Today buying $SPY calls in the fool’s game

THE FOOL’S GAME

As the great market guru, Henry David Thoreau would say – “simplify, simplify, simlify”. In other word, if the market’s up, buy the calls.

Here’s what that looks like at the moment for a $10K buy in the in-the-money SPY weekly call for next week’s Friday expiration (the profit is in the white rectangle on the lower right of the chart):

$SPY – the fool’s game’s not foolin’ for 79% on the day trade

THE FOOL’S GAME – BUYING CALLS AND PUTS FOR DAY TRADES

After SPY’S opening gap, it was very trying trading in the early action as the ETF whipsawed back and forth across its open.

The market’s first ninety minutes chopped out two short signals and two long signals before settling into an downward trend for the rest of the day.

That slide into the close saved the trade for the day. After an initial draw down of $1500 (on a $10K buy-in on each trade), the overall net at the close was $7,900 for the day (or 79%) trading the weekly calls and puts (see the chart below for an illustration). Instead of saying the drop from 8 a.m. (PST) into the close “saved” the day, I guess it would be more apt to say it made the day-trade with this system once again great for the day.

I have upped the ante on what I talk about here from buying $5K worth per trade to $10K worth for each trade simply because it’s easier to talk about percentage gains and losses using that level. The SPY is best for this kind of options day trading because of the liquidity in both the weekly and the monthly strikes. The action today was in this week’s 266 calls with a volume today of more than 63,000 contracts and this week’s 267 puts with a volume today of more than 9,000 contracts, both were in the money contracts (that volume may be skewed by the fact this week’s expiration Friday is also a monthly expiration). Size ranged from 72 to 90 contracts per trade.

With $10 in the trade, it’s also fun to say on good days like today — Made $7900 today with my 10 grand in the market and now I’m flat with no overnight risk! What a fool am I?!

(click on the chart for a larger view)

REMINDER: The commentary presented here is for entertainment purposes only and should not be construed in any way as direct investing or trading advice.

#MarketTiming $SPY – Another day, another…

Had short-term sell signals across the board for Wednesday and the market went up. Marginally.

This bull is trending so hard, it hard to get even two down days in a rows, happens but it is hard. Especially when long-term breadth is rising. For the most part one want to be on the same side as long-term breadth.

For today, both Price and Short-term breadth (see the red circle on the chart below), have again given buy signal so the market should go up. “Should” is not a word that has been that predictable these days either on the long side or the short side although the long side has the edge.

Note: RIOT, the wild and crazy stock featured in yesterday’s timing post, did do what it was “supposed” to do, which was to go down — from 28 to 23.

SWING TRADING SIGNALS:

LONG-TERM BREADTH: Buy (Day 1).

PRICE: Buy. (Day 1).
SHORT-TERM BREADTH: Buy. (Day 1).
VOLATILITY: Sell, (Day 2).

CONTEXT:

SPY CLOSE – 266.75
QQQ CLOSE – 155.99
CNN MONEY’S FEAR AND GREED INDEX: (67, rising, greed level).
NIFTY-50 STOCK LIST: 27 Buys; 6 Overbought, 3 Oversold, 4 new buys today, 4 new sells.

(click on the chart for a larger view)

$KC_F #Coffee futures – racks up 134% on the short side.

I closed this trade earlier (covered too soon) but coffee futures officially closed its current down swing with a profit of about 134%.

Needless to say again, Coffee has been a stellar performer on swing trades this year. Calculated on the continuous contract, it is up $16,500 on swing trades long and short (short being best in retrospect). Sneak a peak at the last line of text below for the current initial margin requirement to see what “stellar” means.

As for the current March contract, it is, according to TradeStation, up $12,600 per contract (see the white rectangle on lower right side of the chart below for closed trades). It is hard to calculate percentage gains since the margin has fluctuated.

Coffee has now reversed to a long. The initial margin requirement is now $2,310 per contract.

(click on the chart for a larger view)

#MarketTiming – What a RIOT!

The late great Kennedy Gammage of the Richland Report used to always say “buy when the market tells you, sell when the stock tells you.”

He was making allowance for stocks that defied the general market’s move or giving stock pickers something to do to impress their clients. What he did not tell was that most often when the market says sell, so does the stock.

As I’ve written here repeatedly, I keep a nifty-50 list of stocks, which I follow both as an indicator and for their individual abilities to move with the market. Every so often (roughly quarterly) I sort the list and add in new stocks to keep it current and vibrant.

On the last sort, the stock symbol RIOT vaulted to the very top of list virtually from out of nowhere. Here is its profile on Yahoo Finance:

Bioptix, Inc., through its subsidiary, BiOptix Diagnostics, Inc., develops enhanced surface plasmon resonance technology platform for the detection of molecular interactions. The company also focuses on animal healthcare and owns important intellectual property rights related to veterinary products. In addition, it has granted a license relating to single chain reproductive hormone technology for use in no-human mammals, which is under active development by the licensee bovine rFSH. The company was formerly known as Venaxis, Inc. and changed its name to Bioptix, Inc. in November 2016. Bioptix, Inc. was founded in 2000 and is based in Castle Rock, Colorado.

