S&P Prediction

[highnote]

Originally Posted by AltonKelsey

Well, I hate to tell you, you didn't lock in anything by putting your sell out there at 8.40. That wasn't a simultaneous trade.

If the option doesn't fill, (and the only reason it did it it was picked off cheap) you have all the risk to the downside.

I think you would be much better off trading out of the thing than fooling with selling an option where you got almost no premium.

Your point is valid. I don't think there is a right or wrong answer. It all depends on your risk tolerance and goals. I did my trade through a retirement IRA. My goal is to maximize gains while limiting risk. As Warren Buffett and Ed Thorp like to say -- "Never lose money."

I was happy to hold VIXY long because I bought it when the VIX hit its 4th lowest day on record. Now that the contracts where bought there is a reasonably good chance of making a 140% profit with less risk than holding VIXY without selling options.

The downside risk is covered up to about an 80% drop and the upside risk is covered to infinity versus holding VIXY without options. VIXY has never been as low $5 and it can drop as low as $3.39 before the trade starts losing money. After VIXY rose by $1.50 after my purchase, without options, I had about 15% to 20% downside protection.

You pick your poison. With options -- limited downside risk, zero upside risk, but limited gains. Or without options -- large downside risk, zero upside risk, but unlimited upside gains.

Like I said before, had I been home from work and watching the market all day I would have done things differently. But when I bought the VIXY there was no way of knowing for certain that it would go up. The way it worked out is not the worst trade in the world and is about as close to making a guaranteed profit as I can think of.

[AltonKelsey]

I think you're getting lost in the weeds a bit.

All you had to do was SELL the position to make almost the same amount of profit , without the risk of the thing dropping below 4 or whatever the breakeven is.

Plus you would have freed up the capital completely , not having to hold for 4 months.

You can still trade out of it, but you'll lose a few cents hitting the bid .


Selling a deep itm option with 5 cents premium serves no purpose, if you're holding a long against it.

[highnote]

Originally Posted by AltonKelsey

I think you're getting lost in the weeds a bit.

All you had to do was SELL the position to make almost the same amount of profit , without the risk of the thing dropping below 4 or whatever the breakeven is.

Plus you would have freed up the capital completely , not having to hold for 4 months.

You can still trade out of it, but you'll lose a few cents hitting the bid .


Selling a deep itm option with 5 cents premium serves no purpose, if you're holding a long against it.

Again, had I NOT been at work I would have done exactly what you are saying.

The 5 cents per share premium you mention is not the way I figured it. I figured the premium based on what I paid for VIXY ($11.79), not on yesterday's closing price ($13.41).

The cost of VIXY ($5895) minus sale of option ($4200) is about $1700.
So I'm only holding about $1700 for 4 months with a likely $800 gain.

The per share conversion value of the option was the price I paid for VIXY
($11.79) minus the $5 strike price = $6.79.

The price of the option was $8.40.

That leaves a per share premium of $8.40 - $6.69 = $1.61.

After approximately 3 cents per share commission the net per share option premium is $1.58.

That nets out to a 140% gain if VIXY closes above $5 at expiration.

Also, VIXY opened down this morning, so I wouldn't have gotten as good a price.

Too, because I only shelled out $1700 for the trade I can put the other $4,000 to work on something else. Had I bought the VIXY and it fell in value -- which it did the first few days I owned it, who knows how long I would have had to tie up the entire $5800.

[AltonKelsey]

I'll say this one last time, then move on to my SFOR investments.

The only reason you got that fill at 8.40 is the stock moved to 13 and change.

You could just as well have put in a limit order to sell the stock at 13 and change and been done with the trade , same profit.


Messing with the option is nonsense.

[PaceAdvantage]

I've been long S&P futures since 9:55 this morning...got in at 2355.75 and my trailing stop is now at 2355.25. I was up to 2367.50 at one point, and then it dropped and almost took me out...still in though...will update at end of day. Currently at 2360.

[PaceAdvantage]

And not 10 minutes after I type the above, the market is taking off again...now at 2365...wish me luck!

[highnote]

Originally Posted by AltonKelsey

I'll say this one last time, then move on to my SFOR investments.

The only reason you got that fill at 8.40 is the stock moved to 13 and change.

You could just as well have put in a limit order to sell the stock at 13 and change and been done with the trade , same profit.


Messing with the option is nonsense.

Valid point. Maybe I'll do that next time instead.

I guess it makes sense to sell the options when the premiums are already in place -- like in March of 2009.

[highnote]

Originally Posted by PaceAdvantage

And not 10 minutes after I type the above, the market is taking off again...now at 2365...wish me luck!

Good luck!

[AltonKelsey]

Originally Posted by PaceAdvantage

And not 10 minutes after I type the above, the market is taking off again...now at 2365...wish me luck!

Vid of Comey might be the reason

#maga

http://www.zerohedge.com/news/2017-0...never-happened

[reckless]

I picked up some of my very cheap long term winners this morning at the start. I did get worried because I got my bid price a little too quickly. When that happens I usually worry.

I went in today, despite the dire predictions of some of our players on here, because all day yesterday, on all the business shows, I heard the market was tanking because of the Trump-Russia-Comey 'memo' stupidity.

Anyone that could read, write, listen and think, knows this Russia thing is a phony story and has been one since jump street. But too many people on here and in the media wish to delude themselves, sad to say.

So, I invested this morning solely because this false market drop was 'because' of the Wash DC dramatics and nothing to do with reality or common sense. At least that's how I saw and heard most of the analysis yesterday.

It's just too bad it didn't last longer -- the decline that is, but I'll take what was giveth, and let the day traders, the chartists, the Trump haters, and the end is near crowd do their thing, which isn't investing as much as it is ... how to get the better of the media headlines and the talking heads on TV, which drive a lot of the market action, imo.

Good luck to everyone.

[PaceAdvantage]

Up to 2373 now...today turning out as good as yesterday....so far...still a long way to go...but my stop is now at 2362.75, so this is a guaranteed profitable trade...

[lamboguy]

Originally Posted by PaceAdvantage

Up to 2373 now...today turning out as good as yesterday....so far...still a long way to go...but my stop is now at 2362.75, so this is a guaranteed profitable trade...

do you stay in overnight on this trade?

[PaceAdvantage]

Originally Posted by lamboguy

do you stay in overnight on this trade?

Strictly day trades during regular market hours

[lamboguy]

Originally Posted by PaceAdvantage

Strictly day trades during regular market hours

i am glad that you are only day trading this thing because i don't like the prospects for the market after it bounced today. to me going up today lends its way to some very bearish possibilities.

i had wanted to see a spike down and then go long today,

[PaceAdvantage]

Originally Posted by PaceAdvantage

Up to 2373 now...today turning out as good as yesterday....so far...still a long way to go...but my stop is now at 2362.75, so this is a guaranteed profitable trade...

Market now off best...at 2367.50....might be stopped out if this continues...