Learn How To Trade Options

[MJ DeMarco]

Mj, curious as to what you're doing - now that you're upgraded and back in the game with TOS...

My first trade was opened at the end of November.

B 20 SO Feb 2015 Call 1.15 ($2,300)
S 20 SO Feb 2015 Call 1.87 ($3,740)
Reasoning: Technical chart showed a bullish pennant.
=======
$1,440 Gain in 7 trading days, 62% gain, annualized it's bunch.

Black Swan event = end of your account and more.

Keep to the stocks.

Do you realize that selling a put an buying a stock carries the exact same risk profile?
A "black swan" will have the exact same outcome on the two investments.

How does selling a put option make unlimited loss?

It doesn't. I wouldn't listen to @markonestock as he doesn't appear to know what he's talking about other than what regurgitating what the stock market gurus love to preach... options are risky! And highly leveraged! Oh my!

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[jpmartin]

$1,440 Gain in 7 trading days, 62% gain, annualized it's bunch.

Mabrook! (As they say in this part of the Middle East!)

BTO V on Oct 31, 2014 - JAN 2015 250 CALL OPTION @ 3.6
STC V on Nov 7, 2014 - JAN 2015 250 CALL OPTION @ 8.53

Gain 137% in 7 Days, annualized... my calculator stops working - though dollar value was small, since I risked only a smaller amount.
Reason: Dead Cat Bounce, but there were enough indicators to suggest that V was rising on new volume.

 

[MJ DeMarco]

Dec 2: B20 10 LVS Puts Strike 60 Feb 15 @ 2.86
Dec 4: S2C 10 LVS @ 3.95
--------
Closed for 36% gain in 2 days, Total Net Profit: $1,014
Now 2 for 2.

 

[David P]

MJ,

If you like this sort of thing, may I suggest someone I learnt from who I believe is very good.

Do your own research/DD, but I know I benefited from his stuff, which includes some
pretty decent software, here is the link, which is not affiliate, nor a solicitation, blah, blah..

Just a friendly link : http://www.daytradingzones.com/

Good luck with the trading...

D

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[MJ DeMarco]

3 for 3, although the last trade was more of an avoidance of loss, than a win.

BTO SLV Put Dec 14 Strike 16 @ .50
STC SLV Dec 14 @ .59

$90 gain, 18% in 3 days. I bailed out (sold) on this trade because I didn't like how the chart was starting to form.
And sure enough, today the ETF is up big and this trade would be down 60% had I kept the trade open.

MJ,

If you like this sort of thing, may I suggest someone I learnt from who I believe is very good.

Do your own research/DD, but I know I benefited from his stuff, which includes some
pretty decent software, here is the link, which is not affiliate, nor a solicitation, blah, blah..

Just a friendly link : http://www.daytradingzones.com/

Good luck with the trading...

D

Thanks, Ill check it out, always open to examining various strategies and ideas.

PS: Please note, I don't consider this "investing" but educated speculation. Really no different than playing the stock market.

@biophase -- what you up to? Last we spoke you mentioned you were dabbling in options.

 

[Jonleehacker]

@biophase -- what you up to? Last we spoke you mentioned you were dabbling in options.

Would love to hear K's adventures trading options. I do as well, but we know that @Edge is the real pro... last I spoke to him he was starting his own hedge fund.

 

[Harry321]

I'd like to learn!

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Mark Foster II]

I'd like to learn as well if the offer is still on the table.

 

[Stu_Hefner]

Id be interested in selling option spreads for additional income. Anyone do this?

 

[biophase]

@biophase -- what you up to? Last we spoke you mentioned you were dabbling in options.

Ugh, market has killed me in the past few weeks. But my trades are very different from yours. I'd probably be real happy posting this last month or even 3 days ago. This has been a good exercise for me to revisit my trades. In fact, I've been down about $17k in the last 3 days.

