As if I haven't been abused enough by AAPL, I'm going to open an Iron Condor on it.
This is my trade:
Buy Feb '08 230 call @ .60
Sell Feb '08 220 call @ 1.04
Buy Feb '08 125 put @ .97
Sell Feb '08 135 put @ 2.16
Credit $1.63
So I'm opening this, but because AAPL is on my Sh*t list, I'm only doing 1 contract.
Wednesday, January 16, 2008
Monday, January 14, 2008
Opened Put Diagonal on DRYS
Looking to take advantage of the recent bearish sentiment in the market and opened a Put Diagonal on DRYS today.
Bought 4 contracts of the Jun '08 85 put for 29.85 and sold 4 contracts of the Feb '08 55 put for 4.05.
My CB is 25.80
My stop-loss is 20.64
Bought 4 contracts of the Jun '08 85 put for 29.85 and sold 4 contracts of the Feb '08 55 put for 4.05.
My CB is 25.80
My stop-loss is 20.64
Closed BDK and KO
Finally closed out BDK and KO - the last two of my first four long trades.
So as a recap - I bought a 100 shares each of these stocks. With my initial "rookie" analysis, I expected KO to continue on a bullish trend, increasing my stock value. BDK had just come off a big sell off, and what appeared to me as a gap down, so I was expecting a rebound in the stock price... yeah, that didn't happen.
After a few days of sitting with this long stock, I decided to sell a call on each so that I would at least be making some money in time decay.
In closing BDK, I lost $320 on a CB of $6865 for a 5% loss, and for KO I lost $62 on a CB of $6487 for a loss of less than 1%.
So I spent $382 on an education in long stocks, calls and how not to read charts :)
So as a recap - I bought a 100 shares each of these stocks. With my initial "rookie" analysis, I expected KO to continue on a bullish trend, increasing my stock value. BDK had just come off a big sell off, and what appeared to me as a gap down, so I was expecting a rebound in the stock price... yeah, that didn't happen.
After a few days of sitting with this long stock, I decided to sell a call on each so that I would at least be making some money in time decay.
In closing BDK, I lost $320 on a CB of $6865 for a 5% loss, and for KO I lost $62 on a CB of $6487 for a loss of less than 1%.
So I spent $382 on an education in long stocks, calls and how not to read charts :)
Friday, January 11, 2008
Stop Loss fired on AAPL
Well I got stopped out of AAPL today. My stop loss was set at $33.05 and with AAPL reaching a low of $170 today, that's all she wrote.
This is a case where I got in just as it turned, so now I need to focus on preserving capital.
This is a case where I got in just as it turned, so now I need to focus on preserving capital.
1/10/08 Put diagonal on WYNN
Bought 4 contracts of the Jun '08 130 puts for -$27.80 and sold 4 contracts of the Feb '08 100 puts for +$3.95
CB is $23.85
Stop-Loss is $19.08
CB is $23.85
Stop-Loss is $19.08
1/7/08 Opened a Vertical on NILE
Bought 4 contracts of the Feb '08 80 calls for -$.93 and sold 4 contracts of the Feb '08 75 calls for +$1.60
So I'm at a +$.67 a share on 4 contracts.
Price of NILE is currently at $59.15
We'll let this one ride to expiration.
So I'm at a +$.67 a share on 4 contracts.
Price of NILE is currently at $59.15
We'll let this one ride to expiration.
AAPL adjustments for 1/7/08 - 1/10/08
Well we've survived a 30 point sell-off of Apple over the last few days and this is how we did it:
1/07/08 Rolled AAPL
Bought Jan '08 185 at a cost of $4.28.
We add this back to our CB of $56.58. $56.58 + $4.28 = $60.86.
We then sell the the Jan '08 170 for $11.92.
So we subtract the $11.92 from the adj. CB of $60.86 which equals $48.94.
Our new CB for AAPL is $48.94.
If we want to set our stop-loss so that we don't lose any more than 20%, we take $48.94 x .2 which equals $9.78 and subtract this from our CB of $48.94 which equals $39.16.
An easier way to do this is to just take $48.94 x .8 (this shows us what 80% of $48.94 is) which is $39.15. So we go into ThinkorSwim and set our Stop-Loss for $39.15.
1/10/08 Rolled AAPL
I did this one the same way as the one above so I won't explain all the math:
Bought the Jan '08 170 @ 11.45 and sold the Feb '08 170 @ 19.20 for a credit of $7.75
CB is now $41.19
Stop-Loss is $32.95
We've lowered our CB $27.96 since we started this diagonal.
