#DayTrading stock options in the “Fool’s Game”

Let’s call this a “Fool’s Game” trilogy.

Three days experimenting with buying calls or puts (calls in this instance) according to the rules of the “Fool’s Game” suggested here for day trading SPY options on a lucky November 13th last year in this link: IS It A FOOL’S GAME?.

The basis of the entire strategy is the simplicity of going long calls or puts (what’s been called the “fool’s game”). The cost is clear since it is simply the cost of the option itself with no shorting margin requirements, no covered stock scenarios, no spreads or complicated attempts to calculate delta and neutralize theta and try to fill the four legs of iron condors both going in and trying to get, and no more god knows what else…

This is this simple: buy calls if you believe it’s going up, puts if you think it’s going down.

The results trading SPY options, either in the money or at the money on the nearest expiration — Monday, Wednesday, Friday. were astounding last year, and earlier this year (that system is currently experiencing its biggest draw down since I began tracking and trading it). Both because of the “astounding” and the “biggest draw down”, I decided to take a look at stocks using the same criteria as outlined in this link: DayTrading Stock Options two days ago.

The criteria for selecting AAPL, FB, BABA, NFLX and TSLA for the trades is noted in that link.

The first day of this experiment, Tuesday this week, netted 13.2% in trades that triggered in all five of those stocks (I highlighted TSLA on a chart in a post below), and netted 37% on trades is four of the stocks yesterday (see charts in the post below). FB options did not trigger a trade that day.

Very fine returns for the system, and much to be learned in its context.

Today (see the muddle of charts below), the trades in calls lost 8% on options traded on four of the stocks.

Still, a good three days overall.

But as I mentioned there was much to learned in context – a logical intraday stop on the NFLX trade (the first blue candle as seen on the NFLX chart below), would have cut the total loss to only 3%. Stops, needless to say, like with all systems, need constant examination and re-examination.

I looked into this because I’d been told day trading stock options can’t be done. This week may be an outlier but as far as this “trilogy” of day trades has gone, it has been done.

(click on the chart for a larger view)

#IPOs for “Dummies” – $GOSS, $ALEC, $HARP on buys

Took a look at some recent IPOs since this is one of the easiest trades any trader and investor can make.

I don’t mean being on the inside, or some investment house’s favorite client, or some politician on the take. This when to buy a newly-issue stock offering AFTER it come public.

The strategy is outlined in this post below:

Buying IPOs For Dummies

Don’t mean to insult all those guys who went to Harvard and Wharton and Stern, but simple is best and there is no simpler trade than this.

Note the range on the first day of the IPO’s trading. The buy signal is a close above the high. It is too difficult usually to short these stocks so let’s set that aside for now. The stop loss after the buy is up to the individual trader’s or investor’s risk tolerance. It a can be as close as the price coming back below the first day’s high or as far away as falling through the first’s low.

Below are the charts of the selected recent examples for the stock symbol GOSS, ALEX, and HARP. I have no idea what these companies do nor how qualified they were to sell stock to the public.

This purely a technical analysis entry signal. GOSS was a buy above $19 on today’s open is currently up 1.9%; ALEC was above 19.50 on today’s open is up 4.9%; and HARP was a buy on Friday’s open and is at the moment up 6.1%. The numbers in the white flags on the lower right of each chart is the dollar gain per $10K invested.

Needless to say, as indicated by those quick gains, the first-day high is an important line to play.

(click on the chart panel for a larger view)

Wednesday in the $10K Day Trade…Final gain 14%

The SPY options trade had huge swings on the Fed announcement today.

The action was not in the calls which never triggered a system buy despite the AAPL news and gains, but in the 282 put, expiring today, first a plummet (see the chart below), then an immediate snap back to a new high for the day before a final grind down into the close. At its low the trade was down 43% and at its high up 84%, all within 20 minutes.

It was enough to make a trader, long the puts, as dizzy as whirling dervish.

Despite the gyrations, at the close the day trade managed to nab a 14% profit, $1469 on the $10K committed to the trade (see the white flag on the lower right of the chart below).

Still, not a bad day in options no matter what.

(click on the chart for a larger view)

#The10kDayTrade – so many possibles to put in play…

MARKET TREND:
Long-term Breadth: Positive.
Short-term Breadth: Neutral.
Price: Positive.
Volatility: Neutral.

All possible trades are $10k longs on the open:

Bellwether stocks: AAPL, FSLR, NVDA, FB, AMZN, NFLX.

3x-leverage ETFs: TQQQ, XIV, TNA, UPRO, LABU, SOXL, NUGT, JNUG.

The options list: SPY calls, QQQ calls.

NOTE: Market rally is overextended so stop are vitally important. This is the 41st day of rising long-term breadth. Hard to believe how bullish it is in price. So many possibilities to put $10k in play. One wonders if there are too many now? The stocks and being nimble with options are likely the better play.

#The10kDayTrade UPDATED – $BID, $NFLX, $FSLR, $SPY calls in play

MARKET TREND:
Long-term Breadth: Positive.
Short-term Breadth: Neutral.
Price: Positive.
Volatility: Neutral.

All possible trades are $10k longs on the open:

Bellwether stocks: BID, NFLX, FSLR.

UPDATE: BID loss $57; NFLX gain $437; FSLR gain $28; for a total gain of $408.

3x-leverage ETFs: XIV, TQQQ, LABU, SOXL.