What?

Recently, it seems, Bioptix, Inc. changed its name to Riot Blockchain, Inc. and its stock went insane, rising from $8 to $23 in four trading days. Then quickly dropped back down as far as $13 in three days. Then wandered sideways while the Nasdaq pulled back and my three swing signals – market timing signals based on Price, Breadth and Volatility – remained on sells. When finally, the swing signals began to click in with buy signals (see the chart panel below), RIOT took off riotously again, rising 101% on the price signal, 92% on the breadth signal and 96% on the volatility signal in less than five days (again, see the chart panel below) – as Kennedy Gammage would say “buy when the market tells you.”

None of this makes any sense to me. I like to think this is three guys smoking weed in Castle Rock, Colorado, where it’s legal who get the brain stroke to go for a “blockchain” in their name because they sort of are one…and laughing at the idea. Wouldn’t that be a riot? What a stroke!

Well, Wednesday we may get a chance to see if “sell when the market tells you” is more telling than “sell when the stock tells you” since all of my short-term swing signal gave sells today for tomorrow’s open (see table below). Geez…going to have to take swing profits on these signal, somewhere around 90% to 100%. On a stock in three to five days.

What a riot!

SWING TRADING SIGNALS:

LONG-TERM BREADTH: Buy (Day 4).

PRICE: Sell. (Day 1).
SHORT-TERM BREADTH: Sell. (Day 1).
VOLATILITY: Sell, (Day 1).

CONTEXT:

SPY CLOSE – 266.78
QQQ CLOSE – 155.69
CNN MONEY’S FEAR AND GREED INDEX: (65, rising, greed level).
NIFTY-50 STOCK LIST: 27 Buys; 6 Overbought, 4 Oversold, 4 new buys today, 4 new sells.

(click on the chart panel for a larger view)

$SPY options – an 11% gain for a day

DAY-TRADING THE FOOL’S GAME:

At the time of the Tweet below, the weekly SPY ITM 265 call was up about 31%, basically the peak of the day. It sold off somewhat into the close, finishing a mechanical day trade for 11.3% profit.

The charts below reflect a $10K buy-in on the call (54 contracts at $1.82 per contract)

THE FOOL’S GAME

END OF THE DAY UPDATE:

I say ” mechanical” above for the finish of the trade because there was no real sell signal during the day.

However, when day-trading weekly options (expiring this Friday), it often helps to also be flexible and take discretionary profits from time to time. In this case (see the chart below) there were ample opportunities to close this trade out on the jags and zig-zags on SPY while the call was at the $2300 to $2500 levels (23% to 25% levels).

There are more exciting days in the Fool’s game but today may be more indicative. A 11% gain for a day is still a 11% gain for a day.

(click on the chart for a larger view)

$KC_F #Coffee #futures short nets 100%

Took off half of the position earlier on this futures swing trade. Second half up more than 100%, about $3150 on a $2970 margin requirement.

START OF THE TRADE

This move to the downside has probably gone about as far as one can expect and is threatening a turn to upside (see indicator on the chart below) and is down three days in a row so covered the second half of the trade on the close today.

Not going long until I get a swing signal to buy.

(click on chart for a larger view)

#MarketTiming – said bounce and so it came to pass

Yesterday, my nifty-50 stock suggested a bounce in the market today and so it came to pass.

In the process, the bounce turned long-term breadth up, to go along with the buys now on all of the swing signals (see panel below). With 15 individual buy signals on the nifty-50 list today, the list itself moved to middle ground from oversold which would suggest more to come to the upside.

All of the leveraged index ETFs – TQQQ, XIV, UPRO, TNA – are buys on the open tomorrow, as well as 9 out of the 12 bellwether stocks I follow (see chart panel below).

With all of those positives in the midst of a bull market, one has to assume this is once again going up. Until it doesn’t.

SWING TRADING SIGNALS:

LONG-TERM BREADTH: Buy (Day 1).

PRICE: Buy. (Day 2).
SHORT-TERM BREADTH: Buy. (Day 1).
VOLATILITY: Buy, (Day 3).

CONTEXT:

SPY CLOSE – 264.07
QQQ CLOSE – 154.02
CNN MONEY’S FEAR AND GREED INDEX: (60, stalled, greed level).
NIFTY-50 STOCK LIST: 24 Buys; 8 Overbought, 10 Oversold, 15 new buys today, 1 new sells.

(click on the chart for a larger view)

$KC_F Coffee futures, five days short, up 70%

The char below says it all, short from 128.50 in the March18 contract and up now $2100 per contract on this down swing, a 70% gain on the margin requirement.

Oversold now. Down four days in a row, a marker oftentimes for a bounce.

Taking half off but letting the rest ride in case of a crash.

(click on chart for a larger view)

$FSLR – When in doubt buy…

Said it before but bears repeating: when in doubt buy renewable energy…

Simple as that.

Solar stocks will fluctuate with the market and with fossil fuel stocks but one day on some market swing (maybe this one) they will leave the fossil fuels companies withering in the sun, so to speak.

Recently oversold, here are a selection of solar stocks today:

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(click on chart for a larger view)