First let me say, don't copy me. I'm just having fun and have no rhyme or reason to my trades. I tend to zero in on a few stocks and watch and learn about them.

Here are my trades for this year 2014.

Tesla

I started trading Tesla 2 years ago and have been riding its options all the way up. I stopped buy options on it after it hit 260. It was a good ride and I made around $40k in Tesla in 2013.

4/15 = BTO TSLA 01/15/2016 185.00 C @ 49.95 -$9920
4/22 - STC TSLA 01/15/2016 185.00 C @ $10.79 +$13789
profit $3869

4/28 BTO TSLA 01/15/2016 195.00 C @47 -$4710
4/29 STC TSLA 01/15/2016 195.00 C @ 55 +5490
profit $780

5/8 BTO TSLA 01/15/2016 185.00 C @43.5 -$4359
5/27 STC TSLA 01/15/2016 185.00 C @56.25 +$5615
profit $1256

7/16 BTO TSLA 01/15/2016 240.00 C @37 -$3709
8/18 STC TSLA 01/15/2016 240.00 C @62 +6240
profit $2491


GoPro

This is where I thought it would be my 2014 Tesla. One where I wish I would have sold just a month ago. Problem is that with Tesla I sold my wad of options when it hit 120 in 2013, then it went all the way up to 280. I did not want to make that same mistake with Gopro. Duh. Goes to show you can never guess right.

I got in with 10 contracts at $1.25 and at one point my $1200 trade was up $30,000. So I decided to hold and go for not only the home run, but the grand slam. I did not sell but still managed to take decent profits on the way down. I still hold some 45 and 65s.

7/16 BTO GPRO 01/17/2015 65.00 C @1.25 -$1266
10/15 STC GPRO 01/17/2015 65.00 C @10.24 +5107
10/31 STC GPRO 01/17/2015 65.00 C @14.17 + $5655
profit $9496

8/27 BTO GPRO 01/15/2016 45.00 C @9.61 - $971
currently profit of $1400

10/15 BTO GPRO 01/17/2015 65.00 C @10.24 - $5107
currently profit $283

Alibaba

So here is or was my Tesla 2015. Again, I got 70 contracts at $1 and $2 and at one point my trade had a paper profit of $34,000 with a month! When BABA went from 100 to 120 in 5 days, these options were flying. But like with Gopro I held and it has lost its momentum.

I feel good about my July options but iffy on the March ones. Considering how shitty the market is and I'm basically breakeven on the 140s is good. Any momentum on this stock in the near future and this should be a winner.

10/3 BTO BABA 07/17/2015 135.00 C @2 - $2016
Currently potential profit is $1783

10/28 BTO BABA 03/20/2015 140.00 C @1.15 -$5850
currently loss of $297


Emerge

This is a fracking sand company which did good for me for a while. I was up a good chunk, about $5000, but honestly I did not watch this trade enough and loss track of it. Then gas prices tanked and so did the stock. It's a complete loss for me of about $5000.

6/20 BTO EMES 12/20/2014 100.00 C @13 -$1309
8/18 STC EMES 12/20/2014 100.00 C @22.67 +2257
profit $948

9/5 BTO EMES 03/20/2015 130.00 C @11.6 -$1161
will lose entire trade amount

9/22 BTO EMES 03/20/2015 130.00 C @10.94 -$1103
will lose entire trade amount

10/3 BTO EMES 03/20/2015 105.00 C @17 -$1710
will lose entire trade amount

10/8 BTO EMES 01/15/2016 85.00 C @20 - $2010
currently loss of $1500, but I have over a year to go, so I think this will recover.


Others

I make these small $1000 trades way out of the money as long shots. Like Tesla, Gopro and Alibaba, I like putting $1k bets down and hoping they will make $2k or sometimes $20,000.

