VisualTrader Forum VisualTrader Forum
forums calendars search
today this week
 
register logon control panel Forum Rules
You are currently browsing as a guest.
You should logon to access more features
A Self-Moderated Community - ALL MEMBERS, PLEASE READ!
Vote for Members who contribute the most to your trading, and help us moderate content within the Forums.


  Current location        Thread information  
VisualTrader Forums
User-Contributed Profiles
Stocks with Weekly Options Map
Last Activity 5/31/2013 9:07 AM
24 replies, 4139 viewings

Jump to page : 1
Now viewing page 1 [25 messages per page]
 
back reply
Printer friendly version

^ Top
Dan

Member
25
Posts: 40

Joined: 10/9/2003
Location: Sussex, UK

User Profile
 
Subject : Stocks with Weekly Options Map
Posted : 3/4/2012 7:17 AM
Post #6673

Hi...

I've been experimenting with writing options on stocks that have weekly options on them and created a VT map separated into their groups. I've put all of the ETFs onto one plate except for the short ETFs (VXX, SDS, TZA & FAZ), they have their own plate called 'Short ETFs' as they're closely correlated..

VT makes it easy to identify stocks that are about to turn (though I use OT in conjunction with VT) so writing bullish option strategies in uptrends and bearish strategies in down trends yield a healthy return with low risk..!

Cheers,
Dan
Attached file : WeeklyOptions.vtp (616KB - 451 downloads)

^ Top
Jim Dean

Legend
100100100100
Posts: 414

Joined: 5/20/2005
Location: L'ville, GA

User Profile
 
Subject : RE: Stocks with Weekly Options Map
Posted : 3/4/2012 7:25 AM
Post #6674 - In reply to #6673

I'd be interested to hear how "fast" you trade them - what your primary timeframe is for entry/exit decisions are - and what strategies you find most beneficial if you rely on any.

Thanks!
^ Top
Dan

Member
25
Posts: 40

Joined: 10/9/2003
Location: Sussex, UK

User Profile
 
Subject : RE: Stocks with Weekly Options Map
Posted : 3/4/2012 8:05 AM
Post #6675 - In reply to #6673

Hi Jim,

Firstly, experimenting means paper trading, not real money trading, so I can't be assigned stock or anything like that. It's a little deceptive as I don't know if I would have actually been assigned stock or lost money, but TradeMonster seems to put the credit in the account no matter what..!

I've been waiting until Thursday when weeklys for the following week are released and their premium is high. I was using VT (5.0) to show the stocks turning up on those days via the Trend with Changes in Trend or Trend with Reversals, then cross checking them against my strategy in OT to see where the Money Zone levels are.

I've just upgraded my data to realtime this weekend so next week, I'm going to chart the 60 and possibly 15 minute timeframes to identify shorter term trends in the direction of the daily and weekly trends.. I only want to write in the direction of the longer term trends, this is so important..

Once I find a potential stock that I want to buy, I write the nearest ATM Put. If the stock stays above the strike price on expiry, I keep the credit. Or if the underlying moves enough to make the Put cheap enough to buy back, I'll buy it back. I've also used some of the credit to buy a longer term (6 month +) out the money calls so I can catch a move up without using up capital, this seems to work quite well. I do this at the same time I write the put.. If I get assigned stock, I can write calls against it or, if the stock goes up, wait until a short term pullback and write a call then..

So I'm using the short term put credit that has a high chance of expiring worthless (ie, I keep the credit) to build a longer term position at no or little cost to me and without using capital (unless I get assigned). When the puts expire, or I close the put at a profit, the margin set aside to purchase the stock is released and I can use it again for the following week or another stock if I find one.. So when writing a weekly Put, I'm only committed to buying stock for the lifetime of the Put and if the stock stays even just above the strike price I sold it at, the value of the put falls off a cliff quite quickly.

I've also been experimenting with Vertical Spreads, still trying to wrap my head around them! They use less margin but instead of buying stock you can loose money if writing them and the stock goes against you.. I've been writing call and put spreads, trying to blow up accounts to figure out how to loose money on them. I figure once I know how to loose money on these things, it'll be a little easier to figure out how make money on them!

