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Right. Healthy corrections. Like yesterday. It was a market wide slump. Analysts are just horrible at printing the truth. Disregard everything you read and watch the market as a whole.
I have to agree. On the final day with no time left, they're a gamble. I moved to next week already, first thing this morning.
And there's where the worthless puts came through for me. Straddling 200c 205p.
It's sad to call a software update a recall. They've already solved the issue, but these analysts have mislead the public. Not surprised.
Well since you never used the strategy correctly and only opened and closed straddles, I can understand why you don't see it.
You've stuck to your methods, altering it. Apologies but I took this as a backhanded comment.
286% for the week.
I'm going to exit here and let you figure out the rest.
You're right. I absolutely am not a fan of limits. If I knew exactly where an entry would take place, I wouldn't use this strategy. I'd make 1 sided trades and be done with it all. But everyone has different approaches. It's these minor differences that we were expressing yesterday though. I have reasons for the approach due to the volatile nature of the stocks I'm in.
You've got the hang of it Dan. That's exactly how to do it.
I believe you missed the boat on that one. I sold calls at 215, and am straddling there with 217.50p and 212.50c
And this is a prime example of when those puts we held onto regain value. Sure that new call is sinking, but when it hits bottom, we'll deal with that later. Looking good though $2 past where I opened my spread at.
Tslafan: This was what I did and should answer your Q5. My positions were close to what you had as well.
No worries bud. I was wondering why you weren't having better luck with your profits. It makes sense now. You'll get there.
To answer why you would hold onto those puts. They may expire worthless.
That's not why you're holding them. You're holding them because speculation deems them valuable, so any time it moves down, they gain value. And it's that revenue that you're walking away from. That's the short sum of what I'm trying to explain. You don't hold options to expiration date ever. But you do want them and the new ones when a rally runs out of gas. Does this make sense?
You're assuming that there's a lot of technical analysis with the actual play. There isn't. I watch for where I believe the ticker is stalling and sell one leg. That's it. I use that sale to fund a new straddle. Sometimes yes it's smaller, but that upside money is locked in because of the way the new 50/50 spread sits.
The value of the worthless leg is still there, but this rule of thumb is what led me to this strategy; if it was at that price today, it's more likely to see that price again than it is to see uncharted territory at a price it has yet to hit. I do this when I feel it's going correct. Almost everyone here knows when that's coming. 5-10 minutes pass by and it's done running.
I sell that worthless leg on a reversal, and the entire profit is realized when it changes directions. If it continues to run, and doesn't correct, the new spread carries the majority of the weight from the first trade. Mistakes happen in judgement calls but the new spread absorbs most of it. Until the correction finally takes place.
I've outlined this every week in my exact moves. I don't know how else to explain it bud. If you haven't been doing this, then you're just waiting for it to go for highest highs and lowest lows and have missed out on the biggest gains from this. I keep saying that I play corrections. Everyone else wants it to keep running. My best days are when it's a ping pong ball going back and forth in a $10 gap. Worst days are when it's barely moving $2 all day.
Your rationalization is: if it keeps running and I opened the new spread too early. That's simple. You just repeat the strategy and do it again at a higher mark. Corrections always come. People get greedy and profit take. Shorts saw it run too far for too long. The incentive is boldly there for a rally to be reigned in. Just look at it dump from mid 210s to 189 in a few short days.
But as I've said before Wed/Thurs are my scariest days. You may want to look at next week until you get the scope of what I've been explaining this entire time.
As it sits, your plays have been for it to exceed a set gap difference. It will have to run or dump greater than $15 for you to ever see a healthy profit. Those days are far too rare to ever invest in.
It is that simple Dan.
For instance, today. Sold my calls from yesterday at 202, kept the puts.
Straddled 200 c and 205p
-------
Went to 198
Sold all puts, kept all calls.
Straddled 195c. 200p
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End of day, Sold all calls, kept 200p.
Straddled 212.50p, 207.50c
Ended with that last straddle and the 200p from earlier. If it continues up, great, but it's also very likely that it will give some of those gains back. That's where the 200p realizes the profit, after the 195c had already covered it all the way to 209.25 pps.
Why sell it at close when tomorrow it's very likely to recoup it's value. If it doesn't, it's not a big loss, because further upside and the plays tomorrow will absolutely make up for it.
Ok. This is exactly what I do. I jump in both feet roughly $2 above and below ITM. Only sell only calls when it goes up. Only sell puts when it goes down. Each time I sell I repeat my entry play, $2 above and below. I never use limits. And the legs you keep saying ate not worth keeping, are where you're dumping off future gains you'll never see. The other leg covered it's loss. You exit them too early.
What use are they? You're missing the entire point of the strategy. Their use is that until you regain value in the result of a correction. You're just closing the entire straddle and benefit nothing from a correction when it occurs.
Since the median of the two is at 192.5, anything north of that favors calls. Sell those and reset it's profit for a downward correction. Currently at 200, so 197.50c 202.50p.
If it falls below 200, sell the puts, and do it again.
If it raises, sell the call and do it again.
It's ripsawing faster than I can keep up with. Today's a great day.
