I am currently in 17 option positions with three additional orders pending.
I have just crossed the $4,000 capital utilized mark today... this does not count the orders pending.
There is no way I could get into that many stock positions with that little capital... short of playing with penny stocks.
Today was a rough ride as the market dropped off right off the start but I held everything through, added another call as well as one put to the list. I do need a little more put action to balance things out, but I see the reasoning behind the stock picks and they are justified in staying long through this undecided period.
Jeff.
Questrade, My direct access discount broker.
Wednesday, September 30, 2009
Tuesday, September 29, 2009
A quick performance check
I've been testing option trading services and their results. While I have not broken them down there is one clear winner so far...mostly due to the volume of trades they recommend. My original intention was to keep any service that paid for it's subscription price in the trial period but I can see that is really going to turn out in favour of only one service as two of the services are providing about one trade a week. I do not intend to continue any that cannot at least look like they may be profitable over the longer term.
So far my overall trade performance based on trades closed since I started tracking the service provided trades looks pretty impressive. There are a few of my trades mixed in here as well...actually four of the total 9 closed are mine and 2 are technically one trade as half of a position was closed and the other half was left to ride for a bit longer...I should have just closed the whole thing at the time...hindsight. The difference was an 85% net return compared to a 63% net return.
9 trades closed
8 winning trades (88.8% win rate)
49.3% average net profit per trade (including the loser)
55.5% average net profit per trade (NOT including the loser)
I expect to have more losers as time progresses. I also expect to be cancelling one service this week as the trial period expires on Saturday and there have only been three trades, one closed for a profit. I need to see more trading volume in order to keep more smaller trades active. Fewer large trades feels like a disaster waiting to happen as a large position goes south and takes capital with it.
I feel that a diversified approach, many small trades, can lose overall but it would take a larger market related move to do it whereas a few stocks could collapse but would only take out the smaller trades based on those stocks. The higher volume plan is in line with the approach of the trading service I am probably going to keep. They have had 16 trades in the same period... three closed for a profit and three did not get filled.
Basically they suit my style of trading.
Jeff.
So far my overall trade performance based on trades closed since I started tracking the service provided trades looks pretty impressive. There are a few of my trades mixed in here as well...actually four of the total 9 closed are mine and 2 are technically one trade as half of a position was closed and the other half was left to ride for a bit longer...I should have just closed the whole thing at the time...hindsight. The difference was an 85% net return compared to a 63% net return.
9 trades closed
8 winning trades (88.8% win rate)
49.3% average net profit per trade (including the loser)
55.5% average net profit per trade (NOT including the loser)
I expect to have more losers as time progresses. I also expect to be cancelling one service this week as the trial period expires on Saturday and there have only been three trades, one closed for a profit. I need to see more trading volume in order to keep more smaller trades active. Fewer large trades feels like a disaster waiting to happen as a large position goes south and takes capital with it.
I feel that a diversified approach, many small trades, can lose overall but it would take a larger market related move to do it whereas a few stocks could collapse but would only take out the smaller trades based on those stocks. The higher volume plan is in line with the approach of the trading service I am probably going to keep. They have had 16 trades in the same period... three closed for a profit and three did not get filled.
Basically they suit my style of trading.
Jeff.
Funky day
Today it is raining, actually it is supposed to rain all week so this is likely to be a funky week.
I have one position that is really in the doghouse. I bought the December option for 80 cents and it is around 25 cents today. I only have two contracts so it is not a huge problem, but that is how I am sizing these trades, I can lose the entire trade and it represents a small portion of my account. This one is about 4% if I let it expire worthless, but that is not the plan as I will close the trade with some value left unless a last minute rally looks promising. I don't hold much faith in last moment rallies though.
It is worth noting that I bought the option when the stock was in the $18.50 range and it is now at $17.10ish. That is a $1.40 per share drop had I just bought the stock and I would likely have used something just south of $17 as a stop loss so, if it continues to head south I would expect $1.60 or more as a loss. In this $1.40 drop the option has lost only 60 cents AND i have no need for a stop order that may or may not do what I want when I want...and I certainly don't have to keep checking at the open to see if I need to adjust my stop.
