The $10K options trade – $SPY today for 103%

Had a loser in the calls to start the day, and another in the puts, but the hard run up in the calls for 180% at the end netted a 103% total gain for the day.

This trade late in the day was in the 267 in-the-money call expiring today, 91 call contracts initially for the loss, then back in for 111 contracts to the close (see chart below).

But if anyone harbors any illusions about this being easy psychologically, divest yourself of those straight away. Trading $10,000 worth of the nearest in-the-money strike at the closest expiration, still has me down 74% for the week, $7,405 on a $10K gamble in each trade after losses of 93% on Monday and 83% on Tuesday. Obviously, it is a strategy that can only be traded with a small portion of any account or portfolio. And even then it is flat out scary at times.

Fast money when it goes your way, and it seems even faster when it goes against you.

(click) on the chart for a larger view)

$SPY OPTIONS – buying calls and puts in a fool’s game of “dailies”

I was going to do a wrap-up of the returns for the first quarter in what I tongue-in-cheek called “the fool’s game” but decided not to because I doubt anyone would believe it.

Even after trading it (off and on) and tracking it (completely) I have trouble believing how astounding it is myself. See note below.

THE FOOL’S GAME – BUYING CALLS AND PUTS

I had tried trading options 30 years ago when I first started trading and it was obvious I didn’t know what I was doing. After being inundated by deltas and thetas and gammas and IVs, as well as strategies like verticals and calendars and strangles and straddles and busted wing whatevers, iron condors, I got killed ever time I tried to put all that stuff to use. It was just too big a jungle to juggle for the average guy.

It was an iron condor that finally told me I had to quit. How anyone executes a four-legged trade in options, going in and coming out, was way beyond me. It still is.

So what to do? What to do?

Do what I do in every other aspect of my trading for the past 30 years – simplify, simplify, simplify. The market either goes up or it goes down. Why wouldn’t it be the same for options?

But in options one is told BY EVERYONE that in buying puts and calls only three things can happen and two of them are bad. It either goes your way right away (the one good thing) or it goes against you (obviously a bad thing), or it goes no where and dies in time decay (the other really bad thing). What to do? Can’t do anything about the “for you” or the “against you” but time decay can be reduced if not eliminated by day trading. Not much decay with a buy on the open and a sell no later than the close.

Last fall I tracked this on the SPY monthly options, but by the beginning of the year, I tracked and started trading the at-the-money weekly options (for a bigger bang to the buck). Much of the tracking had be done manually and by trial and error because the strikes change often daily with the SPY movements, but the trading could be automated in TradeStation. In looking back at the end of the quarter I discovered that most of the really big winners, which I define as more than a 100% gain on the day, came on Fridays, the day of the weekly expiration (8 out of 14 of the big winners).

The day of the expiration? The thing of it is SPY now has options expiration days on Monday, Wednesday, and Friday. It seems possible the Friday expiration phenomenon could be present Monday and Wednesday too.

Call it day trading the dailies.

Which brings us to today. Granted it was a big one but in options lots of days are big ones. The SPY 263 in-the-money put expiring today netted 238% on my date-trade signal. And the same 263 puts for Wednesday and Friday trailed with 110% and 85% respectively. (The white flags on the right-hand axis in the charts below show the total gain for $10K traded, so chosen to also correspond to a percentage gain.)

Not a bad start to a quarter.

NOTE: Probably should say something about the first quarter in this “fool’s game” just for the record… There were 62 trading days in the quarter with 40 of them profitable for a win rate of 64%. Not going to say how much it made overall (everyone would say “oh, come on, that can’t be!”) but think about these numbers… As I said above there were 14 big winners of 100% or more. The biggest winner in the calls was 252% on 3/9. The biggest winner in the puts was 265% on 2/2. The biggest winning week was the week of 2/5 to 2/9 at 650% and the biggest losing week was 3/12 to 3/16 for a negative 208% (obviously one does not trade this strategy with one’s entire account).

All of this is simply buying calls or puts as day-trades.

(click on the chart for a larger view)

$SPY options – another freaky Friday?

Last Friday, the calls in what I’ve ironically labeled for myself the “Fool’s Game” exploded 250%.

In my post in this link below I noted that going into that Friday, my game was looking at its first losing week this year and there had been no trending day during the week also for the first time this year. I define a trending day as any day either the weekly SPY calls or the puts close with a 100% or more gain.

