W&O Trades down as well as up

I was first introduced to WSB 2 1/2 years ago and immediately was very excited about what I was learning. I started following the market daily right after that including the news play, notebook, etc. After ~9 months I had accumulated enough money and felt confident enough that I started doing real-money W&O trades. These were mostly really pretty easy, though I feel like I got a little lucky a couple of times. Sometimes the trades would yield a good return (~10% give or take, I think), others would be very small (a couple of % only), but at least I wasn't losing. One day I was in a W&O trade and saw another opportunity that seemed better. So I closed the other trade. One or two days later the stock I had been in dropped big. I felt very lucky (blessed), but also a little shell-shocked. Then about a year ago a suffered a loss - probably a couple of hundred dollars. This scared me away from actually trading for quite a while. Very recently I started getting the feeling that I need to get trading and learning again.

Everyone's posts on this site have been a great help and motivation to me. Now that my family and I have completed a move crossing several time zones, I am out of excuses to at least start doing W&O again.

One reason I stopped doing W&O trades is the wild market we had over last Spring especially. I had lost confidence that there were plays there that would hold up long enough to sit on the piano, though I really wasn't looking very hard.

A big question I have had for some time is if there is a way to do W&O in a down market, since we know that seasonally there are periods when the market will be depressed. In that case, it may not be very easy to find a stock that will play well. One thought is as long as the underlying stock stays near the same price at least you could profit from the sale of the call. That would be better than nothing.

One last thing, a year and a half ago I guess I knew I wasn't really practicing the trading leg but was feeling pretty good about W&O. I realized that based on my age (mid-30s) and assuming a modest return on W&O, I could achieve my financial goals by really only doing W&O trades. Starting with a modest level one could achieve choice within not that many years without the additional stress and risk of the trading leg. I realize the stool has three legs, but why not take what you feel good at? I'll leave it at that for now and maybe come back with other thoughts later.

Ciao.



Edited 1 time(s). Last edit at 01/17/2013 05:49PM by Kars.

Hi Kars,

I have done really well at W&O this last year, but have lost my trading baset in it entirety twice. I am currently trying to rebuild my trading basket again. UGH. I know how you feel.

Keep practicing the trading leg and keep trading W&O. You ARE good at W&O.

If you don't trade real money in the trading leg, then PRACTICE!!! It doesn't matter if they are perfect. It is just about understanding how the market moves. The way you REALLY understand that is to be in a trade [practice or real] . I treat my practice basket exactly like my real basket (although I have to confess that I have a more cavalier attitude about my practice money). Do two practice trades every day, even if it doesn't look good. You will follow the trades better when you are in them, even with play money.

There is a way to do W&O in a down market, but the most you can hope to get is to stay even by doing the printing press. I am not sure it is worth it (unless you are already in a trade that you don't want to get out of). The big gains come from the up market.

Donna

Try practicing Printing Press. If you already buy stocks this may be something you can try. You can do Printing Press even when the market is down. You will need to purchase at least 100 shares of stock. It works better with 200 shares.

I have practiced Apple with the Printing Press and currently I have paid for 200 shares. I do the weeklies for Apple. Remember do this with stock you don't mind selling.

Also BUY THE FOLLOWING BOOK!!!

Technical Analysis for Dummies. Out of all the books on trading in my library this is by far THE BEST BOOK I HAVE EVER...AND I MEAN EVER read and used!

Make a chart using the information from pages 220 - 223. Use that chart for buying stock for W/O or Printing Press.


Try it...test it doing practice purchases. I have not been disappointed yet.

Thanks for the responses. I have been interested in the Printing Press but intimidated because I haven't gained the skill of reading the HRFP/FP charts very well yet. I haven't had enough confidence in my chart set-up to invest the time to try a lot of those kinds of trades. Now that I am getting ToS set up hopefully I can start doing some of these.

W&O hasn't required the same deciphering of of charts to have success. Trends are much easier to see.

My honest reaction to the "....for Dummies" was to not take it seriously and think it must be some kind of joke. But I'll see if I can track it down. I know it's available on the Kindle. What's the title of the information on those pages in case the Kindle version doesn't have real page numbers?

200 shares of Apple paid off from the Printing Press? That's...um...not shabby...>$100K in AAPL. Paper or real?

Thanks again.

I am practicing the Printing Press. I have been working with AAPL for almost 1 year. Yes 200 shares are paid for using Printing Press and trading AAPL on the weeklies. That is my goal...to purchase 200 shares of Apple with my trading account profits. The weeklies work very well right now.

I trade the market currently. I traded CAT this week (Thursday &Friday). I made good $$. I really do not like to talk a lot about how much $$ but I will say my trade was over 200% simply by learning gaps.

I do not like TOS charts...I use Qcharts but my significant other (S/O) uses Strategy Desk. They are very close to Qcharts and are free.

The Printing Press is really easy. If you know when to buy your stock you then have half the battle won already. You do however need at least 100 shares in order to do the printing press. If you do not mind selling your stock as it starts to go down then instead you sell (STO) the option on that same stock as it starts to fall. If you do not want to sell your stock sell a higher strike option. If you purchase a $30.00 stock and it starts to turn down and goes to $25.00 sell the $30.00 option against the stock. Even if it goes back up to $30.00 you get the option money AND the $30.00 a share. If it goes to $29.99 you keep the stock and get the money for the option.