In general, I think it is the same thing as writing Puts on their own, if the underlying stays above the strike sold, the Put Vertical Credit Spread will fall in value very quickly, especially during the last couple of days where the stock can sometimes be pinned at a certain strike price..

The weeklys seem to loose most of their value over the first weekend and the last 2 days, subject to general market movements..

It's facinating stuff but sometimes very confusing!

Dan
^ Top
Jim Dean

Legend
100100100100
Posts: 414

Joined: 5/20/2005
Location: L'ville, GA

User Profile
 
Subject : RE: Stocks with Weekly Options Map
Posted : 3/4/2012 12:23 PM
Post #6676 - In reply to #6675

This sounds really interesting. I dunno bout the Vert spreads - but your basic approach sounds sensible and easy to manage. I'd like to hear how things work out as you start using RT on the weeklies. Particularly - whether the spreads kill many opportunities - or rather, are the spreads on weeklies more or less conducive to RT trading, vs monthlies.

Are you working with Option Trader on this? I don't know offhand if it supports weeklies yet, but I do know that Ed has been experimenting with OptTrdr and Throttle Trader - so if weeklies offer a tighter RT spread maybe he will be interested in that.

I also cannot remember if OptTrdr has any modeling-input-control for paper trading or back testing re being assigned - but if not that would seem to be a handy "rule" to add to its already very powerful capabilities.

Thanks for the info, and please occasionally jump in to tell us what you learn.

Jim

[Edited by Jim Dean on 3/4/2012 12:25 PM]

^ Top
Dan

Member
25
Posts: 40

Joined: 10/9/2003
Location: Sussex, UK

User Profile
 
Subject : RE: Stocks with Weekly Options Map
Posted : 3/4/2012 1:13 PM
Post #6677 - In reply to #6673

Will do..

Just been re-reading the description on Vertical Spreads on TradeMonster.com.. The loss and profit is known before you enter the trade so you know what risk you're taking beforehand. The ones I'm interested in are the credit spreads where you receive a credit into the account, they are more likely to expire worthless. The spread can be bullish or bearish, so the strategy is for a neutral to slightly directional move. If the underlying goes in the wrong direction, the maximum amount lost is the amount credited into the account, ie, 'the spread'.

However, if the underlying goes against you, you loose money Whereas if you sold a naked put, you would be assigned if the underlying fell below the strike price, which is fine if you wanted to buy the stock anyway, so you still have an asset but at a small discount...

The good thing about Vertical Spreads is that you can trade the expensive stocks like Apple, Google etc with a small account because you only need enough margin to cover the spread, not the whole cost of buying stock. I didn't know this before, wish I did because I would have avoided the smaller stocks when I did have some money to trade with and just concentrated on the bigger liquid stocks! Live and learn..!

I haven't got Option Trader as yet, need to make some money first! Not sure if this laptop would cope with it either, Vista on this thing seems to crash at the slightest youtube video so I'm sure it would panic at the sight of anything more complicated! I'm waiting for the new MacBook Pro to come out later in the year then run OT & VT on Windows 7 on Parallels..

Dan

[Edited by Dan on 3/4/2012 1:17 PM]

^ Top
Dan

Member
25
Posts: 40

Joined: 10/9/2003
Location: Sussex, UK

User Profile
 
Subject : RE: Stocks with Weekly Options Map
Posted : 3/9/2012 12:34 PM
Post #6704 - In reply to #6673

These weekly options are great! They decay so quickly in the last week, even if they go against you a little during the week like many of them did this week.

So the trick with Vertical Spreads is to write them at the money (or even the next strike), Put Credit Spreads if the stock is going up and Call Credit Spreads if the stock is going down. Whilst the premium is the most expensive on the Thursday they are introduced, it varies as the stock moves up and down.. The options decay the most on the first Friday, over the weekend and the following Thursday and Friday.

I wasn't too sure about them before but they definitely allow you to trade the expensive stocks without having a huge account - you just need margin to hold the spread.

Here's a screenshot of my practice account (only a couple of weeks old) for the week, most of them are from the current week. The account had $100k as a starting balance, now over $300k.

The 'Cost Value' is the amount credited into the account when the options are written. The 'Market Value' is the current market value taken about 15 minutes ago..

Loving it!!