Mark on 198. Selling puts. $4 change is good enough for
Marking 202 for the next position to open
You're getting the right idea. The profit from the first sale is used to open a new straddle at that new point. It's to perpetuate the movement and set up for corrections. An added step but I feel is key to getting the most out of the profits you just gained.
Necessary corrections and consolidation. Looking at a potential 188 bottom and the pre-market 197 as top.
Adjust accordingly to swing trade.
That's the benefit of OTM yes, but as I keep saying, you're subjected to more risk, heavier penalties on time decay, and in the event of sideways trading, you can lose far more. I don't do that because consistent growth is better than taking that risk.
Those aren't stocks. They're pump and dump penny stocks. If you can get in on halted action, great. But not a wise move. There's reasons why I'm here and not there.
Exactly. Everyone fears corrections because it goes against their plan of direction.
I pray for corrections. They always happen. A stock never continues to go in one direction forever. I use the exact mechanic of stocks that Everyone fears as my profit technique. That's exactly why I leave the worthless leg as is. When the correction occurs, it regains value that you otherwise would have never received.
I call it a ground rule double, since most investors buy options hoping for homeruns. That's not realistic whatsoever. Scoring bases wins baseball games, not homeruns.
Any baseball coach will tell you RBIs win games and no coach in their right mind banks on homeruns.
:) good luck with it and paper trade first to see if it's right for you. It's the logical approach especially with something as volatile as Tesla.
I have yet to find anyone that does this. But here's the general rule of thumb:
Find the most volatile tickers you can.
ITM options 50/50 going both directions.
Sell only the profitable leg of the spread and straddle that new mark at 50/50 and wait for a correction. You bank profits in both directions this way.
The first trade isn't what you make money from. It's the 2nd, 3rd, 4th...
So long as the ticker doesn't trade sideways you win.
This was my dream child when I decided to employ a risk management strategy for the riskiest venue on the open market.
I've since heralded it in this forum exclusively but for quite awhile it has nested great profits for myself.
Up or down, you can hedge your investment by limiting potential profits to a more realistic outcome. Stability is the goal. And quite simply you are investing on this key aspect: is the stock volatile? Yes? Continue. No? Move to one that is.
And Tesla is anything but stable.
We're here to trade the stock. We're being subjected to daily isolated incidents that pale in comparison to other automotive products. It's blatantly obvious as to why. But this data isn't changing the ticker's pps. The global market is. It's fundamentals on earnings and prospective future growth is. These detractors are simply not enough for anyone to give cause to any concern on their meaningfulness. There just isn't any support for what you're writing. I've yet to see any agree with you on it in here. Tesla is down today after a monstrous comeback. It may be red Monday, but the overall following week will be growth again, despite how many times you link articles. Our economy has suffered enough. Jobs aren't shrinking, so fundamentals say that we're going to rebound, albeit slowly. It will take 2 years in my rough estimate to get us back on track, barring any major detracting developments.
Resetting my mark at 198. All puts sold off. Straddling on 195c 200p.
2/17. I never buy options expiring the following day. Wednesday is already risky enough as it is.
Straddling 212. Riding this downward momentum at the moment.
Green across the board on index futures. Looks like 219 may be possible. 203 as a bottom.
Here's the current trend. Most big brand names are beating analyst expectations. Due to the slight uptick, and fear of fed activity analysts are holding back on overshooting their estimates. We just ended the holiday season with incentives and relatively quiet news on consumer goods disruption for Christmas especially. While everyone stared at the stocks, they missed the lack of issues that actually impact daily lives. I expect all quarterly reports to inject this surprise coming through to March. That was half the reason I picked Disney the other day. The other half was for laughs...
If PayPal hits big today and Honda in the following report, we may see some big surprises ahead for a ripple effect into Tesla. Things to ponder on. I'm willing to take that risk in their earnings, especially after PayPal has been beat into oblivion, yet is still up and fully operational. Venmo is what scares me about it though. Side thoughts mostly. But I still see any tech boost or automotive boost having an effect on Tesla's pps.
Well I'll be a monkey's uncle. Guess I'm back in for options next week. The momentum has returned.
Considering how they handled an issue with a Facebook hacker/scammer tricking people into venmo scams, this is my take:
An absolute dumpster fire that allows scammers to steal people's money even when confronted with a police investigation into the matter.
The dispute was closed three times, with the first two reasons being because of: "fortune telling." It had nothing to do with it at all. The individual has access to their driver's license, so it's in all elaborately done, but nevertheless, nothing was followed up with even after frequent phone calls. My friend has had a dizzying 3 months of issues due to it all, and Venmo/PayPal is just turning their cheek at it. Horrible platform. Hope it roasts in hell.
My 2 cents.
Found my new home to employ 50/50 puts/calls for the coming next few weeks :)
Happy to have helped friend. This is transitioning into a safe practice day trader, the right way. Everyone else is just gambling.
You'll love this. I jokingly put $1000 into $120 Disney calls before close, as part of my vacation. I didn't expect a homerun. Might do the same with PayPal tomorrow lol. Back to typical volatility catalysts, like earnings reports, until Tesla shows more momentum.
I honestly don't have a decent suggestion. Unless you screenshot the active trades as you make them. Then compile all of the data whichever way you prefer. The end sum of a spreadsheet is to show whichever data you want to display, so start at the end then work backwards.