TRENDING DAYS IN THE FOOL’S GAME

So what’s this week look like? Pretty much the same as last week.

As of today’s close, this day-trading system, buying SPY calls and/or puts, expiring either Wednesday or Friday, is losing money, a jarring 81% for each $10K traded (it was losing 152% at last Thursday’s close). Obviously, one does not trade this with any more than a small portion of any account. In addition, this week again there has been no trending day.

Can last Friday be happening again this week? I’m going to suggest — yes!

SPY is down this week four days in a row (not much) which tends to be a magical number for a turn-around in my experience with swing trading, especially in this bull market. The Nasdaq Comp is down three consecutive days. CNN Finance’s “Fear and Greed” Index is down four days to 21, an “extreme fear” level, a neighborhood in which one should consider going long. Yesterday, 40 of the stocks in my nifty-50 stock list were on sells (that is usually the bottom or the beginning of the bottom in any downswing, however small). Today those stocks clicked up to just 38 on sells. The VIX gave a swing buy signal to go long on tomorrow’s open.

And tomorrow is Friday. There have been twelve trending days by my definition so far this year and seven of them have come on Friday. Freaky.

Added all up, tomorrow looks like a run to the upside again and the calls could go crazy, again, if its another trending day.

Or the market could have a monster fifth-day-down crash…but then that would also be a trending day, only in the puts instead.

Trending days in the “Fool’s Game”…

The market Friday broke to the upside at the open and never looked back.

As a result it was what I’ve now come to call in my mind a “perfect trending day” in what I ironically call the “Fool’s Game”. That is to say since I started trading and tracking weekly SPY calls and puts solely on as longs and solely as day trades to avoid as much time decay as possible, it is a day when the in-the-money option gains more than 100% on the trend for day.

Friday’s expiring weekly SPY 275 calls vaulted on my day-trading signal into the close for 252% profit on the day trade. That is $25,200 for each $10K traded, in this instance 93 contracts (see the white flag on the lower right of the 10-minute chart below).

Going into Friday, last week’s trading was truly looking like a fool’s game.

From Monday to Thursday, the daily trades were down a cumulative 150% for the week, $15k for each $10k traded, the first weekly loss of the year.

But there had been no trending day during the week, by Thursday no 100% plus day, another first for the year.

And it was also a Friday, when the weekly option expires and there are the most volatile movements. There have been twelve trending days (up and down) in the first ten weeks on this year and five of those days have come on a Friday, making Friday this week once again the best possibility for another trending day.

And so it was to be, as it turned out. Rather spectacularly. For 252%, the second biggest day-trading gain of the year (on February 2nd, the Fool’s Game racked up a 265% gain on a put trade), and turning the loss on the trades for the week into an overall 100% profit.

(click on the chart for a larger view)

#MarketTiming weekly $SPY options in the “fool’s game”

If anyone wants to take a peek (or another peek) into the link below from Thursday, or look down at the entry immediately below this one, they’ll see it was said: “In other words, I expect the market to shoot up on Friday”.

SPY – CAN THE BOUNCE BECOME A RALLY?

The great trader and “Market Wizard” Linda Raschke once put it very simply: “When you see what you are looking for, jump all over it.”

Well, Friday was a day to look for a rally after the market slid sideways to down all week, and rally it did with the Dow up 343 points, the SPX up 43, and the Nasdaq Composite up 127. TQQQ jumped 4% from its Friday open, UPRO did 3.2% from its open.

Needless to say that is better than money in a bank.

But what about THE FOOL’S GAME I’ve been writing about recently, buying weekly SPY calls and puts as day trades?

Friday that system was up 141% with a combination of trades in the weekly 273 put and the 271 call, both expiring that day. The 273 puts lost $1254 per $10K in the trade while the 271 in-the-money calls gained $14,482 per each $10K trade (there were two) for a total gain for the day of 131%.

The Friday expiration makes for the best day trades in the weeklies. Has been that way all year with this Friday as, obviously, no exception. Its 131% net brought the total gain for the week to 226% — $22,600 for no more than $10,000 in any day trade during the week.

I have not much more to say except to remind that everything said here is for entertainment and educational purposes only, and for my own personal trading journal, and should not in any way be construed as investment or trading advice.

$SPY #Options on a roller coaster for a losing day trade

Today’s price action in the SPY was truly a day on a roller coaster. Consequently it was the same for the weekly calls and puts.

