jbenko_IHB
New member
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Stock Market Day-Trading Discussion Thread
- Thread starter usctrojanman29_IHB
- Start date
NEW -> Contingent Buyer Assistance Program
The topic was day trading.... 29% in 19 hrs counts as good day trading. whether you like it long term or not is not relevant to day trading.
I'll enhance your Public Service Announcement
The VIX is at 69.96 right now. The VIN is 73.64.
Though these levels are a little off the all time highs set in recent weeks, they are at nose-bleed levels. ANYONE who is buying options right now is an idiot. (That includes people lucky enough to be on the winning side of trades. Just because you got lucky does NOT mean that you aren't still an idiot)
Simply put, volatility where it is at, options are too expensive right now. It is a far better idea to be a seller of options than a buyer of options right now.
I'll sell you guys a few options if you want kekekeke
. Seriously some of the calls I sold the underlying dipped down then went back to the same price yet magically the calls never made it back to the same levels. The implied volatility on the calls is fragile and deflates the options easily. Nothing is more frustrating for an option buyer to reach your target price on the underlying yet come up with a minimal profit or even a loss 
.
In my view, the cascade of bad news peels off layers of sellers panicking in succession. Each time a new level of "badness" in the news is reached, each time it's like peeling the layers of an onion. The first layers are the largest, and cause the largest drop. Then on each layer of bad news, another smaller layer of is peeled, and a few more sellers get off. This goes on until we hit more and more the hardcore sellers who become desensitized to bad news.
So, in my view, the level of bad news required to cause more panic becomes exponential. At this point I can't imagine anyone on the planet believes we won't have a recession, and most expect a deep one. The view that we are going to have a true full fledged depression seems to be in the minority (and afaik even Roubini isn't going that far).
So we all know about Alt-A loans, we all know most banks are insolvent (but will be made whole), we know a few banks will fail every week, we know credit is frozen, we know the dry shipping rates have crashed, we know currencies are completely out of whack, we know lots of money is appearing out of nowhere... Well, at this point, the stakes are high enough that we'll need even a higher level of doom to cause further panic in my view. I guess the US defaulting on debt would do it, or multiple states/counties going bankrupt...
So, imho, it will take very little good news to bring the market somewhat higher, just because the remaining sellers become desensitized , and short traders, if they still want to make money, need to stay flexible and flip to the long side for a while.
Even in the great depression the market didn't go down in a straight line. It's much easier for the market to go lower if it goes up for a bit (a few weeks/months) first. Hardened sellers at these levels will think "well what the heck, too late to sell now so I'm keeping my shares". A 15-20% rally could certainly convince those sellers to sell ("ok, good enough, I'll sell now that my losses aren't as bad"), creating selling pressure for more dowturn later.
It's the lack of sellers that cause the bear market rallies. It's an influx of new buyers that finally creates a bear market bottom.
Of course, though selling options is no worse than holding the stock itself, with an added premium for padding.
I wouldn't sell calls/puts against stocks I don't have confidence will weather the storm of a deep recession and have no need for debt.
In addition, the calls can be sold deep in the money so as a seller you can protect yourself up to a 20% drop and still get paid the premium. Though a loss is always possible and in fact it should be expected on one of the months the stock could drop 25% and you would be hit by a 5% loss, if you're clearing a 4% premium monthly the odds would be rolling the contracts over each month would tend to pay for any "accidents". Same idea as selling insurance, and as with insurance the trick is to evaluate the risks of downside and make sure the premium covers that risk.
As I said, best is to make sure the stock is oversold/strong enough to minimize the risk of these "accidents".
Trend channels are your friend. If you are going to sell options, you need to choose your spot and choose your strategy.
But if you aren't familiar with the different ways of playing them, then you should be aware that the education process can be expensive.
Wow! Somebody decided that their bitter and angry attitude was getting old in the politics thread, and decided to bring it in here. Talk about a negative Nelly. Yeah... buyers of options are idiots, I buy options, so I must be an idiot. Yeah... that is why BV and I are 1 and 2 in the Panda challenge. Now go eat your angry sandwich and bitter chips in the politics thread. We don't need that kind loser like attitude here.
I read this part of the post as another cautionary statement against the use of options. I'm sure the experienced traders here are more than familiar with how volatility is a major component of the price of an option. I'm also sure that there are many readers that may not be aware that the price of their call option could go down even if the stock goes up. Using unhedged options to make directional bets on the price of the underlying is very risky.
Hormiguero_IHB
New member
i've had decent knife-flipping this week with EEM, UYM and RSX. unfortunately, that late trade hammered what was a nice day for the (way too much) VNQ in my IRA. that stuff has been a real heartbreaker, and what makes it worse was my laziness on getting some puts on it in my taxable account for insurance.
ventouxbob_IHB
New member
ok, I will put something out there. I was Thinking about buying 1000 shares of ford. its a big risk just thought they may have a few things going for them. and they are very cheap right now.
-they have a new deal with the UAW
-they have a buch of nice small cars ready to sell in usa. (fiesta)
- they are more streamlined than gm
- they just got a real favorable reliability review from consumer reports top domestic maker.
any thoughts?
I figured maybe they are too big to fail you know like aig.
-they have a new deal with the UAW
-they have a buch of nice small cars ready to sell in usa. (fiesta)
- they are more streamlined than gm
- they just got a real favorable reliability review from consumer reports top domestic maker.
any thoughts?