Dan
Attached file : weeklypapertrading.png (271KB - 408 downloads)

^ Top
Jim Dean

Legend
100100100100
Posts: 414

Joined: 5/20/2005
Location: L'ville, GA

User Profile
 
Subject : RE: Stocks with Weekly Options Map
Posted : 3/9/2012 12:44 PM
Post #6705 - In reply to #6704

I've emailed Ed to check out this thread ... great info ... please continue to report in occasionally. Sooner or later you'll have a bad week, I'm guessing ... if so, those insights will be very useful as well.

[Edited by Jim Dean on 3/9/2012 12:46 PM]

^ Top
Dan

Member
25
Posts: 40

Joined: 10/9/2003
Location: Sussex, UK

User Profile
 
Subject : RE: Stocks with Weekly Options Map
Posted : 3/9/2012 3:43 PM
Post #6706 - In reply to #6673

I thought I'd post a few screenshots of various parts of my practice account now that the market has closed and these weekly options have now expired..

The 'Summary' is the account summary as it stands at the close of business today. The Option Values Long and Short should change overnight as the options have expired, however, as this is a paper account, I don't know what happens with the options that didn't go in my direction. I believe, with Vertical Spreads, that they would just expire and I would have lost the spread but I don't know for sure. For comparison, I'll post another screenshot over the weekend when the options have been settled and I get all of my margin back - these numbers will change..

The 'Positions' image is screenshot of the positions currently open at the close of business today. Some of the market values are $0.00! Check out PCLN, $46k in the bank on expired options!! That could be used to buy stocks or longer term calls/leaps and it wouldn't have cost me anything out of my original capital.. The losses were longer term experiments when I wasn't quite sure what I was doing!

The 'Profit' and 'Losses' screenshots are a graph of the weeks profit and losses at the close of business today. I've been experimenting with different size trades to see how much profit or loss they make. I really maxed out with PCLN, it went against me by about $15 earlier in the week but turned around on Wednesday and closed above my strike price of $645 today, hence the reason they have decayed into nothing now..

With the fantastic analysis that's possible with OT and VT and these trading instruments, the odds of success can really be put in our favour!

Dan
Attached file : summary.png (249KB - 424 downloads)
Attached file : positions.png (270KB - 402 downloads)
Attached file : profit.png (200KB - 402 downloads)
Attached file : losses.png (200KB - 391 downloads)

^ Top
Melvin

Member

Posts: 11

Joined: 3/3/2003

User Profile
 
Subject : RE: Stocks with Weekly Options Map
Posted : 3/10/2012 11:05 AM
Post #6707 - In reply to #6706

Dan,

Are you using Option Trader? How do you see weekly options in its options chain?

Mel
^ Top
Dan

Member
25
Posts: 40

Joined: 10/9/2003
Location: Sussex, UK

User Profile
 
Subject : RE: Stocks with Weekly Options Map
Posted : 3/11/2012 4:34 AM
Post #6709 - In reply to #6673

Hello Melvin..

No, I haven't got OptionTrader yet. The trading platform I'm using is TradeMonster.com. There's a row of buttons at the top of the options page that allow you to view whatever month or week chain you choose. You'll only get one week at a time except for Thursday and Fridays when 2 weeks will be displayed, the current week about to expire and the following week. OptionTrader might have the same thing where you toggle the chains you want to view, you'll have to contact Support on that one..

There is no new weekly options issued for the week when monthly options expire either..

All the best,
Dan
^ Top
Dan

Member
25
Posts: 40

Joined: 10/9/2003
Location: Sussex, UK

User Profile
 
Subject : RE: Stocks with Weekly Options Map
Posted : 3/11/2012 4:55 AM
Post #6710 - In reply to #6673

Here's a screenshot of the Account Summary after the options have expired and my margin released again..

Last week, the Live Account Value was just over $200k, the majority of the gain is due to the credits from the Vertical Spreads I sold.

The Buying Power has changed a lot though. The Spreads I sold locked money out of my account. As the spreads expired, the credits paid into my account where also released, as well as the margin used to secure the spreads - there'll be another $12k credit added when this month's options expire too..

