BlackHatBloom
Junior Member
- Feb 2, 2012
- 101
- 7
Cool... I would appreciate it if you lead me to a virtual trading option platform..
Yeah, thats possible too
Thanks
Is Option Trading profitable?
- Thread starter BlackHatBloom
- Start date
Cool... I would appreciate it if you lead me to a virtual trading option platform..
Thanks
Yes, option trading can be profitable. Thinkorswim or Option House is a good broker for beginners. Thinkorswim (TOS) has a paper money account you can practice with and I would recommend at first. I use different methods such as seasonal trends, probabilities, and earnings plays.
Here is an option trade and the reasoning behind it that I did yesterday:
I opened a bearish trade on Groupon (GRPN). Normally, I avoid recent IPO's, especially when they are in new industries or business models. However, this is also a place that some of the biggest profits can me made. Groupon, was hailed as the future of advertising a year ago, but since the IPO last year, its been rough sailing. Its not that revenue hasn't been growing (it has) or that losses are above historical level *they aren't yet) - the real problem is how a lock of corporate governance has been killing expectations. Restatements, inflated margins, and concerns above growth have cut the stock in half and I don't see that changing in the short term.
I am not along in our expectation for a big move in GRPN this coming Monday. Implied volatility is quite high, but it is actually down quite a bit since last week. This is a case when the potential for another significant surprise is worth the cost. I had great success in playing DECK and GMCR to the downside via puts over the past few weeks as well.
What I bought was the GRPN June 10 Puts for $1.80 per put.
Watch and see what happens Monday....
Here is an option trade and the reasoning behind it that I did yesterday:
I opened a bearish trade on Groupon (GRPN). Normally, I avoid recent IPO's, especially when they are in new industries or business models. However, this is also a place that some of the biggest profits can me made. Groupon, was hailed as the future of advertising a year ago, but since the IPO last year, its been rough sailing. Its not that revenue hasn't been growing (it has) or that losses are above historical level *they aren't yet) - the real problem is how a lock of corporate governance has been killing expectations. Restatements, inflated margins, and concerns above growth have cut the stock in half and I don't see that changing in the short term.
I am not along in our expectation for a big move in GRPN this coming Monday. Implied volatility is quite high, but it is actually down quite a bit since last week. This is a case when the potential for another significant surprise is worth the cost. I had great success in playing DECK and GMCR to the downside via puts over the past few weeks as well.
What I bought was the GRPN June 10 Puts for $1.80 per put.
Watch and see what happens Monday....
One of my friend's lost his 70, 000 sports car doing options. I had to drive him home a couple of times in my little beater.
I spent 9 months on the floor of a day trading company and public gets smoked almost every single time. I can't even imagine with options.
I lost my company thousands and thousands of dollars while they try for me to 'get it'. Haha. At least I learnt a lot.
I spent 9 months on the floor of a day trading company and public gets smoked almost every single time. I can't even imagine with options.
I lost my company thousands and thousands of dollars while they try for me to 'get it'. Haha. At least I learnt a lot.
NoirHat
Regular Member
- Feb 4, 2011
- 449
- 216
most can't deal with Greed or Fear..it eventually knocks them out.
Choosing up or down is pretty damn straight forward.
Options are good for hedging stock trades but if i remember correctly the Risk:reward ratio sucks because you risk a dollar to make 80 cents?? if that's correct
Choosing up or down is pretty damn straight forward.
Options are good for hedging stock trades but if i remember correctly the Risk:reward ratio sucks because you risk a dollar to make 80 cents?? if that's correct
VinceC
Elite Member
- Jun 8, 2008
- 2,119
- 948
Dont do stocks options, instead futures index or etf options. Been trading it ten yrs ago.Believe it or not, i have been earning good mthly income just by trading ratio. For 30k start of this yr, now it sitting ard 42k. TBH, $200 is just not enough to trade n pls give up the tot of just gaining experience by losing it, instead u can use it to buy some books to educate yourself. And also forget abt all those gurus courses, u will only make them richer, not u.
When you buy or sell an option the market maker is charging you a premium to grant you the position so you are automatically losing money.
Next you really are just taking a smaller spot position .. That position then varies until maturity. .... So the best way to describe it is buying an insurance policy and being ripped off buying it ... Even if you do make money at the end of the day.
.... So they are selling you something that's worth $90 for $100 ... Your losing whether you know it or not.
Banks love people who deal options.
Next you really are just taking a smaller spot position .. That position then varies until maturity. .... So the best way to describe it is buying an insurance policy and being ripped off buying it ... Even if you do make money at the end of the day.
.... So they are selling you something that's worth $90 for $100 ... Your losing whether you know it or not.
Banks love people who deal options.
BlackHatBloom
Junior Member
- Feb 2, 2012
- 101
- 7
Man! I must say this is AWESOME advice... we need to skype at some point REP+
I agree guys, but there is a huge difference between trading mindset and gambling mindset... been through both. Trading is based on careful analysis and educated decisions, while gambling is fed by your personal ego..