1/07/08 Rolled AAPL
Bought Jan '08 185 at a cost of $4.28.
We add this back to our CB of $56.58. $56.58 + $4.28 = $60.86.
We then sell the the Jan '08 170 for $11.92.
So we subtract the $11.92 from the adj. CB of $60.86 which equals $48.94.
Our new CB for AAPL is $48.94.
If we want to set our stop-loss so that we don't lose any more than 20%, we take $48.94 x .2 which equals $9.78 and subtract this from our CB of $48.94 which equals $39.16.
An easier way to do this is to just take $48.94 x .8 (this shows us what 80% of $48.94 is) which is $39.15. So we go into ThinkorSwim and set our Stop-Loss for $39.15.
1/10/08 Rolled AAPL
I did this one the same way as the one above so I won't explain all the math:
Bought the Jan '08 170 @ 11.45 and sold the Feb '08 170 @ 19.20 for a credit of $7.75
CB is now $41.19
Stop-Loss is $32.95
We've lowered our CB $27.96 since we started this diagonal.
Tuesday, January 8, 2008
Sold calls on KO and BDK
Back on 12/31/07 I needed to do something with KO and BDK. I was Long in the stock (I actually owned the stock) and I went ahead and sold a Jan '08 ATM call on both.
When you sell a call on stock that you're Long on, you make money if the stock goes up, stays neutral, or even if it goes down a little. As long as the price of your Long stock doesn't go down so much that its starts to drop below the down side protection you got by selling the call.
So this is where I currently am with KO and BDK (as of 1/08/08):
KO - bought the stock for $62.57 a share.
I sold the Jan '08 60 call for a credit of $2.00.
This makes my new CB, $62.57 - $2.00 = $60.57 (This gave me $2.00 of downside protection).
If the stock price stays above my CB of $60.57, I make money.
So where is the price of KO at the close of 1/08/08? Today it closed at $63.75. I'm makin' money baby!
BDK - bought the stock for $70.55 a share.
I sold the Jan '08 70 for $2.15 a share.
This makes my new CB, $70.55 - $2.15 = $68.40.
If the stock price stays above my CB of $68.40, I make money.
So where is the price of BDK at the close of 1/08/08? Today it closed at $64.98. Not lookin' so good.
I've got 10 days left 'till expiration on both of these.
When you sell a call on stock that you're Long on, you make money if the stock goes up, stays neutral, or even if it goes down a little. As long as the price of your Long stock doesn't go down so much that its starts to drop below the down side protection you got by selling the call.
So this is where I currently am with KO and BDK (as of 1/08/08):
KO - bought the stock for $62.57 a share.
I sold the Jan '08 60 call for a credit of $2.00.
This makes my new CB, $62.57 - $2.00 = $60.57 (This gave me $2.00 of downside protection).
If the stock price stays above my CB of $60.57, I make money.
So where is the price of KO at the close of 1/08/08? Today it closed at $63.75. I'm makin' money baby!
BDK - bought the stock for $70.55 a share.
I sold the Jan '08 70 for $2.15 a share.
This makes my new CB, $70.55 - $2.15 = $68.40.
If the stock price stays above my CB of $68.40, I make money.
So where is the price of BDK at the close of 1/08/08? Today it closed at $64.98. Not lookin' so good.
I've got 10 days left 'till expiration on both of these.
Figuring Cost Basis, and the advantages to rolling the short side of a Call diagonal
1-7-08
I’ve got some catching up to do with my trades, and a bunch of notes that I’ve taken about understanding diagonals.
Let’s start with AAPL (Apple). This is Mojo’s blog at insanemoney.com on this trade - Mojo has been teaching me about Options, so I’m following his trades:
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"OPEN: AAPL LEAP Jan 09 150 Call -69.15
31st December 2007, 12:54 am
We’ve been watching Apple (AAPL) for quite a while and we’re looking to purchase a Jan 09 leap. We’ll probably purchase the Jan 09 150 call for a debit of -69.50. With the stock being at 199.83 that means the -69.50 is made up of 49.83 of intrinsic value and 19.67 of extrinsic or time value. There are 383 days until expiration so that means our daily time decay will cost us $0.051 a day.
Now you know me, I never hold a long call or put by itself so we’ll likely roll this into a call diagonal by selling the ATM Jan’s. Currently the at-the-money (ATM) call is the 200s selling for +8.95. Since this is slightly out-of-the-money this is all extrinsic or time value. With 19 days left to expiration that will give us a positive time decay of $0.471. So, we’re spending $0.051 a day to bring in $0.471 a day! Sweet!!
