$SPY Options – Weds 285 call fades into the close Tuesday

After peaking at up 20%, the call finished with a .4% gain on the close.

Disappointing for the day trade.

(Click on the chart for a larger view of the tweet)

$SPY – Friday’s calls at the end of the bounce…

Friday’s 285 calls immediately vaulted as high as a 42% gain but wound down for the rest of day, hitting a breakeven stop along the way, and finishing down 52%.

If one studies the day’s bounce from the opening gap down and final reversal at the close (see final chart below), it’s apparent there was not much to do to capture some of the profit on the day before it was all gone on the stop loss. The bearish gap at the open might have given a hint to fast and nimble traders three days was all this bounce would have. Of note, it’s evident how important a stop is to avoid letting a profit turn into an outright loss.

Suspect Friday’s price action is a sign this little three day bounce has reversed and there will be downside next week, but we’ll have to see Monday.

There were no puts to buy on the reversal day since after the early run up SPY never quite fell back through its open.

(click on the chart for the full twitter thread)

(Click on the chart for a larger view)

$SPY – Long Friday calls on bounce day three…

The bounce continued Thursday…

(Click on the chart for a view of the final tweet)

(Click on the chart for a view of the initial tweet)

$SPY – Calls on bounce day two

The market followed through strongly Wednesday after a “turnaround Tuesday” on the current bounce signal.

(Click on the chart for the full Twitter thread)

$SPY #Options – Calls on the bounce day…

The great trader and “market wizard” Linda Raschke, talking about trading setups, once said “when you see what you’re looking for, jump all over it.”

As outlined in the post yesterday, I was looking for a market bounce, possibly as early as a “turnaround Tuesday,” and voila! The bounce began in the futures overnight and followed through on the open into an upswing for most of the day before selling off into the close (see the tweet and charts below).

The SPY in-the-money 281 call (SPY opened at 281.99), Wednesday’s expiration, netted a final 52% for the day trade, $5200 for each $10K traded.

(click on the chart to see the complete Twitter thread)

The Final chart:

(click on the chart for a larger view)

$SPY #Options – Puts on a put day….

This Tweet was made at the time today’s 284 put (282 on the chart is a typo) hit a 100% profit for the day.

The day-trading strategy, which I call “BUY THE YELLOW, SELL THE BLUE,” topped out up 144%. and even with the choppiness at the end of the day managed to register a 76% gain (see the final chart below).

(click on the chart for a full view of the Tweet)

(click on the chart for a larger view)

$NFLX drives stock options to a 66.9% daily gain

NFLX’s weekly in-the-money 360 call today rose 213% on its buy signal near the open.

As a result it drove the four stocks in a day-trading basket tracked here – AAPL FB, NFLX, TSLA – to an overall gain of 66.9% for the day.

This is a system that simply day trades the stocks’ weely calls and/or puts on the long side. As per this link:

#DayTrading Stock Options in the Fool’s Game

I’ve been setting the trades at a total of $10K per day — what I call the $10Kdaytrade on Twitter — allocating $2,500 to each of the four stocks. So today that was $6,690 for the $10K committed to the trade. Besides the spectacular NFLX move, the FB call was up 90% with $2,261 gain, the AAPL call was up $442, TSLA was up $415; there were also triggered trades in NFLX, AAPL and TSLA puts with small losses except for TSLA down $968.

I began applying the day-trading buy and sell triggers similar to those I use for day trades in SPY options on February 26th, about a month ago, trading the nearest weekly strike in the current week, and first introduced it here February 27th:

#Stock Options in the Fool’s Game

The system has been volatile (there were 20% and 30% losers on separate days last week) but so far so good overall. It is up 124% on $10K trades opened and closed each day.

So far this is just an experiment to see if day trading options on very liquid and popular stocks is viable. It is an attempt by going long on either the call or the put or sometimes both during the day to eliminate or at least mitigate the “greeks”, the complexity of fills on strategies like iron condors, and the margin requirements needed to short options. Obviously, this is not for those with their own trading rooms nor for hedgers, but for day traders with limited funds to trade, it suggests there are simpler ways to play the options game.

For an illustration of today’s movement in the calls in the stock basket discussed above see the charts below.

(click on the chart for a larger view_

#DayTrading $SPY and #Stockoptions…

The contents of this blog entry was first posted here last November about trading SPY options on the long side. I have added “stock options” to the title above because the strategy basically works with weekly stock options.

There are so many options strategies in the stock market the head spins – a straddle, a strangle, a naked and/or a covered put and/or call, a calendar, a condor, an iron condor, an iron butterfly (isn’t that a rock band?) and any combination of any of these for hedging purposes, for capital appreciation or preservation, for gambling. Mind boggling.

But buying options… Buying options, just plain buying a call or a put, everyone will say is a “fool’s game.”

Regardless of whether a trader buys calls or puts on index ETFs like SPY or QQQ or IWM, or buys options on stocks, there are only three things that can happen – the option goes the trader’s way (good), or the option goes against the trader (bad), the option goes sideways with price decay over time (also bad).

Two out of the three possibilities for the option buyer are losers. What fool would want to play that game?

But is it really a fool’s game?

Doesn’t have to be. Not for day traders.

Let’s take SPY options as the prime example — very liquid across multiple strikes, tight spreads, hardly any time decay on a trade for only a day, a stop-loss is close by and immediate, and the profits, if there is a trend for the day, can be substantial, even rather astounding.

Also great for scalping on any time frame intraday.

The key, as always, is persistence, discipline, experience, and an entry signal the trader is comfortable with taking.