11/17 BTO AAPL 07/17/2015 115.00 C @9.16 -$928
currently loss of $50

10/17 BTO NFLX 07/17/2015 485.00 C @10.50 - $1060
currently loss of $500

3/24 - BTO FB 06/21/2014 72.50 C @ $3.02 - $604
expired loss - $604

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Stu_Hefner]

WOW! I need to play around with 1000 and try run it to 34k. Hope you hit a grandslam with one of these, that would be real cool!

Ugh, market has killed me in the past few weeks. But my trades are very different from yours. I'd probably be real happy posting this last month or even 3 days ago. This has been a good exercise for me to revisit my trades. In fact, I've been down about $17k in the last 3 days.

First let me say, don't copy me. I'm just having fun and have no rhyme or reason to my trades. I tend to zero in on a few stocks and watch and learn about them.

Here are my trades for this year 2014.

Tesla

I started trading Tesla 2 years ago and have been riding its options all the way up. I stopped buy options on it after it hit 260. It was a good ride and I made around $40k in Tesla in 2013.

4/15 = BTO TSLA 01/15/2016 185.00 C @ 49.95 -$9920
4/22 - STC TSLA 01/15/2016 185.00 C @ $10.79 +$13789
profit $3869

4/28 BTO TSLA 01/15/2016 195.00 C @47 -$4710
4/29 STC TSLA 01/15/2016 195.00 C @ 55 +5490
profit $780

5/8 BTO TSLA 01/15/2016 185.00 C @43.5 -$4359
5/27 STC TSLA 01/15/2016 185.00 C @56.25 +$5615
profit $1256

7/16 BTO TSLA 01/15/2016 240.00 C @37 -$3709
8/18 STC TSLA 01/15/2016 240.00 C @62 +6240
profit $2491


GoPro

This is where I thought it would be my 2014 Tesla. One where I wish I would have sold just a month ago. Problem is that with Tesla I sold my wad of options when it hit 120 in 2013, then it went all the way up to 280. I did not want to make that same mistake with Gopro. Duh. Goes to show you can never guess right.

I got in with 10 contracts at $1.25 and at one point my $1200 trade was up $30,000. So I decided to hold and go for not only the home run, but the grand slam. I did not sell but still managed to take decent profits on the way down. I still hold some 45 and 65s.

7/16 BTO GPRO 01/17/2015 65.00 C @1.25 -$1266
10/15 STC GPRO 01/17/2015 65.00 C @10.24 +5107
10/31 STC GPRO 01/17/2015 65.00 C @14.17 + $5655
profit $9496

8/27 BTO GPRO 01/15/2016 45.00 C @9.61 - $971
currently profit of $1400

10/15 BTO GPRO 01/17/2015 65.00 C @10.24 - $5107
currently profit $283

Alibaba

So here is or was my Tesla 2015. Again, I got 70 contracts at $1 and $2 and at one point my trade had a paper profit of $34,000 with a month! When BABA went from 100 to 120 in 5 days, these options were flying. But like with Gopro I held and it has lost its momentum.

I feel good about my July options but iffy on the March ones. Considering how shitty the market is and I'm basically breakeven on the 140s is good. Any momentum on this stock in the near future and this should be a winner.

10/3 BTO BABA 07/17/2015 135.00 C @2 - $2016
Currently potential profit is $1783

10/28 BTO BABA 03/20/2015 140.00 C @1.15 -$5850
currently loss of $297


Emerge

This is a fracking sand company which did good for me for a while. I was up a good chunk, about $5000, but honestly I did not watch this trade enough and loss track of it. Then gas prices tanked and so did the stock. It's a complete loss for me of about $5000.

6/20 BTO EMES 12/20/2014 100.00 C @13 -$1309
8/18 STC EMES 12/20/2014 100.00 C @22.67 +2257
profit $948

9/5 BTO EMES 03/20/2015 130.00 C @11.6 -$1161
will lose entire trade amount

9/22 BTO EMES 03/20/2015 130.00 C @10.94 -$1103
will lose entire trade amount

10/3 BTO EMES 03/20/2015 105.00 C @17 -$1710
will lose entire trade amount

10/8 BTO EMES 01/15/2016 85.00 C @20 - $2010
currently loss of $1500, but I have over a year to go, so I think this will recover.