We will update you once we’ve move to sell the short side.
Mojo
PS - OK, we got filled at a debit of -69.15. We think with the potential of a near term split, people moving their cash holdings from closing losing trades, and the relative strength of Apple today, we are going to hold our long position and see what happens on Wednesday."
insanemoney.com
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So we sold the Jan ’08 195s @ $8.65 and bought the Jan ’09 150s for $69.15.
To figure the Cost Basis (CB) you take what you bought the ’09 150s for ($69.15) minus what you made by selling the ’09 ATM (at-the-money) 195s, which equals a CB of $60.50.
$69.15 - $8.65 = $60.50 CB
So this was our CB on our original buy long, sell short.
The market didn't go up like we thought, but what can you say... that's the market for ya. So today we did some managing of our account by rolling the Jan ’08 195s for the Jan ’08 185s because AAPL has been tanking. By doing this we had to buy back the Jan 195s for $4.40, and we had to add this cost back to our CB of $60.50, bringing it back up to $64.90 (we did this because we originally sold the Jan ’08 195s for $8.65 and booked that credit against our cost, but now that we bought it back we can’t claim that as a credit anymore, so we add it back and bring our CB back up the amount that we bought it for).
Now we’re at $64.90, and now we go back out and sell the ATM call, which is now the Jan ’08 185s (because the price of AAPL has been going down) for $8.32. And now we can subtract the $8.32 from our $64.90, which gives us a new CB of $56.58.From this you can see that by managing our trade, we’ve in effect reduced the CB for our Jan ’09 150s another $3.92. So even though we would like to see the AAPL stock stay natural, go up, or even go down just a little bit, it has gone way down but we’ve still been able to move defensively and affectively continue to reduce our CB.
Now we need to keep in mind that we can do this because we have a lot of time left on our Long Jan '09 call. A lot of time left to continue to reduce the cost to us for that call. It’s like we bought a house for $150K (our Jan '09 call) and we are using the money we make by selling the ATM calls like they were renters paying our mortgage and in effect slowly paying off our house (i.e. the ATM calls are reducing our CB – the cost of the house)
I’ve got some catching up to do with my trades, and a bunch of notes that I’ve taken about understanding diagonals.
Let’s start with AAPL (Apple). This is Mojo’s blog at insanemoney.com on this trade - Mojo has been teaching me about Options, so I’m following his trades:
------------------------------------------------------------------------------
"OPEN: AAPL LEAP Jan 09 150 Call -69.15
31st December 2007, 12:54 am
We’ve been watching Apple (AAPL) for quite a while and we’re looking to purchase a Jan 09 leap. We’ll probably purchase the Jan 09 150 call for a debit of -69.50. With the stock being at 199.83 that means the -69.50 is made up of 49.83 of intrinsic value and 19.67 of extrinsic or time value. There are 383 days until expiration so that means our daily time decay will cost us $0.051 a day.
Now you know me, I never hold a long call or put by itself so we’ll likely roll this into a call diagonal by selling the ATM Jan’s. Currently the at-the-money (ATM) call is the 200s selling for +8.95. Since this is slightly out-of-the-money this is all extrinsic or time value. With 19 days left to expiration that will give us a positive time decay of $0.471. So, we’re spending $0.051 a day to bring in $0.471 a day! Sweet!!
We will update you once we’ve move to sell the short side.
Mojo
PS - OK, we got filled at a debit of -69.15. We think with the potential of a near term split, people moving their cash holdings from closing losing trades, and the relative strength of Apple today, we are going to hold our long position and see what happens on Wednesday."
insanemoney.com
----------------------------------------------------------------------------
So we sold the Jan ’08 195s @ $8.65 and bought the Jan ’09 150s for $69.15.
To figure the Cost Basis (CB) you take what you bought the ’09 150s for ($69.15) minus what you made by selling the ’09 ATM (at-the-money) 195s, which equals a CB of $60.50.
$69.15 - $8.65 = $60.50 CB
So this was our CB on our original buy long, sell short.
The market didn't go up like we thought, but what can you say... that's the market for ya. So today we did some managing of our account by rolling the Jan ’08 195s for the Jan ’08 185s because AAPL has been tanking. By doing this we had to buy back the Jan 195s for $4.40, and we had to add this cost back to our CB of $60.50, bringing it back up to $64.90 (we did this because we originally sold the Jan ’08 195s for $8.65 and booked that credit against our cost, but now that we bought it back we can’t claim that as a credit anymore, so we add it back and bring our CB back up the amount that we bought it for).