Thank you guys for your advice
Hey guys,
Here is another trade I will be putting on today.
Action: Buy the Coca-Cola November $75 call for $265 or less, good this week.
Shares of Coca-Cola Co. trade on the New York Stock Exchange under the symbol "KO". The expiration date for this option is November 17, 2012.
Coca-Cola closed Friday at $74.05 and the recommended option closed $260 bid at $264. Coke's 52-week range is $63.34-$77.82. The $75-strike call is an "out-of-the-money" option, with its premium for time and volatility only. Coca-Cola shares have dropped sharply to support. Conditions are right for demand to show up and KO to launch a snap-back rally, but don't be surprised if Coke explores secondary support before this naturally corrective down move is done. Technical resistance is at $75-$78 and $80-$83. Support is at $73.75 and $69-$72. Conservative traders may target a move toward $78and above. Speculative traders may eye a multiplier move toward $80.30 and above. If KO rises to $83, each $75 call will have $800 of intrinsic value. If my expectations go awry and Coca-Cola is at or below $75 on the third Friday in November, your option will expire worthless. That is your risk.
Here is another trade I will be putting on today.
Action: Buy the Coca-Cola November $75 call for $265 or less, good this week.
Shares of Coca-Cola Co. trade on the New York Stock Exchange under the symbol "KO". The expiration date for this option is November 17, 2012.
Coca-Cola closed Friday at $74.05 and the recommended option closed $260 bid at $264. Coke's 52-week range is $63.34-$77.82. The $75-strike call is an "out-of-the-money" option, with its premium for time and volatility only. Coca-Cola shares have dropped sharply to support. Conditions are right for demand to show up and KO to launch a snap-back rally, but don't be surprised if Coke explores secondary support before this naturally corrective down move is done. Technical resistance is at $75-$78 and $80-$83. Support is at $73.75 and $69-$72. Conservative traders may target a move toward $78and above. Speculative traders may eye a multiplier move toward $80.30 and above. If KO rises to $83, each $75 call will have $800 of intrinsic value. If my expectations go awry and Coca-Cola is at or below $75 on the third Friday in November, your option will expire worthless. That is your risk.
fuzzy_corleone
Regular Member
- May 11, 2011
- 299
- 211
BlackHatBloom
Junior Member
- Feb 2, 2012
- 101
- 7
BlackHatBloom
Junior Member
- Feb 2, 2012
- 101
- 7
Thank you! This will be great... I like it
I opened a bearish trade on Men's Wearhouse (MW) yesterday. This is going to be a quick-in-and-out trade on MW, but it should be a fun one.
MW releases its quarterly earnings today after the market closes. And if the results of the MW announcement are anything life the results of their competitor Jos A. Bank Clothiers (JOSB), the stock should see a sharp decline. JOSB showed that the market for men's apparel hasn't been as strong as it missed earnings expectations by $0.09 and revenue expectations by $7 million.
If MW misses big, the stock could easily drop down to the $32 level, but I am using the current support level of $34 as my strike prices of choice.
ACTION: 'Buy to Open" the MW July 34 Puts.
Remember - Trade according to your plan!
MW releases its quarterly earnings today after the market closes. And if the results of the MW announcement are anything life the results of their competitor Jos A. Bank Clothiers (JOSB), the stock should see a sharp decline. JOSB showed that the market for men's apparel hasn't been as strong as it missed earnings expectations by $0.09 and revenue expectations by $7 million.
If MW misses big, the stock could easily drop down to the $32 level, but I am using the current support level of $34 as my strike prices of choice.
ACTION: 'Buy to Open" the MW July 34 Puts.
Remember - Trade according to your plan!
portalweb
Supreme Member
- Jan 7, 2010
- 1,435
- 579
You'll make good money if you have the right tools.
You can start with http://stockcharts.com - study the public charts there.
Note: Nearly all DOW stocks are down. With right timing, nearly all 30 DOW stocks will rebound, which will make you a good fortune. AA (Alcoa) is one of good DOW component as the example that is due for a nice rebound.
You can start with http://stockcharts.com - study the public charts there.
Note: Nearly all DOW stocks are down. With right timing, nearly all 30 DOW stocks will rebound, which will make you a good fortune. AA (Alcoa) is one of good DOW component as the example that is due for a nice rebound.
Ah, I lost a good deal trading options before learning some stuff I should've known from the start.
1. Play for singles. Swinging for the fences is a good way to go broke(experience talking here)
2. Out of the money is for suckers. Yeah yeah yeah, sometimes they can make you huge money, but unless you're a stock picking and timing god they'll expire worthless. You want to be a seller of OTM.
3. Spreads. Spreads. Spreads. A simple call spread and put spread can get you a long way when you want to speculate.
4. Covered calls all day! By far my favorite way to trade now. I love the weeklys on some of the bigger names because you can get serious returns from the premium you're selling and who cares if it gets called away, a profit's a profit.