Others

I make these small $1000 trades way out of the money as long shots. Like Tesla, Gopro and Alibaba, I like putting $1k bets down and hoping they will make $2k or sometimes $20,000.

11/17 BTO AAPL 07/17/2015 115.00 C @9.16 -$928
currently loss of $50

10/17 BTO NFLX 07/17/2015 485.00 C @10.50 - $1060
currently loss of $500

3/24 - BTO FB 06/21/2014 72.50 C @ $3.02 - $604
expired loss - $604

 

[biophase]

WOW! I need to play around with 1000 and try run it to 34k. Hope you hit a grandslam with one of these, that would be real cool!

The Alibaba trade was $7k worth that went up to $41k in value. I sort of went with a larger position because I had a huge goal I was trying to reach.

 

[MJ DeMarco]

Id be interested in selling option spreads for additional income. Anyone do this?

Yes, verticals are my fave trade.

This has been a good exercise for me to revisit my trades.

Wow, you've been busy!! I had no idea your *dabbling* was this extensive. Ever thought about becoming a seller and put time on your side? I typically try to be STO vs a BTO... anytime I BTO its pure speculation based on a clear chart pattern.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[biophase]

Wow, you've been busy!! I had no idea your *dabbling* was this extensive. Ever thought about becoming a seller and put time on your side? I typically try to be STO vs a BTO... anytime I BTO its pure speculation based on a clear chart pattern.

No, because the upside is so limited vs their downside AND I don't watch the market everyday. As you can see from my trades, I like going for homeruns. With that said. I got back into TSLA this morning.

BTO TSLA 1/15/16 265C @18.5 -$1860
BTO TSLA 1/15/16 300C @11.8 -$1190

 

[sammich]

Hey guys, haven't logged in here in a while. This is a great thread. Don't wanna try and steal OP's thunder but wanna give some input here. I been trading options little over a year. Before that, I was trading penny stocks. I been all over the place in terms of underlyings and profits/losses. I gradually moved away from penny stocks after seeing so many SEC haults, liquidity issues, and other reasons. I could go on and on.

As for options, I started the usual straight buying and selling options and playing ER's which pretty much burned me for the most part. Was a good learning experience. I'm focusing more on selling premium now due to the exact reasons MJ had previously pointed out here. Also, I kinda feel bad saying this but I trade at work so I need something that requires less monitoring. I actually built a PC primarily for trading then just remote login from my phone at work. I don't really recommend doing this. It's pretty dang hard and can get stressful trying to manage work AND trading on your phone all while trying to keep a low profile lol.

I put a lot of emphasis on the VIX and the underlying's IV%. You can write scripts that allows you to display and manage all these IV%'s in TOS for instance. Its super helpful and saves a lot of hassle. After that, I focus on the probability of success %. I usually try to stick to positions with at least or as close to 70% probability of success. I tried equities for a while but they're generally much more volatile compared to ETFs and indexes. I been focusing more on the the Indexes now (european-style options) as they have some great benefits compared to ETFs/equities. Watch out for the bid/ask spread though. The spread can get pretty darn wide ranging anywhere from 0.50 to $2.00! I been casually looking into automated algorithmic trading and think I may have found a potentially decent system but capital is a bit limited right now

I'm still continuing to learn as they're sooo much stuff with options but can get kinda demoralizing when things don't go your way. I view trading like football. You are the QB. Every time the ball is snapped, you have to analyze the field, determine what all your opportunities are and go for it. You win some and lose some but the ones that make consistent completions with limited interceptions/sacks are the ones that do great.