I always thought options were really complicated. Due to an early experience, my first attempt at investment with European style options that went wrong very quickly (before the days of the internet!), I always avoided them but I now see how beneficial they are if used correctly. I'm being somewhat trigger happy here, I wouldn't expose a real account to the same levels of risk as I'm taking here but in trying to blow up a paper account (and failing miserably so far!), I'm trying to discover how to loose money with these things. The odds are definitely on the sellers side compared to buying options! I made $135k over the past week selling option spreads, someone else lost that $135k by buying them short term.

Selling weeklies to credit the account and using that credit to buy longer term positions whether leaps, long term options or stock direct seems to be a good thing to do - it's possible to build a diverse portfolio with a relatively small amount of money. And when you've got weekly and daily signals in OT and VT that can keep you in that trend, you know to only write options in the direction of that long term trend.. It's opened my eyes to a completely different way of gaining exposure to the markets..

Dan

[Edited by Dan on 3/11/2012 4:58 AM]

Attached file : ExpiredOptionsSummary.png (228KB - 382 downloads)

^ Top
Dan

Member
25
Posts: 40

Joined: 10/9/2003
Location: Sussex, UK

User Profile
 
Subject : RE: Stocks with Weekly Options Map
Posted : 3/15/2012 3:10 AM
Post #6733 - In reply to #6673

I think one of the most important things I've learnt this week is not to rush into a position as soon as the market opens as the spreads can be so wide, it can take a while for the decay to work when selling options.

As a new experiment, I wrote an at the money call and put spread on pcln (using 650 as the main strike price) as well as the strike price on either side, so an in the money and out the money. I think I messed it up though because the platform seems to have turned it into a wider spread, so it isn't something I'll be doing again. The written options are still decaying though but so far, it isn't as effective as what I was doing before. It's just messy, a trend direction needs to be established then a strike price needs to be chosen for the underlying to close above or below in the direction of that trend.

I've funded an account with a small amount of money so I'm going to work my original strategy with faz and fas. Got a new short daily signal on fas, anyone else think the market is looking toppy?

Dan

[Edited by Dan on 3/15/2012 3:23 AM]

^ Top
Dan

Member
25
Posts: 40

Joined: 10/9/2003
Location: Sussex, UK

User Profile
 
Subject : RE: Stocks with Weekly Options Map
Posted : 3/17/2012 4:00 AM
Post #6741 - In reply to #6673

PCLN did what I was hoping it might do and moved in a big way.. On Monday, I sold the Put Credit Spread at the $650 strike price (Vertical Spread - there seems to be a few different names for these things..), and the Call Credit Spread at the same strike price to see what happens. I also sold the strikes above and below (in and out of the money) but I wish I had stuck to one strike price as it would have been easier to understand! Still...

PCLN hovered around $650 for a first 3 days, then jumped up to around $660, then flew up to $675 on Friday. The Put spreads expired worthless, banking over $100k but the Call Spreads lost money. I can now see how a big move against a position can loose money quickly, even with weekly options..

Whilst the Calls I bought in the Credit Spread gain, they don't gain enough to offset the losses on the Calls I sold in the Spread. If PCLN kept moving up even more, the losses would be greater so it's essential not to bet the farm on these things!

At least, if just writing a naked Put, you acquire stock at a discount if the underlying goes against you - so if the long term trend is up that's fine, you still have an asset at the end of the day. But with Credit Spreads, you just loose money if it goes against you. Despite this however, TradeMonster has still credited the full credit of $232k to my practice account. I might send them an email and ask them if that is actually right or whether it would be different on a real money account.

And a note to self, don't second guess my trading strategy!!

Dan
Attached file : pcln.png (274KB - 369 downloads)

^ Top
Dan

Member
25
Posts: 40

Joined: 10/9/2003
Location: Sussex, UK

User Profile
 
Subject : RE: Stocks with Weekly Options Map
Posted : 3/21/2012 1:29 PM
Post #6750 - In reply to #6673

I opened a series to trades yesterday, mostly Put Credit Spreads, though I did open a Call Credit Spread on AMZN after the big move up yesterday (I messed it up though, should have been a call credit spread to profit if AMZN closes below $195 at expiry, still currently in profit though).

I used the Trend with Reversals and Breakout with Reversals Transforms on 15 and 60 minute timeframes on Tuesday, looking for green cylinders below the map, about an hour or 2 before the market closed.

