DrStool Posted October 27, 2009 Report Share Posted October 27, 2009 ah.... suspense... Link to comment Share on other sites More sharing options...
Rationalize Posted October 27, 2009 Report Share Posted October 27, 2009 The problem with that Drano is that you are making a directional bet with an asymmetric pay off. With that method you can have 90% winning trades and still lose money if you get the direction & magnitude of the move wrong only 10% of the time. Yup.. everything's great, until KABOOM! Link to comment Share on other sites More sharing options...
DrStool Posted October 27, 2009 Report Share Posted October 27, 2009 In case you forgot, the Mr. Widget links are now in the left sidebar menu near the top of the page. Link to comment Share on other sites More sharing options...
I_Am_Madness Posted October 27, 2009 Report Share Posted October 27, 2009 Yup.. everything's great, until KABOOM! Every trade is directional. Unless you are trading front month, your risk is the same as buying the same amount of shares. You're just leveraging up and at same time if used properly limiting your losses. Link to comment Share on other sites More sharing options...
DrStool Posted October 27, 2009 Report Share Posted October 27, 2009 The 5 hr cycle buy signals yesterday afternoon came from a bit positive divergence. Usually means a big move, but the bigger wave coming down could suppress that. Probability favors a sideways up phase in that cycle and 2-3 day cycles. If the 5 hr cycle indicator turns back down from around these levels over the next hour, that would have crash potential. Link to comment Share on other sites More sharing options...
I_Am_Madness Posted October 27, 2009 Report Share Posted October 27, 2009 BIDU NOV 400 calls went from 3.40 to 8.40. Link to comment Share on other sites More sharing options...
Drano Posted October 27, 2009 Report Share Posted October 27, 2009 The problem with that Drano is that you are making a directional bet with an asymmetric pay off. With that method you can have 90% winning trades and still lose money if you get the direction & magnitude of the move wrong only 10% of the time. Obviously you only do a risky strategy like this when you see an overpriced mania stock that has made a parabolic move. I did this with AZO and APOL near the top of their run, and sold OUT OF THE MONEY calls at levels that were unlikely to be hit. They went up a little more,nowhere near the strikes where I sold them, and then tanked. I don't have the guts to do this with a stock like AMZN, or AAPL, or BIDU, that could go up 20% from already elevated levels. Link to comment Share on other sites More sharing options...
DrStool Posted October 27, 2009 Report Share Posted October 27, 2009 So then, to summarize-- It will either go up, sideways, or down. Link to comment Share on other sites More sharing options...
Lemur Posted October 27, 2009 Report Share Posted October 27, 2009 Every trade is directional.Unless you are trading front month, your risk is the same as buying the same amount of shares. You're just leveraging up and at same time if used properly limiting your losses. I find the high spreads on the options really hurt performance to say nothing of the premium. Link to comment Share on other sites More sharing options...
I_Am_Madness Posted October 27, 2009 Report Share Posted October 27, 2009 Every trade is directional.Unless you are trading front month, your risk is the same as buying the same amount of shares. You're just leveraging up and at same time if used properly limiting your losses. Bare in mind, there's no reason for you to hold a trade that's going against you. Stop loss are key. Of course time is very important. Link to comment Share on other sites More sharing options...
Lemur Posted October 27, 2009 Report Share Posted October 27, 2009 Apple short going nicely now but Amzn continues to hang tough. Hopefully its turn is coming up. Link to comment Share on other sites More sharing options...
Drano Posted October 27, 2009 Report Share Posted October 27, 2009 Also you can limit your risk by buying options a couple of strikes out from where you sold 'em, or buying the stock itself as a hedge/trade if it starts running up but you feel confident of the longer-term direction. Link to comment Share on other sites More sharing options...
dogsie Posted October 27, 2009 Report Share Posted October 27, 2009 ConCon plummets to 47.7 Link to comment Share on other sites More sharing options...
K Wave Rider Posted October 27, 2009 Report Share Posted October 27, 2009 First Down Bears.... Link to comment Share on other sites More sharing options...
Drano Posted October 27, 2009 Report Share Posted October 27, 2009 I find the high spreads on the options really hurt performance to say nothing of the premium. Depends on which options. Some of the QQQQ options have spreads of pennies. The leveraged ETFs have profited from the high premiums and spreads. That's why I suggested DRV as an alternative to puts on IYR Link to comment Share on other sites More sharing options...
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