5. Watch volatility closely, it's always a factor.
6. The point isn't to be right, it's to make money. Focus on strategies that will make you money even if you're wrong, that's why I like the covered call
1. Play for singles. Swinging for the fences is a good way to go broke(experience talking here)
2. Out of the money is for suckers. Yeah yeah yeah, sometimes they can make you huge money, but unless you're a stock picking and timing god they'll expire worthless. You want to be a seller of OTM.
3. Spreads. Spreads. Spreads. A simple call spread and put spread can get you a long way when you want to speculate.
4. Covered calls all day! By far my favorite way to trade now. I love the weeklys on some of the bigger names because you can get serious returns from the premium you're selling and who cares if it gets called away, a profit's a profit.
5. Watch volatility closely, it's always a factor.
6. The point isn't to be right, it's to make money. Focus on strategies that will make you money even if you're wrong, that's why I like the covered call
Hopefully some of you got in on my MW earnings play that I mentioned before Men's Warehouse released earnings this past week. Turned out to be a 122% winner!
Here is my latest option trade recommendation for all you traders out there.
It seems that Bernanke and crew are not alone in their fight against deflationary forces. China is trying to rev their economic engine and European leaders are working to inject capital into Spanish banks ahead of the Greek elections (and while the populace is focused on the big soccer tournament).
This action may be boosting the euro and weighing on the US dollar. Meanwhile, US politicos continue to fiddle and squabble their way toward the fiscal cliff. Currencies are calling the tune. And a euro rally could put the risk-on trade back on for institutions. Markets have reached important points and we could see a larger move out of bonds and into stocks and commodities. Buckle up for what could be a wild market ride over the weeks ahead.
This week I?ve found a call play, on a construction and mining equipment company, to vie for fun and profit. So, without further ado, here is...
Buy the Caterpillar July $90 call for $285 or less, good this week.
Shares of Caterpillar Inc. trade on the New York Stock Exchange under the symbol ?CAT?. The expiration date for this option is July 21, 2012.
CAT closed at $87.60 and the recommended option closed $279 bid at $285. CAT?s 52-week range is $67.54-$116.95. The $90-strike call is an ?out-of-the-money? option, with its premium for time and volatility only. I?ll tell you why I like a call recommendation here.
A few months ago, CAT appeared ready to roll over into a natural correction. I was looking for a move down to underlying levels of support. Prices have dropped back to a level not seen since late last year. And I?m seeing signs of support (demand) kicking in. Now, a rebound to resistance appears likely.
Support is at $82-$85 and $79-$80. Resistance is at: $89.50-$92.65, $95-$97.77, and $99-$104.
Conservative traders may target a rise toward $94 and above. Speculative traders may eye a multiplier move toward $95.70 and above.
If CAT rises to $100, each $90-strike call will have $1,000 of intrinsic value. If my expectations go awry and CAT is at or below $90 on the third Friday in July, your option will expire worthless. That is your risk.
Here is my latest option trade recommendation for all you traders out there.
It seems that Bernanke and crew are not alone in their fight against deflationary forces. China is trying to rev their economic engine and European leaders are working to inject capital into Spanish banks ahead of the Greek elections (and while the populace is focused on the big soccer tournament).
This action may be boosting the euro and weighing on the US dollar. Meanwhile, US politicos continue to fiddle and squabble their way toward the fiscal cliff. Currencies are calling the tune. And a euro rally could put the risk-on trade back on for institutions. Markets have reached important points and we could see a larger move out of bonds and into stocks and commodities. Buckle up for what could be a wild market ride over the weeks ahead.
This week I?ve found a call play, on a construction and mining equipment company, to vie for fun and profit. So, without further ado, here is...
Buy the Caterpillar July $90 call for $285 or less, good this week.
Shares of Caterpillar Inc. trade on the New York Stock Exchange under the symbol ?CAT?. The expiration date for this option is July 21, 2012.
CAT closed at $87.60 and the recommended option closed $279 bid at $285. CAT?s 52-week range is $67.54-$116.95. The $90-strike call is an ?out-of-the-money? option, with its premium for time and volatility only. I?ll tell you why I like a call recommendation here.
A few months ago, CAT appeared ready to roll over into a natural correction. I was looking for a move down to underlying levels of support. Prices have dropped back to a level not seen since late last year. And I?m seeing signs of support (demand) kicking in. Now, a rebound to resistance appears likely.
Support is at $82-$85 and $79-$80. Resistance is at: $89.50-$92.65, $95-$97.77, and $99-$104.
Conservative traders may target a rise toward $94 and above. Speculative traders may eye a multiplier move toward $95.70 and above.
If CAT rises to $100, each $90-strike call will have $1,000 of intrinsic value. If my expectations go awry and CAT is at or below $90 on the third Friday in July, your option will expire worthless. That is your risk.