UPDATE – $SPY #Options trade on a “Turnaround Tuesday”

Pretty great day in the gone-long options world.

Bought the Wednesday 287 call based on the immediate post below speculating that today would be a turnaround day suggested by history and by David Bergstom’s analysis at the “See It Market” site.

Several notable stocks were also up more than 3% from the open: NFLX, AMZN, BABA, and AAPL almost at up 2.95%. TQQQ, the Nasdaq 3xLeveraged ETF, was up 3.8% from the open.

An $AMZN trade that was a coulda, shoulda, but not a woulda…

Shared the chart below of AMZN around the internet after the close last night with the suggestion that this was an obvious setup to buy puts or sell calls.

It was prompted by this post here yesterday:

$AMZN – a leader stumbles?

The idea was that the stock would continue its stumble today (and maybe for a week or so). See the blue boxes marking the spots on the chart when that has happened before as it comes off overbought (the yellow color coding on the chart).

Since long-term breadth had just turned down after a long run up and everything in the market was pretty much overbought, it was likely there would also be market pressure on the stock besides it being overextended on its own. Then there was that history thing in play again – the best indicator of all since it repeats or rhymes or whatever but it mostly whispers what’s going to happen next again and again.

It was a trade for today’s open. The most aggressive and least expensive entry would be an in-or-at-or-just-out-of-the-money put expiring Friday.

I coulda and probably shouda but I did not trade this. In general I don’t like stock options, don’t like the spreads, don’t like the lack of liquidity when it’s time to close it out, don’t like the complications (all those Greeks and spread strategies). I like my options trading plain and simple – it either goes up or it goes down, it is either a call or a put. I trade SPY options.

I threw this out there last night for entertainment purposes primarily, and, as it turned out, it turned out to be quite instructive for anyone who does like stock options. To each his or her own way to play these money games…

AMZN had a big move down (as history whispered it would). The 1995 Put, expiring Friday, from the open peaked during the day up 260% and ended the day up 161% (see the companion chart below). That’s somewhere between $26,000 and $16,000 on a small $$10K capital commitment. Not bad for a day trade? This could drop more tomorrow making that put even more profitable but come on…it’s a home run with no need to risk an overnight reversal.

And besides, moves like this happen again and again, nearly everyday, somewhere in the market.

I didn’t even notice TWTR. Market-timing, options-trading bears must have made some serious money there today.

(click on the charts for a larger view)

The $SPY $10K day trade for 26.7%

Just a quick note on the $10K SPY options day trade for Thursday.

The long signal triggered just after the open and rose to a 97% peak (see the chart below) and closed the day up 26.7 percent, $2,670 for each $10K trade (see the white profit flag on the lower right). The is the day trade, start to finish.

Note, though, I consider a 100% gain a “trending day”, which are obviously the most important days to capture. Had this position passed above that threshold it could be locked in that profit level with a trailing stop. Just missed it today. Shucks!

However, it also should be noted that light blue candle after the peak on the chart was a chance to take at least some profits – the $10K was up 56.9% at the point. Short-circuiting the day-trade has not be more profitable over the long run this year than just letting it ride, but there at times when it just looks so obvious…

These trades are all day trades, either in the nearest in-the-money SPY calls or puts (in this case the 283 call, expiring Friday, and are closed at the close of each day. There was no signal for the puts today but on some days there are both calls and puts in play. My entry signal is proprietary, and should be tuned to any individual trader’s courage and risk tolerance.

Keep in mind, these posts are only for entertainment and educational purposes and should not in any way be construed as trading or investment advice.

$SPY options – can little losers be the prelude to a big winner?

I came into today expecting a sell-off in the general market.

It didn’t happen, at least not right off the bat. At the end of the day, it sort of sold down in a way that may mean the market “plop” I suggest yesterday will come tomorrow.

For the past three days the market has been in a very tight range – for instance SPY opened Tuesday at 285.39, opened Wednesday again at 285.39 and today at 285.53, a total range of 14 cents in three days. This might be great if one is selling SPY options but I don’t even look at the short side naked because it takes too much margin. Instead in what I’ve been calling, tongue-in-cheek “the fool’s game,” these three days have been yuck. I mean PURE YUCK!

Today was a little loser again.