I have a few other positions that are in far better shape, but I will not close them yet. Most of the trades are at technical lows for their respective current trend, touching on support. I could have waited for the stock prices to approach these support areas before getting in but I was not doing technical studies for these. I will be starting that back up soon to help determine good exit points and stop loss on some of these trades. As much as I can let the whole trade hit zero, I would rather not if it is plainly obvious that the stock is more likely to depreciate than not.
My exit stops would be in the 50% of the trade mark depending upon the circumstances.
There is not much to talk about with these trades. Even though there are 15 active trades and two active orders I have done very little chart work other than a cursory glance. This makes for rather uninformative posts.
I have some waiting to do while the market sorts itself out and decides which direction it is likely to head next.
Jeff.
I have one position that is really in the doghouse. I bought the December option for 80 cents and it is around 25 cents today. I only have two contracts so it is not a huge problem, but that is how I am sizing these trades, I can lose the entire trade and it represents a small portion of my account. This one is about 4% if I let it expire worthless, but that is not the plan as I will close the trade with some value left unless a last minute rally looks promising. I don't hold much faith in last moment rallies though.
It is worth noting that I bought the option when the stock was in the $18.50 range and it is now at $17.10ish. That is a $1.40 per share drop had I just bought the stock and I would likely have used something just south of $17 as a stop loss so, if it continues to head south I would expect $1.60 or more as a loss. In this $1.40 drop the option has lost only 60 cents AND i have no need for a stop order that may or may not do what I want when I want...and I certainly don't have to keep checking at the open to see if I need to adjust my stop.
I have a few other positions that are in far better shape, but I will not close them yet. Most of the trades are at technical lows for their respective current trend, touching on support. I could have waited for the stock prices to approach these support areas before getting in but I was not doing technical studies for these. I will be starting that back up soon to help determine good exit points and stop loss on some of these trades. As much as I can let the whole trade hit zero, I would rather not if it is plainly obvious that the stock is more likely to depreciate than not.
My exit stops would be in the 50% of the trade mark depending upon the circumstances.
There is not much to talk about with these trades. Even though there are 15 active trades and two active orders I have done very little chart work other than a cursory glance. This makes for rather uninformative posts.
I have some waiting to do while the market sorts itself out and decides which direction it is likely to head next.
Jeff.
Friday, September 25, 2009
AAARRRGGGHHH! One last trial.
I had decided that signing up with the Optioneer program was to be my last service to put to the test (although there is more commitment there than others from my side AND their side to make it work).
Today I received a notice about another program that I had considered before and looked into. It is new but I have tried other products from the same group. While I did not keep them active and exercised my risk free guarantee I was impressed with their dealings and straight up business attitude.
I put the cost onto my card, as all online services do, and immediately went crazy reading and going through the material.
This one is a "course" in options that includes a DVD set of lessons and some online assistance and webtools for working with options.
I must admit that they did a bangup job of it and it comes across as professional and is informative. I blew through all the quizzes after reading through the slide presentations so I have a handle on the entire content of the course now. The last part I skipped had to do with some of the more complicated strategies, condors, butterflies, strangles... all of which I am already looking at implementing anyway but will approach on an individual basis as I have done with every other aspect of trading.
In order to receive the credit upon cancellation within the 30 days I have to return the material...I think that I may cancel before then as all of the option course so far, 70% of it, has not had anything new. A few twists on theories that I passed over before and a slightly different takes on a few ideas but certainly nothing earthshattering...and certainly not worth $2500, the "introductory" price let alone the suggest retail price of $5,000.
While I should have known, I was curious enough to try it. The thing about these is there is no real material to get to understand ahead of ordering these so I have to bite the bullet to satisfy my curiosity. I am glad that the guarantees so far have lived up to their word.
I suppose, in defense of the program, anyone brand new to options would have a time with this course as it does cover a lot of material, just not much new for someone who, like myself, loves to learn voraciously and seeks out every scrap of material available while leaving my BS filter on high gain.
One last comment, and this has to do with the reason that I left options as long as I have. No matter how much one knows about options, one still has to be able to gauge a stock and price expectations in order to trade options. There are a few ways to trade them that can turn losers into winners and some that can turn a profit without knowing anything more than the volatility and average true range but that does not preclude getting to know the stocks first anyway.
Another service bites the dust.
Jeff.
Today I received a notice about another program that I had considered before and looked into. It is new but I have tried other products from the same group. While I did not keep them active and exercised my risk free guarantee I was impressed with their dealings and straight up business attitude.