So far, up a nice amount today but if the trades close above the Puts sold on the spreads, the spreads will decay and expire worthless banking another small fortune! - Just need this to be real money!!

Hope others are testing this too.. It's a real eye opener..!

Dan
Attached file : summary.png (246KB - 359 downloads)
Attached file : positions.png (325KB - 353 downloads)
Attached file : performance.png (196KB - 462 downloads)

^ Top
Optimus

New User

Posts: 2

Joined: 3/2/2012
Location: Phoenix

User Profile
 
Subject : RE: Stocks with Weekly Options Map
Posted : 3/22/2012 10:30 AM
Post #6751 - In reply to #6673

Hey Dan - why don't we start a skype group for these options?
^ Top
barryc48

Member

Posts: 22

Joined: 4/9/2008
Location: Sydney AUSTRALIA

User Profile
 
Subject : RE: Stocks with Weekly Options Map
Posted : 3/29/2012 3:32 PM
Post #6758 - In reply to #6751

skype barryc48

Australia
^ Top
Optimus

New User

Posts: 2

Joined: 3/2/2012
Location: Phoenix

User Profile
 
Subject : RE: Stocks with Weekly Options Map
Posted : 3/30/2012 3:07 PM
Post #6767 - In reply to #6673

mine is brooklyndon1 :)
^ Top
Dan

Member
25
Posts: 40

Joined: 10/9/2003
Location: Sussex, UK

User Profile
 
Subject : RE: Stocks with Weekly Options Map
Posted : 4/10/2012 1:22 PM
Post #6796 - In reply to #6673

I spent much of the bank holiday weekend configuring and testing my new VT9 upgrade and updating my computer's software to cope with it..

We still had a holiday on Monday in the UK so I spent the whole day behind the computer (don't get a chance to do this often, but I really need to think about doing some exercise too!) placing this weeks vertical spread trades in real time as VT9 alerted me to various opportunities as the market unfolded..

At the close of the day yesterday, the spreads were showing a paper loss but I've noticed that they tend to do that when they are entered. The important thing is that the underlying stock or EFT closes below the sold Call in a vertical Call credit spread or above the sold Put in a vertical put credit spread at expiration.

The market as a whole was failing, the Leading Indicators backed this up, so whilst I sold a few credit Put spreads (anticipating a move up in a stock), the Call Credit Spreads I sold are the ones that are in profit, and by a considerable amount after just one day.

VT9 made it really easy to identify stocks that were moving. The new NTB charts and Leading Indicators/Transforms made it easy to see the direction of the whole market and it's just so easy to find opportunities quickly in the direction of the main trend, I can't heap enough praise on the latest VT9!

I've attached a few screenshots of the trades I made yesterday.. The Positions attachment is a spreadsheet to make it easier to look at.

Looking forward to it being real money!

Dan

[Edited by Dan on 4/10/2012 1:27 PM]

Attached file : performance1.png (195KB - 351 downloads)
Attached file : performance2.png (196KB - 335 downloads)
Attached file : summary.png (281KB - 338 downloads)
Attached file : positions.xlsx (20KB - 405 downloads)

^ Top
CKasper

Member
25
Posts: 46

Joined: 4/30/2010

User Profile
 
Subject : RE: Stocks with Weekly Options Map
Posted : 9/29/2012 11:45 AM
Post #6971 - In reply to #6673

Dan, can you give us an update on your trading strategy and results?
As far as I have read you have VT9 real time, but what strategies, charts, indicators, systems are deployed to give you your stock choices.

Charles
^ Top
Dan

Member
25
Posts: 40

Joined: 10/9/2003
Location: Sussex, UK

User Profile
 
Subject : RE: Stocks with Weekly Options Map
Posted : 9/30/2012 3:03 PM
Post #6972 - In reply to #6971

Hi Charles,

I stopped practicing for a while due to early starts at work and I also had a recent family issue to focus on but thankfully, though it isn't good, it isn't as bad as we feared, so I've only just started up again to familiarize myself with everything I did early in the year... There's a high probability that I'll be leaving my job soon so I'll be able to focus on this 110%, as well as getting back into shape again! It's going to take my body months to get over the initial shock of training again!

