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Trade stocks that move well.... but there's a catch....

Posted by RichieRick 
Trade stocks that move well.... but there's a catch....
January 09, 2021 04:15PM
Hello everyone,

I hope this new year is finding everyone well so far.

The best moving stocks that move well tend to be very pricey, thus making the options very pricey also. And there's the catch.

I remember time and again Gary shouting about trading stocks that MOVE and each year he wants us to review the list of stocks that move to ensure we don't have any dead weight stocks that used to move, but don't anymore.

Also throughout the year he talks about sorting and resorting your basket for Stars, Sub, and Stubs. Mostly he says he uses the autowave line to get a feel of those things price wise. The stocks have to move. If they aren't moving more than 4 or 5 dollars a week on average, then go find a different one. Hormel foods comes to mind.... hehehe..... I've found many that move 20 or 30 bucks a week on average, but I can't trade them. Here's why...

As many of you know some of the very best movers are also the ones have that a high stock price. Like Priceline, and google, and tesla and many many more like that. Usually on the 500+ dollar side of things. Often times I find with these higher stocks that even the options are so expensive I can't trade even a 2 contracts.
At first I thought I would just focus on stocks under 600 bucks, and that helps a little bit. However, I've been seeing stocks that trade in the 300's with options that are in the range of 15 to 20 bucks. Apparently those are great movers, but with their options being so expensive I wouldn't be able to trade them in my trading leg. I'm wondering and hoping if anyone has mastered TOS enough to build a good script for scanning for those stocks that move well, but also have options that are in an affordable range. I've attempted many times but ultimately fail out.
It just a real bummer though, when you find a great trade on a stock only to see that you can't buy even 2 contracts cause it would break the basket rules, while you just watch a great trade sail away. smiling smiley I just want to focus on a list of great movers, with affordable options.

Anyway, enjoy your weekend everyone, and happy trading! smiling smiley

R



Edited 4 time(s). Last edit at 01/11/2021 08:49AM by RichieRick.
Re: Trade stocks that move well.... but there's a catch....
January 10, 2021 02:12PM
Well, it's nice to see that some folks are at least stopping by the read a post or two. smiling smiley
Dan
Re: Trade stocks that move well.... but there's a catch....
January 11, 2021 12:00PM
Check your favorite search engine, YouTube and TastyTrade for "debit spreads." These can be done as either call debit spreads (bullish) or put debit spreads (bearish). You buy a call/put and then sell a call/put with the same expiration date that is less in the money or more out of the money that the call/put you bought. This makes it cheaper to make your bet since the call/put you buy is offset to some extent by the call/put you sell. Since the call you sell is higher than the call you buy, and vice versa for puts, the sold option sells for less than the option you bought so you are looking at a net debit. The down side is that your potential profit is capped at the difference between the two options. For example, if you buy a $300 call option on a stock currently selling for $295 and sell a $305 call option, the maximum profit is ($305-$300) - minus the debit you paid. There are lots of variation on this technique and ways to determine the strike prices you buy and sell that you can find. The bottom line is that you can purchase options on more expensive stocks for less than buying an option outright, and in return for this you give up unlimited profit potential. I don't know how Gary feels about option spreads.

One thought on "stocks that move." They need to move in a somewhat predictable manner. You can have a stock that moves, but it is all over the place with wide moves that are not at all regular or somewhat predictable. I avoid stocks like these.
Re: Trade stocks that move well.... but there's a catch....
January 11, 2021 07:11PM
YEAH!!!! Someone responded. There is life out there. Hehehe. lol. smiling smiley

Very interesting concept about the option spreads. I see things like that on TOS, but I never mess with them. I'll look into it.

Your last comment about "stocks that move". Yes that's true. I didn't mean to imply that, but I guess it's a good point to mention. I'd like to attempt to clarify a bit if possible.

I just meant my comments based on an example that Gary has used in the past. Lets say a given stock moves steadily UP 30 dollars over a 3 week period, that's a 10 dollar move per week, and that is something he'd say moves well. Now granted there are MANY stocks out there that MOVE AWAY BETTER than 30 dollars over 3 weeks. So nowadays he'd probably say it needs to move 50 or 70 bucks over that same 3 weeks to be considered a good mover. However I think he'd say that while trading at his trading leg basket level. A trader with only 3K in the trading leg couldn't afford those options WITHOUT breaking the basket rules. So they are forced to look for cheaper stocks that have cheaper options that they could use, all while making sure the stock moves well.

The problem is those stocks tend to be very expensive, and so are their options. smiling smiley

I can see this as a real challenge for new students especially, or anyone with a small amount of cash in a trading leg. If you've got 15k or more in your trading leg then you can play there, but if you've only got 5K or or less you're wasting your time looking at those high price super movers, cause you can't afford to buy their options. So you'd need to eliminate those and focus on the ones that have affordable options in the ranges you can afford to buy a few contracts (3 to 5) to start with, AND that "move well".

17 contracts in one trade is my personal best so far, and I haven't managed to come close to that in a long while now. At least not with my current basket of stocks I look at because they've all gotten so expensive. Which is why I'm on the hunt for a solution. smiling smiley

So yes dealing with stocks that seem to move in trending directions does make life a lot easier than trying to deal with crazy erratic moving stocks. Gary talks about that in RTP also. And yes there are "range bound" stocks that seem to spend some time seemingly trapped in a trading range which is nice to have so long as it's somewhat predictable, or as predictable as one can hope for when dealing with the market. Hehehe... smiling smiley
Re: Trade stocks that move well.... but there's a catch....
January 15, 2021 07:54PM
A great site for finding stocks that move can be found here:

[www.trade-ideas.com]
Re: Trade stocks that move well.... but there's a catch....
January 18, 2021 10:49AM
When you google "Most volatile stocks" look for the link that is www.trade-ideas.com. These will give you a great list for potential stocks to trade.

Also, I find a lot of stocks by looking that the stocks that are moving the most (both up and down) premarket using Tradestation. I wish this was possible using ALCHEM. I keep the ones that look the best and are volatile.
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