Fast hit and out

S/O and I are getting ready for our vacation but this morning we traded a quick trade. It was opposite the over all market but at the time it agreed with the NASDAQ.

As I have said before S/O watches the net. He looks for movement. I know on one of GW's cd's he was asked if he ever watched the net by a student (cd recorded at GW's house) and he replied "no". However in "The Market Makers Edge" the net is one of 3 things to look for in order to spot a trend. (Chapter 5...page 40 and before Newton's Law of Motion subtitle).

So we entered @ 9:51 and bought 5 July 230 calls (5 for S/O and 5 for me) we were in at 12.90 and sold at 10:04 for 15.60 (5 cents lower than was being shown)...BTW we were given 15.65. Our profit was a little over $1500.00 each.

S/O has been practice trading TSLA for several weeks...opp's he said over a month so I best use his statement! I said that so those of you who are practicing will know practice REALLY is a very good thing and will help when trading a stock or a few stocks you really like.

So the next question is will we trade on our vacation? Not on your life. The lap tops are staying home. It is time for a break! We will however watch CNBC in the morning and if possible at the close recording on paper the events and how they affect the market. See you'all on the flip side!

Darcy,

You all have a blessed vacation!!

52trade
Proverbs 4: 20 - 22

Nice profit! By my math that is a 23% profit on the cost of the options. For being in the trade only about 15 minutes, that works out to $6,000 per hour - nice work if you can get it . BTW, what was the underlying? Based on the price of the calls, were they ITM TSLA calls? I don't think I saw you mention it in your message.

Hi Dan,

Unless a stock is within a few cents ( 10 and 20 cents is too much) of the next strike we do not mess with OTM. In fact I have at times (though not recently) bought 1 -2 strikes ITM.

I am not sure what you mean by "BTW, what was the underlying?"

Do you mean what was the underlying reason to buy TSLA? If that is what you meant I would say movement was the underlying reason we bought TSLA. Many (probably 50% or slightly more) of our trades happen right after the amatures have left and once the stock has digested the move. Many times we are in probably 10 - 20 minutes too early because there is a slight pull back. What we found was even though there is a pull back the options hardly change.

Before we started using the E charts we would wait and wait and wait and many times miss the trade altogether waiting for a pull back. Half the time we just gave up and moved on to something else. I won't say how long pulls backs last but if you've waited half a day to all day you have probably waited too long.

I don't know maybe someone else can say but it seems like anything longer than 1 hour on a pull back could mean a change in direction of the stock. That's just a thought and don't play off that tiny bit of info...pleae!

Often when a stock jumps $2 - $5 at the open we look for where it hit on the BB. Out of the BB on the 55, or 34 we wait for a pull back (not always but often) just out of the 21 but with room to move on the 34 and 55 or the candle landing right on the BB we have seen pulls backs not happening at all. Look at TSLA on the 23rd June...and look at the 21 chart. We entered right at the close of the 2nd candle on the 21 (draw a line at the close of the 2nd candle on the 21 that was our entry). We watched the 10 chart. Draw a line under the second candle on the 10 chart.

If we were trading that stock for all day we would have remained in that trade until about 12:05 or as the white candles started to get smaller...but we had to finish packing and head out to the airport.



Edited 2 time(s). Last edit at 07/06/2014 05:13PM by Darcy2.

Darcy,

I was not clear that by referring to "the underlying" I meant the equity instrument for the option you purchased, which in this case was TSLA. I'm glad I was not clear, however, since I really liked your explanation on movement and pullbacks. Thanks.

Darcy,
As most others on this site, I am so very appreciative on all the time and effort you put into sharing and teaching. A few years ago,an investment house (E.F.Hutton,I think) had an ad campaign centered on the premise that when E.F.Hutton spoke, everybody listened. You, Darcy, are the E.F.Hutton of this forum. I have a large folder with just about everything you've posted,and my trading style is very much patterned after your suggestions. Thank you so very much. Could you be so kind to answer a couple of questions on your TSLA trade on June 23. I did this as a practice trade before I found your post when reading back through past forum posts.
1. You entered the trade at 9:51. I entered at 9:44. Obviously this trade worked out for me with an early entry, but was that just dumb luck? Were you just later in finding the trade, or did you hold back for specific reasons?
2. We both got out about the same time. I exited at 10:06 when the money flow on the 5 min chart started turning down. I bailed out for a couple reasons. First I was up about 30 some percent and didn't want to give it back. Second, the rsi was in the overbought range on the 34,21,10, and 5. and the money flow on the 10,21,34, and 55 was over 80 ;so, I wasn't feeling too confident to continue. I hate when I get out too early, but hate it even more when I give it all back. You exited at 10:04 but later stated that, time permitting, you would have stayed until 12:05. With all due respect, I don't understand why you would have stayed that long. After 10:04, the stock did a rollercoaster ride sideways for almost two hours before it finally got slightly back above your 10:04 exit price. Can you expound on your thought process here.
I ask these questions not to challenge but to learn. Thanks very much for your patience.

tpplayer,

Thank you so much for the nice words. That means a lot to S/O and I.

Why did I enter TSLA 7 minutes after you did? It could have been I wanted to be sure where it was going but most likely I was in the kitchen cooking S/O something to eat. I think your entry was perfect...spot on as they say in London.

I really do not mind challenging questions and I did not take this as a challenge.

S/O kept watching TSLA (I packed) and our option would have yeilded several hundred more dollars even though the chart looks like it wouldn't. However in all honesty I am glad I get out when it looks like it could go against me. Sometime S/O stays for the ride. That's the gunslinger in him. One day it will turn around and bite him...but generally when he is in a trade he watches nothing but the stock he is in.

Friday (Aug 15th) S/O did a practice trade with GOOGL. He went outside because he have been having bears (black bears) tearing up our yard and maple trees. He wanted to go see the latest destruction...when he left he was $25.00 up and the chart looked good. When he got back he was $900.00 down because of the news in the Ukraine. By the time he got out of his trade he was $1,400.00 down. You never know 100% because news could come out and rip your head off. Much better to leave stuff behind and forget about it.

BTW look for rollercoaster rides during lunch. I look during lunch to see if I get any entry points.