My practice account is now over $2.5 million. It started with $100k. I've found that if you write weekly at the money or out the money vertical spreads in the direction of the long term trend, they tend to expire worthless. I generally use weekly charts and the previous weeks high and low as well as the developing moneyzone/value line to pick the prices for the spreads. I've been using OT as VT is a little slow in my computer.

In general, you only need a few stocks to focus on. The expensive stocks like Apple, Google etc are good for this as you can write out the money spreads far away from the stock price and still get a pretty good return on your money. You don't have to be 100% accurate in picking an entry point, just identify the trend direction and write options at prices where you think the stock won't close by the end of the week.

If the trend is up, I look to write a put spread below the price. If the trend is down, I look to write a call spread above the price. The value line is good for identifying prices..

I sold $755 call spreads on Google last week that expired worthless due to Google closing about $754.50 on Friday.. Also Apple $690 call spreads expired worthless because Apple closed well below $690. Both these stocks are in up trends but they seem to be turning downwards, hence writing call spreads instead of put spreads..

I'm a little concerned that the market is going to go through a correction soon due to the low VIX/VXX but then again, I'm not too concerned as writing call spreads are as profitable as put spreads! Fear is quicker to profit out of than greed..

Anyway, that's about where I am at the moment..

Cheers,
Dan

[Edited by Dan on 9/30/2012 3:07 PM]

^ Top
CKasper

Member
25
Posts: 46

Joined: 4/30/2010

User Profile
 
Subject : RE: Stocks with Weekly Options Map
Posted : 10/3/2012 7:13 PM
Post #6974 - In reply to #6673

Thanks Dan,
Hope you and the family make healthy comebacks and your exercise routine becomes easier each day.

Cheers,
Charles

[Edited by CKasper on 10/3/2012 7:17 PM]

^ Top
Dan

Member
25
Posts: 40

Joined: 10/9/2003
Location: Sussex, UK

User Profile
 
Subject : RE: Stocks with Weekly Options Map
Posted : 12/7/2012 7:26 AM
Post #7010 - In reply to #6673

Well, things are looking up here.. Emergency over, though radiotherapy to come before and after Christmas, which is a shame but it needs to be done.. However, moving forwards, which is a relief..

I thought I'd attach an up to date map for the weeklys as they have changed since the first time I posted it here.. Ebay was added this week, I haven't checked to see if any have been removed though.. Ignore LQMT, that isn't a weekly, just a pennystock that I'm following..

As I'm now trading with real money, my risk tolerance has changed somewhat. Where as I was writing without paying much attention to where the stock was, except for writing in the direction of the general trend, if the trend went against me, the platform still wouldn't assign stock to my paper account. It's a little misleading but I think it is very important to pay attention to it. The last thing I want to happen is to be assigned 10 lots worth of Apple stock on a smallish account. Also, each time you open a spread in an up trend, you're exposing your account at a higher price.. Wouldn't want that when Apple failed to hold $700..

The first trade I made was to, flippantly, write an Apple and Google spread, 5 contracts, which took up a lot of margin. Whilst in hindsight, they would have expired worthless, giving me around £750 for the week, I didn't like the fact that far too much of my account was tied up like that. If they went the other way, I would have been assigned a huge amount of stock which would have caused a problem on an account my size..

I closed out for a loss on the same day but then triggered a 'pattern day trader' things that locked my account, fortunately only for 1 week once I spoke to Interactive Brokers.. Otherwise, it would have been 90 days! Also, it isn't really worth opening just one spread.. A bit of a reality check..!

Sooo, what to do..? I've gone back to looking for long term weekly signals to identify the big up trends. OT and VT are great for identifying the strongest candidates and set up a series of option trades to expose my account to any long term move up whilst capturing short term reversals by writing weekly options against my long term position and protecting the position from a meltdown..

These stocks also have LEAPS, 2 or 3 year options that have a huge amount of time premium on them. Everything I have read about them goes on about buying them to gain long term exposure to the stock. That's all very well but buying them costs money and if the stock stays flat for a couple of years, you don't have much to show for it..

For the past couple of months, I've been experimenting with writing a LEAP Put option that is in the money by one strike or so.. The amount of LEAPS written can be dictated by the amount of stock that would be bought if the LEAP were to be exercised. So for example, if you wanted to use $2k to buy a stock, and the stock was $10 at the time, then you would sell 2 LEAP Puts.