First, a gap up, then a plunge on the ETF (see the chart on the left below), another bounce into mid-day, and another plunge before a final surge into the close.

The SPY triggered a day trading buy on the calls, which stopped out for a loss 27% loss, $2688 on 10K traded, before reversing to the puts which saw a loss of $602 at the close (see the white flags on the lower right of the charts below, in-the-money calls on the left, puts on the right). That made the total loss for the day almost 33% per 10K traded, a draw down of approximately $3290, the fourth losing day in the past 20 trading days.

However, there were plenty of times defense could have been played during the day. This is day trading after all.

When the call failed to hold its open at 1.79 it could have been stopped out for less of a loss than when the system signal finally sold (the chart below on the left). On the reversal the put trade made up all of the loss on the call and about 11% more at its high (the yellow-coded spike into the last hour on the chart on the right). Selling that gain would have been a gift for the day but even coming down from that high on the puts, there was a breakeven (the end of the first cyan-coded bar)

Defense. Always take the signals, then play defense…

(click on the charts for a larger view)

$SPY #Options – #DayTrading 10K in weekly puts…FINAL UP 55%

Trading weekly 286 puts – 64 contracts at $1.49 – to start the day trade.

Current return per $10K in the white flag on the lower right of the chart below.

Will update.

Update #1 – stop at breakeven.

Update #2 – the trade topped out at up 39% (the green vertical line on the updated chart below). Violated its rising moving average at up 15% (the first red vertical line), a point at which to take some or all off for the day.

Stopped out at break even (the second red vertical line).

Obviously a disappointing day-trade in the put. Just as obvious it is the trades that do not hit the stop loss that make the most money.

Update#3 – Reentry at $1.49 again, $10K, 64 contracts. Stop at breakeven. See updated chart below.

FINAL UPDATE: the last entry in the puts rode the sell off to the close, netting approximately 55%, $5,500 per $10K in the trade. So the disappointing, even with the first stop loss, day in puts turned out to be just fine. See final updated chart below.

TUESDAY UPDATE: Another day trade in puts, triggered off SPY’s gap at the open. A fairly frustrating sideways move after the open. Stopped out on the first entry for a 12.2% loss on $10K in the weekly in-the-money 284 strike, 36 contracts. Reentered the 284 strike, 41 contracts, for a 27% gain into the close, for a total net of 14.8% on the day, $1,480 per $10K in capital. I’ll skip the chart for today.

(click on chart for a larger view)

$SPY $QQQ #Options – Day trading $10K…Final Update

THE FOOL’S GAME – BUYING CALLS AND PUTS

As other bullish week in the bull market begins to draw to a close, the $10K buys in the weekly in-the-money SPY 283 calls and QQQ 168 calls are up 45% and 28% mid-day (see chart below). That is $4500 and $2800 on a $10,000 buy in each index ETF.

Will update on the close.

UPDATE: The week ended with a glorious options trade in the weekly SPY and QQQ options. The SPY 283 call, expiring Friday, was up 130%, $13,300 per $10K traded for the day. The QQQ 186 call, expiring Friday, was up 96%, $9.660 per $10K traded for the day.

SEE UPDATED CHART BELOW.

(click on the chart for a larger view)

#DayTrading #SPYoptions – Ho-hum, another 80 to 120%

THE FOOL’S GAME – BUYING CALLS AND PUTS

Today was again a day to live for in “The Fool’s Game.”

The weekly SPY options bracketing the open at 280.17 — the 279, 280, and 281 calls expiring Friday — netted 80%, 100% and 120% respectively on the $10K day trades. See the white flags on the lower left of each chart below for the cash gains and percentages per $10K committed to the trades of each strike.

Been a lot of days like this in this bull market.

(click on the charts for a larger view)

$BA – a Boeing trade better than #Bitcoin

I didn’t trade this but WOW!

Ah, the possibilities! The possibilities!

BA gave a buy signal today on a 10-minute chart at 6:40 (pacific time) at 297.26 (see chart panel below). It’s 300 weekly call (expiring today) crossed into the money at 8:00 (pacific time), at 45 cents per contract. Both then just kept going.

At last look a few minutes ago a $10K buy in the 300 call is now worth $106K, up 1000% and change on a 2.6% move in the stock itself.

It would take some real focus to find this trade, and real discipline to take this trade, but it is one of those possibilities that are always there, and sometimes one could just gets lucky.

(click on charts for a larger view)