I put the cost onto my card, as all online services do, and immediately went crazy reading and going through the material.
This one is a "course" in options that includes a DVD set of lessons and some online assistance and webtools for working with options.
I must admit that they did a bangup job of it and it comes across as professional and is informative. I blew through all the quizzes after reading through the slide presentations so I have a handle on the entire content of the course now. The last part I skipped had to do with some of the more complicated strategies, condors, butterflies, strangles... all of which I am already looking at implementing anyway but will approach on an individual basis as I have done with every other aspect of trading.
In order to receive the credit upon cancellation within the 30 days I have to return the material...I think that I may cancel before then as all of the option course so far, 70% of it, has not had anything new. A few twists on theories that I passed over before and a slightly different takes on a few ideas but certainly nothing earthshattering...and certainly not worth $2500, the "introductory" price let alone the suggest retail price of $5,000.
While I should have known, I was curious enough to try it. The thing about these is there is no real material to get to understand ahead of ordering these so I have to bite the bullet to satisfy my curiosity. I am glad that the guarantees so far have lived up to their word.
I suppose, in defense of the program, anyone brand new to options would have a time with this course as it does cover a lot of material, just not much new for someone who, like myself, loves to learn voraciously and seeks out every scrap of material available while leaving my BS filter on high gain.
One last comment, and this has to do with the reason that I left options as long as I have. No matter how much one knows about options, one still has to be able to gauge a stock and price expectations in order to trade options. There are a few ways to trade them that can turn losers into winners and some that can turn a profit without knowing anything more than the volatility and average true range but that does not preclude getting to know the stocks first anyway.
Another service bites the dust.
Jeff.
Interesting twist, dissappearing bids
One of my positions that was showing a loss was not in a bad state, just down a bit. This was not a position that I had great hopes of gaining a lot... testing and all.
The option was worth $2.25 and I bought 2 contracts, $450. This is a higher than I normally would place on an options trade now, this one was entered before I decided on full trade loss risk.
Today, as I was reviewing the prices after the market had been opened long enough to get the option prices set and the bids in I noticed a huge loss in one account. My $2.25 position was at zero value, which shouldn't happen unless the option expires or nears expiry...even then it SHOULD have some value. This stock is only $1.30 down from the $20 strike price so I might expect a 50-75 cent loss at this point...maybe even as high as 90 cents worst case.
So what's up? No bids. The current ask is $3.00... much higher than my $2.25 entry price. Zero bids means zero value as nobody is buying. Now, the open interest is 1227 contracts so there is SOME interest but the stock itself is trading on lowish volume, under 20,000 shares in the first hour and less than 150,000 daily on average. Technically the stock is at a good support level trendwise so there is potential.
The first thing that comes to mind is THANKFULLY I decided not to place a stop on my options as I am not sure what price I might have got for this stock had I stopped it.
I notice that now it is back to a 50 cent paper loss, so all is good and this is actually in line with what I expected...so it is back to normal. I may drop this one as a bit of a whit elephant once it gets into a breakeven position or if I end up at a stable -90 cent point.
Jeff.
The option was worth $2.25 and I bought 2 contracts, $450. This is a higher than I normally would place on an options trade now, this one was entered before I decided on full trade loss risk.
Today, as I was reviewing the prices after the market had been opened long enough to get the option prices set and the bids in I noticed a huge loss in one account. My $2.25 position was at zero value, which shouldn't happen unless the option expires or nears expiry...even then it SHOULD have some value. This stock is only $1.30 down from the $20 strike price so I might expect a 50-75 cent loss at this point...maybe even as high as 90 cents worst case.
So what's up? No bids. The current ask is $3.00... much higher than my $2.25 entry price. Zero bids means zero value as nobody is buying. Now, the open interest is 1227 contracts so there is SOME interest but the stock itself is trading on lowish volume, under 20,000 shares in the first hour and less than 150,000 daily on average. Technically the stock is at a good support level trendwise so there is potential.
The first thing that comes to mind is THANKFULLY I decided not to place a stop on my options as I am not sure what price I might have got for this stock had I stopped it.
I notice that now it is back to a 50 cent paper loss, so all is good and this is actually in line with what I expected...so it is back to normal. I may drop this one as a bit of a whit elephant once it gets into a breakeven position or if I end up at a stable -90 cent point.