The 2K is then set aside as margin to cover you in the event that you need to buy the stock if assigned. The premium is then paid into the account and can be used to buy shorter term options, in the money, say 6 months out, in order to gain exposure to the stock as it moves up.

The premium paid can be significant, up to 30 or 40% of the value of the stock, so you're getting a huge discount, even if you don't do anything else..

To reduce the risk of loosing too much money in the event that the stock crashes through the LEAP price, short term PUTS can be bought with some of the premium received. To make the risk as small as possible, I buy puts to cover the LEAPS sold, in this case, 2, plus the amount of calls bought. So if 3 calls were bought, 5 puts would be bought to cover in the event of a crash. Sometimes, it's possible to breakeven or make a little money if the stock crashes so much so no money is lost. I've only seen this on the risk profiles in Trademonster, I haven't experienced it for real..

As the stock moves up, which it should if the signal is good, the bought puts would decay but when they expire worthless, they can be rolled over to continue to protect the position in the event of a crash but if the stock is higher, the puts bought would be cheaper. Or puts higher up could be bought and used as a stop loss or something like that.. Still experimenting there..

So while the stock moves up, the LEAP decays, which adds value to the account, and the bought calls increase in value.. Finally, in order to cash in each week, weeklys can be sold each Thursday (when the following weeks options are issued, they're at their most expensive) that would either call the bought calls or expire worthless the following Friday if the stock fails to close above the weekly call strike price, releasing that cash into your account..

I guess the weeklies would be sold according to chart patterns, a pull back, ATR or whatever, still figuring that out. I'd probably use ATR and just write the strike that corresponds to that ART. However, if sold on Thursday when they come out, they decay from that time on, and decay the most over the first weekend..

This is probably obvious to seasoned option traders.. The idea is to get paid a large premium up front on a long term prospect, use some of that premium to gain further exposure to capture the long term move whilst protecting the position from a meltdown, and cash in on a weekly basis in order to pay bills or reinvest..

One of my experiments was on PCLN. I sold 10 LEAPS that paid $107.90 a contract, or $10790 (x 10), and used that to buy 10 in the money calls for $102.50 a contract. I didn't buy protective puts as I had't thought about that at the time.

PCLN jumped about £50 in one day, currently this position is showing a $95200 gain which is an open market gain of 1762.96%!! The PUT LEAPS I sold are now worth $77.85 each and the call options I bought are worth $167.65

With the stock at $664.14, I could sell the current $685 Call for $3.10. This would give it room to move if it continues to go up and if it doesn't close above $685, I bank $3100 in a week..

I can't do this with my real account size buy I think it is possible to do the same thing with $20 or even $30 stocks and build slowly, reinvesting the profits each week.. Once you hold 10 calls, paid for by the sold LEAP and protected by shorter term bought puts, it should be possible to generate a fair amount of money each week..

Anyway, if anyone can think of any improvements, or potential problems, post away..

Dan
Attached file : WeeklyOptions.vtp (1480KB - 324 downloads)

^ Top
Dan

Member
25
Posts: 40

Joined: 10/9/2003
Location: Sussex, UK

User Profile
 
Subject : RE: Stocks with Weekly Options Map
Posted : 4/29/2013 12:10 PM
Post #7294 - In reply to #6673

Hello again..

Are there any options gurus here? I'm currently trying to wrap my head around Iron Butterfly/Condor Spreads as a safer instrument to use than just vertical spreads..

The theory being that stocks like Apple, Google, Amazon etc are volatile each week and setting up weekly spreads that take advantage of this should make regular money with out being direction dependent..

I know that weekly options decay very quickly. However, I keep reading sites that say they don't touch these volatile stocks because they are too volatile. They prefer to set up premium collecting spreads on indexes like SPY, Russell etc..

I'm interested in doing the opposite with the volatile stocks.

For example, Apple has a weekly ATR of around $33. So we can assume that, over the past 21 weeks, Apple has moved an average of $33. My plan is to sell an at the money Iron Butterfly or Iron Condor for each new weekly option on the Friday just before the market closes. That way, much of the weekend decay has already occurred already.. The price should move out of the top or bottom of the range and I should profit.