I figured maybe they are too big to fail you know like aig.
jbenko_IHB
New member
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stepping_up_IHB
New member
blackvault_cm said:
The topic was day trading.... 29% in 19 hrs counts as good day trading. whether you like it long term or not is not relevant to day trading.
jbenko_IHB
New member
.
skek said:
I'll enhance your Public Service Announcement
The VIX is at 69.96 right now. The VIN is 73.64.
Though these levels are a little off the all time highs set in recent weeks, they are at nose-bleed levels. ANYONE who is buying options right now is an idiot. (That includes people lucky enough to be on the winning side of trades. Just because you got lucky does NOT mean that you aren't still an idiot)
Simply put, volatility where it is at, options are too expensive right now. It is a far better idea to be a seller of options than a buyer of options right now.
muzie_IHB
New member
WINEX said:
I'll sell you guys a few options if you want kekekeke
. Seriously some of the calls I sold the underlying dipped down then went back to the same price yet magically the calls never made it back to the same levels. The implied volatility on the calls is fragile and deflates the options easily. Nothing is more frustrating for an option buyer to reach your target price on the underlying yet come up with a minimal profit or even a loss .
usctrojanman29_IHB
New member
When you have 500+ point swings in the market, selling options can get dangerous really quick. The markets will continue being volatile in the near term.WINEX said:
muzie_IHB
New member
blackvault_cm said:
In my view, the cascade of bad news peels off layers of sellers panicking in succession. Each time a new level of "badness" in the news is reached, each time it's like peeling the layers of an onion. The first layers are the largest, and cause the largest drop. Then on each layer of bad news, another smaller layer of is peeled, and a few more sellers get off. This goes on until we hit more and more the hardcore sellers who become desensitized to bad news.
So, in my view, the level of bad news required to cause more panic becomes exponential. At this point I can't imagine anyone on the planet believes we won't have a recession, and most expect a deep one. The view that we are going to have a true full fledged depression seems to be in the minority (and afaik even Roubini isn't going that far).
So we all know about Alt-A loans, we all know most banks are insolvent (but will be made whole), we know a few banks will fail every week, we know credit is frozen, we know the dry shipping rates have crashed, we know currencies are completely out of whack, we know lots of money is appearing out of nowhere... Well, at this point, the stakes are high enough that we'll need even a higher level of doom to cause further panic in my view. I guess the US defaulting on debt would do it, or multiple states/counties going bankrupt...
So, imho, it will take very little good news to bring the market somewhat higher, just because the remaining sellers become desensitized , and short traders, if they still want to make money, need to stay flexible and flip to the long side for a while.
Even in the great depression the market didn't go down in a straight line.
It's much easier for the market to go lower if it goes up for a bit (a few weeks/months) first. Hardened sellers at these levels will think "well what the heck, too late to sell now so I'm keeping my shares". A 15-20% rally could certainly convince those sellers to sell ("ok, good enough, I'll sell now that my losses aren't as bad"), creating selling pressure for more dowturn later.It's the lack of sellers that cause the bear market rallies. It's an influx of new buyers that finally creates a bear market bottom.
muzie_IHB
New member
usctrojanman29 said:
Of course, though selling options is no worse than holding the stock itself, with an added premium for padding.
I wouldn't sell calls/puts against stocks I don't have confidence will weather the storm of a deep recession and have no need for debt.
In addition, the calls can be sold deep in the money so as a seller you can protect yourself up to a 20% drop and still get paid the premium. Though a loss is always possible and in fact it should be expected on one of the months the stock could drop 25% and you would be hit by a 5% loss, if you're clearing a 4% premium monthly the odds would be rolling the contracts over each month would tend to pay for any "accidents". Same idea as selling insurance, and as with insurance the trick is to evaluate the risks of downside and make sure the premium covers that risk.
As I said, best is to make sure the stock is oversold/strong enough to minimize the risk of these "accidents".
jbenko_IHB
New member
'
usctrojanman29 said:
Trend channels are your friend. If you are going to sell options, you need to choose your spot and choose your strategy.
But if you aren't familiar with the different ways of playing them, then you should be aware that the education process can be expensive.
jbenko_IHB
New member
.
graphrix_IHB
New member
WINEX said:
Wow! Somebody decided that their bitter and angry attitude was getting old in the politics thread, and decided to bring it in here. Talk about a negative Nelly. Yeah... buyers of options are idiots, I buy options, so I must be an idiot. Yeah... that is why BV and I are 1 and 2 in the Panda challenge. Now go eat your angry sandwich and bitter chips in the politics thread. We don't need that kind loser like attitude here.
zovall_IHB
New member
WINEX said:
I read this part of the post as another cautionary statement against the use of options. I'm sure the experienced traders here are more than familiar with how volatility is a major component of the price of an option. I'm also sure that there are many readers that may not be aware that the price of their call option could go down even if the stock goes up. Using unhedged options to make directional bets on the price of the underlying is very risky.
usctrojanman29_IHB
New member
I would have added a few more puts this morning on the big open, but I didn't walk up until about 7:30am. 
I looks like they wanna rally this thing into close, but I like how oil is way down and the 1-month and 3-month yields are heading down.
I looks like they wanna rally this thing into close, but I like how oil is way down and the 1-month and 3-month yields are heading down.
WestparkRenter_IHB
New member
I'm digging out my old options book. It has pretty good explanations on most strategies. Taking it slowly is my motto.