Now we’re at $64.90, and now we go back out and sell the ATM call, which is now the Jan ’08 185s (because the price of AAPL has been going down) for $8.32. And now we can subtract the $8.32 from our $64.90, which gives us a new CB of $56.58.From this you can see that by managing our trade, we’ve in effect reduced the CB for our Jan ’09 150s another $3.92. So even though we would like to see the AAPL stock stay natural, go up, or even go down just a little bit, it has gone way down but we’ve still been able to move defensively and affectively continue to reduce our CB.
Now we need to keep in mind that we can do this because we have a lot of time left on our Long Jan '09 call. A lot of time left to continue to reduce the cost to us for that call. It’s like we bought a house for $150K (our Jan '09 call) and we are using the money we make by selling the ATM calls like they were renters paying our mortgage and in effect slowly paying off our house (i.e. the ATM calls are reducing our CB – the cost of the house)
Getting my feet under me
12/20/07
BDK – I’m long in this stock and expecting it to rebound. The past few days look as if it’s trying to figure itself out.
BG – Sold all at 120 for a profit of $12,000 minus fees.
KO – I’m long in this stock and it’s been hanging around the 30day moving average. I’m expecting it to set it’s current position as a new higher low, then push up to a new higher high. The moving averages are in a 1,2,3 setup and the stock is bullish.
MOS – Sold all @ 84.98 for a profit of $8,498 minus fees.These were my first trades. I just bought into them long, not knowing any better. After I set these trades I realized that I had bought some of these stocks on the bearish side of their mini cycles. Because they were bullish stocks (except for BDK) it would have been better for me to enter from a sell high, buy low standpoint.
BDK – I’m long in this stock and expecting it to rebound. The past few days look as if it’s trying to figure itself out.
BG – Sold all at 120 for a profit of $12,000 minus fees.
KO – I’m long in this stock and it’s been hanging around the 30day moving average. I’m expecting it to set it’s current position as a new higher low, then push up to a new higher high. The moving averages are in a 1,2,3 setup and the stock is bullish.
MOS – Sold all @ 84.98 for a profit of $8,498 minus fees.These were my first trades. I just bought into them long, not knowing any better. After I set these trades I realized that I had bought some of these stocks on the bearish side of their mini cycles. Because they were bullish stocks (except for BDK) it would have been better for me to enter from a sell high, buy low standpoint.
First Trades
12/17/07
BDK 100 @ 70.55 - Showed neutral growth over the last 9mo, but in the previous two days had a huge decline, opening a big gap on extremely high volume. Hoping to get in low and ride it as it reacts to fill the gap under the support of a bullish rally.
BG 100 @ 119.05 - Showed a neutral/bullish growth over last 9mo. The 30day had crossed over the 50day moving average back around 6/14/07. Ever increasing higher highs and higher lows. Expect it to descend to a higher low and then push up to a higher high.
KO 100 @ 62.57 - Showed a neutral/bullish growth over last 9mo. The 30day had crossed over the 50day moving average back around 7/17/07. Ever increasing higher highs and higher lows though not as pronounced as with BG. Expect it to descend to a higher low and then push up to a higher high. Over the last three months it has been using the 30day moving average as support.
MOS 100 @ 84.25 - Showed a neutral/bullish growth over last 9mo. The 30day had crossed over the 50day moving average back around 9/04/07. Ever increasing higher highs and higher lows. Expect it to descend to a higher low and then push up to a higher high. Over the last three months it has been using the 50day moving average as support.
BDK 100 @ 70.55 - Showed neutral growth over the last 9mo, but in the previous two days had a huge decline, opening a big gap on extremely high volume. Hoping to get in low and ride it as it reacts to fill the gap under the support of a bullish rally.
BG 100 @ 119.05 - Showed a neutral/bullish growth over last 9mo. The 30day had crossed over the 50day moving average back around 6/14/07. Ever increasing higher highs and higher lows. Expect it to descend to a higher low and then push up to a higher high.
KO 100 @ 62.57 - Showed a neutral/bullish growth over last 9mo. The 30day had crossed over the 50day moving average back around 7/17/07. Ever increasing higher highs and higher lows though not as pronounced as with BG. Expect it to descend to a higher low and then push up to a higher high. Over the last three months it has been using the 30day moving average as support.
MOS 100 @ 84.25 - Showed a neutral/bullish growth over last 9mo. The 30day had crossed over the 50day moving average back around 9/04/07. Ever increasing higher highs and higher lows. Expect it to descend to a higher low and then push up to a higher high. Over the last three months it has been using the 50day moving average as support.
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