When doing the printing press make sure it is a stock you do not mind owning or selling. That’s why I picked AAPL. It pays no dividends so I don’t care if it sells or if I keep it.

Technical Analysis for Dummies is a great book. When I read tech books I read only that which I use. For instance I do not read about bar charts...or line charts...or Parabolic SAR or envelopes, or Pivots… etc. Too much information is way to confusing.


The pages you will look at are 220 - 222. However you should read the entire book. Learning about gaps, how to draw trendlines etc. are really easy to understand with this book.

Hi, would that be the 1rst or 2nd edition of the book. One was published in 2004 and the other in 2011. Thanks

I used Qcharts for almost 2 years and was afraid to switch, but after the last price hike, I simply did not feel I could afford to keep it. I started using Strategy Desk with the assistance of TOS for futures and a couple of other small components. I made the switch my brokerage firms about 2 weeks ago. Initially, I was using TOS as my primary. I liked parts of it, but I could not get the charts to match my Qcharts- I still have Qcharts until Jan.31st, 2013, so I am able to make specific comparisons. Based on recommendations of a person I respect, I switched from TOS to Strategy Desk. If anyone switches from a platform that you are accustomed to using, think about keeping that service for a month as you transition to the new one- PRICELSS. SD is almost identical to Qcharts. I am still practicing with SD. Remember, is free, free, free!

Rook,

I downloaded SD to my computer, but when I logged in using the same login information that I use for ToS, it wouldn't work. Instead I got an error telling me to verify my login on the TDAmeritrade website. I logged in to the website with the username and password but it wouldn't work on SD. I wasn't able to call TDAmeritrade before closing time to see if they could help. Have you had any similar issues and could advise me on what worked for you?

Thanks.

TCB... mine says 2004

The author makes it clear in her book to get only the information you need. Do not read all the book. The other book I love that sits on my desk along with this one is "The Market Makers Edge". I refer to these often. In The Market Makers Edge I only refer to the things that apply to my charts. I do not read things about bar charts or line charts or open interest etc. I try not to crowd my brain. Too much in leaves little room for the best information.

BTW way for those of you reading.......do not just use these pages. Read the parts in the book that apply to Gary's teachings. The author makes many things really very clear.

Darcy,
I have Technical analysis for dummies on a kindle iPad app which won't show page numbers. What section (from the table of contents) is pages 220-223 in?
Thank you!

Kars,

That is exactly what happened to me. I called Ameritrade. They initially set me up under the "Orange" status in TOS, so they had to first reduce the status to "Green". They explained that Orange is the full version of TOS. Green is the minimized version. Honestly, I can not see any differences. The main thing I wanted was for them to grant my access to SD. I was up and running the following morning. It takes overnight for them to have everything processed and downloaded. You do no need to re-install or anything. It simply starts to take your password the following morning. You must call them to request access. I will warn you, they are going to push TOS really hard. It is apparent they do not wanting people using SD because TOS is the platform that they have invested a large sum of money (my opinion). Nevertheless, when you have them both, you will be very happy. Again, I still have Qcharts til the end of the month. I have my parameters in SD set EXACTLY as I have in Qcharts.

Rookie,

So I contacted TDAmeritrade about getting SD to work. Like you said the gentlemen on the phone was eager for me to use ToS. He even said he would have someone from that department call me to make sure I understood what ToS could do. I persisted saying that I was accustomed to QCharts and wanted to use something similar to what I had used before. He did say those folks were off today so I'll have to try again tomorrow.

Thanks for the advice.

jslavell...

Chapter 12 Using dynamic lines
Starts at: Using 2 moving averages

After 3-4 phone conversations plus an on-line chat, I finally was able to get a resolution with TDAmeritrade. Sure enough I was one of the "orange" folks. But they wouldn't change mine to green. I told them I realize they are reportedly going away from SD in the near(ish) future and they are pushing ToS. But I told them I was familiar with QCharts and wasn't able to see what I was used to on ToS. So maybe they would grant me access to both so I could fine tune my squiggly lines setting on ToS. (Plus ToS works fine on my Mac, unlike SD.)

Finally they said I would just have to open a new account, though I wouldn't be required to fund it right away. (It can be where I keep my Vault, I suppose.) So this is the route I'm taking. It's taking a few more days than I was hoping, but we'll get there and I will establish some confidence in and experience with my squiggly lines.

Ciao.

rookie30 Wrote:
-------------------------------------------------------
> Kars,
>
> That is exactly what happened to me. I called
> Ameritrade. They initially set me up under the
> "Orange" status in TOS, so they had to first
> reduce the status to "Green". They explained that
> Orange is the full version of TOS. Green is the
> minimized version. Honestly, I can not see any
> differences. The main thing I wanted was for them
> to grant my access to SD. I was up and running
> the following morning. It takes overnight for
> them to have everything processed and downloaded.
> You do no need to re-install or anything. It
> simply starts to take your password the following
> morning. You must call them to request access. I
> will warn you, they are going to push TOS really
> hard. It is apparent they do not wanting people
> using SD because TOS is the platform that they
> have invested a large sum of money (my opinion).
> Nevertheless, when you have them both, you will be
> very happy. Again, I still have Qcharts til the
> end of the month. I have my parameters in SD set
> EXACTLY as I have in Qcharts.