UPDATE: XIV gain $252; TQQQ loss $640; LABU loss $41; SOXL loss $88; for a total loss of $117.

The options list: SPY calls, QQQ calls.

UPDATE: SPY weekly 252 call gain $7,900. SPY monthly 252 call gain $3,900.

NOTE: Market rally is overextended with SPY up now seven days in a row and most index ETFs overbought. Once again this is a difficult day-trading market that could pull-back any moment but hasn’t yet on the close. The stocks and being nimble with options are likely the better play.

#The10kDayTrade Update – $SPY ITM call nets $2595 for the day

MARKET TREND:
Long-term Breadth: Positive.
Short-term Breadth: Neutral.
Price: Positive.
Volatility: Neutral.

All possible trades are $10k longs on the open:

Bellwether stocks: TSLA, NFLX, FSLR.

UPDATE: TSLA plus $105; NFLX plus $166; FSLR plus $166. For a total gain of $437.

3x-leverage ETFs: SOXL, FAS, NUGT.

UPDATE: TNA loss $21; NUGT loss #39; FAS loss $10; SOXL loss $19. For a total loss of $89.

The options list: SPY calls, IWM calls.

UPDATE: The SPY in-the-money (ITM) 252 Call for this Friday’s expiration netted $2,595 for the day, two trades. NOTE: The first $10,000 buy (82 contracts) was stopped out below its open for a loss of $164. The second $10,000 buy (89 contracts) netted $2,759.

NOTE: Market rally is overextended with SPY up six days in a row and most index ETFs overbought (TNA up 8 consecutive days). Once again this is a difficult day-trading market that could pull-back any moment but hasn’t yet on the close. The stocks are likely the better play.

#The10kDayTrade – SBGL current up $600 margined


MARKET TREND:
DAY: Positive.
SWING: Positive.
RALLY: Positive.

SBGL – divergences don’t matter until they do part II

SBGL was a buy on the open today. Currently up $306 for the day on a $10k buy, $600 on a $10k buy margined , exclusive of slippage and commissions.

(click on the chart for a larger view)

#The10kDayTrade UPDATED – Stocks, ETFs, options in play

MARKET TREND:
DAY: Positive.
SWING: Positive.
RALLY: Positive.

All possible trades are $10k longs on the open:

Bellwether stocks: BID, FSLR.

UPDATE: BID gained $130 for the day; FSLR lost $123.

3x-leverage ETFs: TNA, SOXL, FAS, ERX, LABU.

UPDATE; TNA stopped for a $42 loss, SOXL for a $36 loss, FAS for a $25 loss, ERX for a $42 loss, LABU for a $74 loss for a total loss of $219.

The options list: SPY, IWM calls.

Note: Market rally is overextended with SPY up five days in a row and most index ETFs overbought.

UPDATE: Initial profit taking in the overextended market stopped all except BID but should be noted all except of LABU and ERX, all of the above ended up in profits on the close (very bullish). Probably should have introduced these day trades in an oversold/neutral market instead of an overextended/overbought general market.

#The10kDayTrade on $EPZM nets $420 for the day

MARKET TREND:
DAY: Positive.
SWING: Positive.
RALLY: Positive.

EPZM, in the biotech sector, was a buy on the third 5-minute bar today (see chart below), based on being above its open and above the rising fast moving average with the market trends all positive.

Show me the money:

The net gain for the $10k trade in EPZM was $420 for the day, exclusive of slippage and commissions.

(click on the chart for a larger view)

Trading System:

This is “show me the money” system when only trading a $10K account.

Stocks are selected the night before and bought at the market on the next day’s open. They are monitored on a 5-minute chart (see below) with a stop-loss on any close below the day’s open after the first five minutes. If a stock does not stop out right away, it will immediately be in profits. If the ETF or stock or option does not violate its open any time during the day the profits can be taken on the close to end of market day. That is the basic trade.

An alternative trade is to buy after the market open in the direction of the market trends whenever any ETF, stock, option is above its open, and manage it the same as above. The market trends are for the three time frames based on market timing – a Day, a Swing and a Rally trend for the longer term.

Profits can be taken at any time when the ETF, stock, option is overbought, or when it breaks down through a fast falling moving average. And as a day trade the trade ends on the close no matter what.

This blog is for entertainment purposes and nothing else. It is not to be in any way considered trading or investment advice.

#The10kDayTrade on $WTW (Weight Watchers)…

This is a system to “show me the money” when only trading a $10K account.

Stocks are selected the night before and bought at the market on the next day’s open. They are monitored on a 5-minute chart (see below) with a stop-loss on any close below the day’s open after the first five minutes. If a stock does not stop out right away, it will immediately be in profits. If the ETF or stock or option does not violate its open any time during the day the profits can be taken on the close to end of market day. That is the basic trade.

An alternative trade is to buy after the market open in the direction of the market trends whenever any ETF, stock, option is above its open, and manage it the same as above. The market trends are for the three time frames based on market timing – a Day, a Swing and a Rally trend for the longer term.

Profits can be taken at any time when the ETF, stock, option is overbought, or when it breaks down through a fast falling moving average. And as a day trade the trade ends on the close no matter what.

MARKET TREND:
DAY: Positive.
SWING: Positive.
RALLY: Positive.

WTW was a buy on the second 5-minute bar today, based on being above its open and above the rising fast moving average with the market trends all positive.

Show me the money:

The net gain for the $10k trade in WTW was $461 for the day exclusive of slippage and commissions.

(click on the chart for a larger view)