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Thanks for the pm. I will try to

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Friday, July 20, 2012 10:34:10 AM
Re: None Post # of 43448 
Thanks for the pm. I will try to answer your question on iv but first I want to say if you made 7 good trades out of 9 then you should be proud. That the range you want to be in and is probably telling you what your doing is working and you need to write what your doing down and look what type of plays they are. Just make sure your 2 bad plays didnt over shadow your 7 good ones by having good sell triggers.

On your one that you had that rocket from 0.04 to 0.50. To prevent this from slammin back down on you start using stops as it moves up. I started doing this more and more. Example, at 0.08 either move your entry level stop to 0.04 so the worse that happens on a quick snap back you break even or take your initial investment off the table. Then at 0.12 you move your stop to 0.08. At .16 your stop is 0.12. You could widen the space in between to let it breath but the point is you have none emotional hand on the ejection seat. When it hit your 0.50 you migh have had a stop at .40 and worse case it takes you out at that point. When they are running like that it easy to get emotions running high and talk yourself into thinking it going higher and it might but here is the second part that gets so many is IV.

On your cien the avg volitaty 1 month ago was 37%, having to look at aug since july's numbers a skewed to expiration. During this run your iv shot to current 73%. So demand shot this option price up with no price movement, in our example, 0.01. So the iv move from 37% to 73% moved the option price 0.36 just by itself. What probably happen to you is when it consolidated the IV went down to let say .50ish so sitting still and a decreasing IV you lost 0.23 on your option price (VEGA). So during that pullback right after breaking the 50ma on the 6m chart probably hurt the iv.

Now to your question of to quickly calculate this on the fly is really hard one. This is where I think having a trailing stop or moving your stops up as the price goes up is important. We have seen so many times where price can go against us in seconds.

The bottom line here is if it punched you out at or .40 example if the price broke the last high we can again. Probably wont get a good iv price and have that working with us but still can gain.

Hope this helps and if not shot me another pm or if you want to examine your next play send it to me and we can work the pieces.

One last thing and not so much address to you but have had several asked. Using delta, gamma and a lot of them are a pain in the butt and some say I doing fine without them and I dont disagree, but for those that having been losing and dont know why then these help.


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