Jeff.
Thursday, September 24, 2009
Optioneer
I have been a bit evasive when it comes to talking about any of the services that I have tested, mainly as I was hesitant to attract any attention to something that I had no idea whether it would really work out well or not. Optioneer is different. Partly due to the ideal that their system and service is based upon and partly due to the training in advance and the explanation of the system long before any commitment is reqiured.
So, I am signing up for the Optioneer service. This is the more expensive service with the dedicated broker I mentioned. If this was not to be a long term plan I would reconsider going this route as I can place the strangle trades myself but cannot trade the markets they use. I would be restricted to using ETF options to emulate the market activity as strangling a stock is a little to "iffy" for a variety of reasons.
Even so, legging into a strangle is not overly complex, nor is closing the trade. They are really two bracketing spreads, as mentioned in my last post.
The downside of doing it myself is that the round trip for each contract is $22 initially. Subsequent contracts in the same execution are $1 per contract. Getting started involves at least four separate trades which adds up to $88 in commissions. Going with Optioneer starts the same round trip commissions at $24... that is a fair difference and the initial startup cost is offset after 62 trades. The monthly data fee is between $90 and $195 (I'll be at the minimum for some time) and I am used to paying close to $200 for decent charting services per month already so I consider the data fee a fair exchange.
In larger trades the Questrade route works out to be cheaper as the $24 Optioneer commission is charged for every full strangle trade unit. If I trade 4 units (4 of each calls/puts bought and sold) their commission is $96 whereas Questrade is $97. There is the break point. Having said that I would be trading different markets altogether, different valued units, Optioneer manages a lot of the data and signals ... so I can hardly compare the two fairly. Apples and oranges.
A quick note about using strangles and data. There is very little need to watch anything intra-day so having live data is a negligible benefit outside of the trading platform. With Optioneer I do not place the trades in the market as I am used to, I send the entire order to the broker and they look after executions for me... that is worth something right there as well. Also they have profit and loss auto exit strategies so I don't even have to decide when to close trades... if I don't ant to.
I am downloading and printing off the necessary forms as I type this.
Like I said, this is a long term plan, as would be any self generated strangle strategy based system. All in all I do not begrudge the upfront fee nor the monthly data fees as I consider this strategy a reasonably sound one and having a lot of the work done for me is a great advantage and I am looking forward to getting up and running.
Jeff.
So, I am signing up for the Optioneer service. This is the more expensive service with the dedicated broker I mentioned. If this was not to be a long term plan I would reconsider going this route as I can place the strangle trades myself but cannot trade the markets they use. I would be restricted to using ETF options to emulate the market activity as strangling a stock is a little to "iffy" for a variety of reasons.
Even so, legging into a strangle is not overly complex, nor is closing the trade. They are really two bracketing spreads, as mentioned in my last post.
The downside of doing it myself is that the round trip for each contract is $22 initially. Subsequent contracts in the same execution are $1 per contract. Getting started involves at least four separate trades which adds up to $88 in commissions. Going with Optioneer starts the same round trip commissions at $24... that is a fair difference and the initial startup cost is offset after 62 trades. The monthly data fee is between $90 and $195 (I'll be at the minimum for some time) and I am used to paying close to $200 for decent charting services per month already so I consider the data fee a fair exchange.
In larger trades the Questrade route works out to be cheaper as the $24 Optioneer commission is charged for every full strangle trade unit. If I trade 4 units (4 of each calls/puts bought and sold) their commission is $96 whereas Questrade is $97. There is the break point. Having said that I would be trading different markets altogether, different valued units, Optioneer manages a lot of the data and signals ... so I can hardly compare the two fairly. Apples and oranges.
A quick note about using strangles and data. There is very little need to watch anything intra-day so having live data is a negligible benefit outside of the trading platform. With Optioneer I do not place the trades in the market as I am used to, I send the entire order to the broker and they look after executions for me... that is worth something right there as well. Also they have profit and loss auto exit strategies so I don't even have to decide when to close trades... if I don't ant to.
I am downloading and printing off the necessary forms as I type this.
Like I said, this is a long term plan, as would be any self generated strangle strategy based system. All in all I do not begrudge the upfront fee nor the monthly data fees as I consider this strategy a reasonably sound one and having a lot of the work done for me is a great advantage and I am looking forward to getting up and running.
Jeff.
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