bear spread.

After analyzing my trades here are the important key aspects to keep in mind when entering an options strategy position:

1. Risk management as a key to not lose sleep - one of the strategies I had was an Iron Condor on GOOGL. Now, GOOGL had lost about 6% at the bottom of the week's trading. My Iron Condor went nuts during this week. I especially remember how before the Fed's rate hike my position was down $1,000 and 1.5 hours later it was up $200. That was an incredibly tough trade to hold and not sell. If realized, that loss would have ended my aspirations to use options ever again.
Luckily I ended up with a nice win, but I no longer take such sizable positions where I could lose more than $1,000 (which is a lot for my small-ish account).

2. Do not search for those "Hail Mary"s  - as I told you before, those lotto options are not good for you. They end up financing the brokers with fees. Even if you do win a lotto option, you will not respect that trade's winnings and will quickly lose those gains buying another lotto option.
I started looking at strategies where it is HIGHLY LIKELY to make a profit. If you offer me a strategy with 95% win probability and a 10% return on my investment - I will take it every time! And if there is none, then I will sit on my hands and wait for it to come. They always do eventually!

3. Do technical analysis as biased-free as possible - try not to think of stocks as companies. It is very hard to do. But during times like these, practically all stocks crumble to pieces and break down. And even though I truly am a worshiper of Tesla ($TSLA), once Mr. Market says it's bear-time, I will create a strategy that will make me money if TSLA stays below a certain resistance level.


One example of an option strategy that I currently have:
$DIS
I LOVE DISNEY
I just wanted to open with that.
Having said that, the stock has seen some finer up-days.
It's been trending down from its 52-week high of $116.10 since the end of April. Having seen the down trend, once the market was breaking down, I knew $DIS would not trade higher anytime soon. My hypothesis was that a specific resistance will not be challenged by DIS.
That hypothesis has been confirming itself with lower highs ever since.
Just take a look at the chart:

You can see from the trend line that resistance in June 9th was around $107.
So I looked up option strategies where $DIS trades below $107 and over $100, thinking that will be its short-term support.
And so I sold an Iron Condor with strike prices 95,100,105,110.
My Performance forecast looks like this (using http://www.optionsprofitcalculator.com as the market just closed):

As you can see, as long as DIS stays in the range of 98.40-106.60, I will profit from this strategy. As of today, due to DIS's big down-day of -1.3%, my strategy is up around 21%. I intend to close the position as long as the conditions are in my favor.

I currently have open positions on GOOGL (an Iron Condor around 955-975) for the end of this week and a Butterfly Call on QQQ around 139 for this week as well.
Currently all of my positions are green and positive, but again, I am not looking for those home-runners! for $DIS I can expect max gain of around 46%. For QQQ it's 94% (in the only case of the index closing at 139) but the expected probability for profit is 51% at this time. Not bad.

Check out my Essential Reading List here (I may receive some compensation if you purchase anything on Amazon following my links)
Disclosure: Nothing on this site should ever be considered to be advice, research or an invitation to buy or sell any securities, please see my About page for a full disclaimer.

Monday, April 3, 2017

New signals for 04-03-2017 $COF $ETFC $FITB $KEY $M $PBCT $INTU $SJM

Hi everyone,

We have several new buy and sell signals for today.



New Buy signals - I would not enter any of the following positions, as the technical chart does not seem favorable, and almost all stocks look to be at the top of their downward channel, except maybe $M, if you believe the company can get back up there:

$COF 

$ETFC 

$FITB 

$KEY 

$M 

$PBCT

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New Sell signals - would carefully enter Short here, as these stocks have already took quite a beating in the past few weeks:

$INTU 


$SJM

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That's it for today. Have a great one!


To see general results of the algorithm click here.

Check out my Essential Reading List here (I may receive some compensation if you purchase anything on Amazon following my links)

TK



Full Disclosure: Nothing on this site should ever be considered to be advice, research or an invitation to buy or sell any securities, please see my About page for a full disclaimer.