 

[MJ DeMarco]

BTO TSLA 1/15/16 265C @18.5 -$1860
BTO TSLA 1/15/16 300C @11.8 -$1190

Yikes, now that's balls... against the intermediate trend, against the oil drop, good luck my friend. And hope oil rebounds and goes back higher, it's good for Tesla.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Stu_Hefner]

Yes, verticals are my fave trade.

I'm reading up about them and trying to learn the best way I can trade them in my spare time. I love the concept of time decay working for you.



Sent from my iPhone using Tapatalk - now Free

 

[biophase]

Yikes, now that's balls... against the intermediate trend, against the oil drop, good luck my friend. And hope oil rebounds and goes back higher, it's good for Tesla.

Well I have a year, and all I look for is for the stock to move upward a little, double/triple my money and exit. I only have $3k into this trade so I'll just let it run and I'll check up on it every few days. I don't think Tesla moves with gas prices as the people who buy then now are luxury car buyers, they're not really saving any money by going electric at this point. I guess we will see where these options are on Jan 1st.

 

[Jonleehacker]

Well I have a year, and all I look for is for the stock to move upward a little, double/triple my money and exit. I only have $3k into this trade so I'll just let it run and I'll check up on it every few days. I don't think Tesla moves with gas prices as the people who buy then now are luxury car buyers, they're not really saving any money by going electric at this point. I guess we will see where these options are on Jan 1st.

Bio, whatever your trading platform is, there should be a function to set some alerts that trigger when your stock hits a certain price. So if your target is $400, you could get a text message when the price is hit, and just log in and sell at that point, you can also set them on the down side or every $50 dollars. I use them a lot in my trading, saving me having to think about it. You can usually add messages to the alerts as reminders since it may be 6 months later (like... S&P is a buy here as there's previous support).

I also use Google Calendar to remind myself when my options are expiring... usually want to sell at least 30 days before expiry as that when the time value decay really kicks in.

... btw, based on the charts, looks more likely TSLA will test $180 before a turnaround. I believe price falling has more to do with slowing orders than price of oil.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[~Phil]

If you're long stock you can sell options against your stock and make a nice little income. Taught my Dad how to do this in his SEP-IRA account. He makes a few $$$$ each month

 

[HotRocket]

I would be interested as well.

 

[Josh Runion]

I would be interested as well.

As would I.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[jpmartin]

I would be interested as well.

PM me and I'll try to help you out. I'm mentoring a few students to get started on options trading...

 

[jpmartin]

As would I.[/QUOTE

PM me and I'll try to help you out. I'm mentoring a few students to get started on options trading...

 

[MJ DeMarco]

I would be interested as well.

As would I.

On the INSIDE there is an extensive thread on options trading (currently 18 pages long) as well as 3 supplemental ones that have spawned from the large thread. Myself and @IceCreamKid are the two biggest contributors to that thread.

In that thread which I started in early 2016, it details how I have earned anywhere from 2% to 9% PER MONTH on risk capital -- in that thread I report:

Feb +12.5% (big market rebound recaptured some losses from January, more like 4% when this is taken into account.)
Mar +3.6%
April +5.4%
May +9.3%
Jun -1.2% (huge market rally)
July 1.8%

These returns are based on CAPITAL put at RISK and net of comissions.

Some notes to that thread on the INSIDE (and others like it)...

1) The strategy outline is really a "money system" type strategy -- the best "money maker" in the world is still your business!
2) To get the results outlined above it is best to have at least $100K to invest as my risk capital on those returns vary from $50-$120K.
3) A TD Ameritrade account with a negotiated commission rate at Think or Swim platform.
4) Tier 4 approvals -- ability to sell naked, or worse, spreads.

Options are phenomenal financial tool as they are the only instruments which have a TIME element embedded making them have Fastlane characteristics.... when time goes by, you make $$!

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[LleixG]

I'm interested too

 

[jpmartin]

I'm interested too

I think if you're interested 1-on-1 mentoring - pm me or you can join the INSIDERS here on the forum and gain access to what MJ is teaching (it's really great stuff).