I set one up last Friday on the $415 strike price..

Sell 1 x 410 Put
Buy 1 x 415 Put
Buy 1 x 415 Call
Sell 1 x 420 Call

To profit, apple has to move above $420 or below $410. So Apple moves $15 today (Monday) up to $430. My profit/loss still fluctuates positive and negative but it is generally positive.

I closed the trade but it only closed at a break even.. Generally, do I need to wait until expiration to realise the full profit? I thought that as Apple had moved $15, that might have been enough for me to realise a profit but it doesn't seem to have worked that way..

My account is with Interactive Brokers (confusing platform! Very difficult to figure out how much I can make on a trade, risk etc..)

Thanks,

Dan

[Edited by Dan on 4/29/2013 12:13 PM]

^ Top
chazman

New User

Posts: 1

Joined: 6/26/2008
Location: Colorado Springs

User Profile
 
Subject : RE: Stocks with Weekly Options Map
Posted : 5/27/2013 9:34 AM
Post #7382 - In reply to #6673

Hi Dan,

You asked if there were any Options guru's in the forum. Well ... here I am. I have been trading options for the better part of 15 years .. real trading .. real money .. 6-7 figures at times. Made .. and yes also lost fortunes as it were.

I have been a Nirvana club member and user of both OmniTrader and Visual Trader for more than 10 years but have only recently been using Visual Trader for my option trading activities. The Option Trader module at Nirvana is a nice addition ( I own both V1 and V2 ), but unfortunately for an aggressive, experienced option trader it can't compete with the likes of Think-or-Swim or other more professional platforms that have risk graphing modeling and Greeks at a more sophisticated level.

That said, the option module is a great addition to Nirvana's products for those just getting into options or those simply looking for ideas to trade.

I am currently generating weekly and monthly cash-flow using strategies with weekly's and regular monthly equity options and certain ETF's. Been real productive ... yielding a consistent 4-5% monthly.

I will load your profile and let you know what I think. Post and let me know if you would like to communicate on these matters and share more information.

Dennis

^ Top
Dan

Member
25
Posts: 40

Joined: 10/9/2003
Location: Sussex, UK

User Profile
 
Subject : RE: Stocks with Weekly Options Map
Posted : 5/31/2013 9:07 AM
Post #7385 - In reply to #7382

Hi Dennis..

Thanks for your reply..

It's been a tricky one, it's one thing paper trading with 6 or 7 figure amounts, especially longer term on the bigger stocks (like I have been above), but it's quite another when you only have a few thousand to use in real money..

I've been reading a book by Ron Ianeri that described the use of butterflys and condors however, I've decided to stop trying to use them for the time being until I can paper trade them properly as I don't really know where I am and what I'm risking with Interactive Brokers. I'm just focusing on the 2 mains trades I have which look good long term (weekly and monthly) but are volatile on a day to day basis. Both are up today, which is good..

I got myself too invested in these 2 and whilst I generated some cash beforehand, I haven't been able to generate cash on a weekly basis, which is a little annoying..

I've decided I need 60 minute charts instead of just relying on daily as the lowest timeframe. I think the way OT and VT pick up the trend in this timeframe would suit writing naked puts well, weekly and monthly, but I'm not in a position to do that at the moment..

The idea behind that profile was to use it in conjunction with the Moneyzone. It goes green when the stock's price closes above the Value Line and red when prices closes below. A long signal on a weekly or daily chart would be taken and calls would be sold against the position when the chart goes red, the idea being that the long position is kept until the signal changes short, but small, regular amounts of money could be taken out with short calls within the up trend..

There is always something to learn.. There are so many options strategies, it gets confusing. I figured that the above strategy is the easiest to follow.. I'd certainly be interested in learning some more though..

Thanks again,

Dan

[Edited by Dan on 5/31/2013 9:08 AM]

Jump to page : 1
Now viewing page 1 [25 messages per page]
back reply

Legend    Action      Notification  
Administrator
Forum Moderator
Registered User
Unregistered User
E-Mail this thread to a friend
(un)/Freeze thread |
Toggle e-mail notification


Nirvana Systems
For any problems or issues please contact our Webmaster at webmaster@nirvsys.com.