Because I’ve been posting winners, primarily to explore the potential of day trading SPY calls and puts on the long side (“the fool’s game”), I’ve been met on the internet as expected by a chorus of naysayers who believe what I’m saying is far “too good to be true.” So I’ve decided to post this loser to reassure that while it is good and it is true it is not every day.

Today’s loss came from trading $10K on each trade, first the 284 call, expiring tomorrow (see the the chart on the left below), then the 286 put on the day-trading reversal. The call lost 22.8% percent on the $10K trade, $2282. The put, which was deeply underwater most of the day (see the white profit histogram on the chart on the right below), managed to surge to a .9% profit on the SPY sell-down into the close, $958. Total loss for the day was $1324 for $10K traded, 13.2% for the day.

That 22% loss on the calls and the 13% loss overall is why money management is most important in trading anything, especially any strategy like this. It is intended to be traded small versus one’s overall portfolio and traded everyday.

The tight range of the past three days suggest SPY could go big either way tomorrow. My hope is it will be a trending day either up or down since the real money here is made on trending days, usually days of options expiration like Friday (in fact, YTD Friday’s have been the best days of the week), or like last Monday…

Monday’s SPY 283 call (see the pattern on the charts) trended all day. As a result, the profit for week remains at 57% despite the yuck, yuck chop of Tuesday, Wednesday and today.

As a great, wise film fool once said: “That’s…

(click on the chart for a larger view)

$SPY – chances are the market plops tomorrow

I was going to write a detailed analysis of why I think the general market (SPY, QQQ) takes at least a dip Thursday but I’m kind of tired.

So suffice it to say, the Nasdaq Composite is up seven days in a row, and SPY, except for a brief pause a few days ago, the same. My Nifty-50 stocks have gone from 40 on sells at the beginning of the rally up to 41 on buys Monday and are now rolling over. A lot of the stocks have been sluggish since that peak three days ago.

CNN Money’s Fear and Greed Index is one click away from an extreme greed level.

Most importantly, long-term breadth has gone negative today (see the red line on the chart below).

Yup, there’s good chance a pull back begins tomorrow. Hopefully it is a down swing that lasts for a couple of trading days since this advance is now in thin air and can surprise to the downside any second.

Time to tighten stops or look to to exit the up swing.

(click on the chart for a larger view)

Wednesday in the $10K Day Tradeā€¦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)

Tuesday in the $10K day Trade…Final 10% gain

Tweeted this trade near the highs of the day. SPY 280 Call, Wednesday expiration, up 38%. TQQQ at the time was up 1.5% ($1500 per $100K).

This was a display of a day trade based on the suggestion (see post below) that Tuesday after three days down in the Nasdaq (two of them hard down) would bounce today with an entry into the trade near the open.

Some defense (like a trailing stop) had to be played to lock in gains intraday since once again with long-term breadth still negative there was the possibility of another fade into the close, which happened. Still (see chart below), the SPY trade netted 10% for the day, and TQQQ added another $450 on its $100K buy.

Not a bad return for the day even if the defense stayed on the bench.

Tomorrow, AAPL will be the focus of the day for the general market. The company reported earnings after the close today and rose eight points in the after-market to an new all time high. The question will be can it vault the market higher for the day or will this be a “sell the news” time?

(click on the chart for a larger view)

#MarketTiming $QQQ – tomorrow the bounce…

After three days down in the Nasdaq, two of them hard downs, it is very likely time for a bounce tomorrow.

All of my bellwether stocks, as suggested yesterday (see posts below), followed through with losses today, led by NFLX down 5.5%. With the exception of AAPL and GOOGL they are all oversold. In addition forty of my nifty-fifty stocks are on sells with 34 of those oversold. Forty or more sells usually means we are at the bottom or the beginning of a swing bottom before a bounce.

Most likely he Nasdaq Composite Index has gone down too far too fast (see chart below). Focus on the chart and note that each time the blue histogram pierces the green lines, what happens next is a bounce, sometimes a substantial bounce. That is the most compelling technical case for timing a bounce for tomorrow. Also note if there is a bounce, it will likely not be a bottom. Bottoms and subsequent rallies come after retests.

This time could be an exception of course since the market can do anything it wants any time it wants but for now, I’m watching tomorrow open primarily for some play on the long side.

(click on the chart for a larger view)

Monday in the $10K day trade FINAL gain 76%

SPY 282 put, expiring today. Final day’s gain 76%.

“THE FOOL’S GAME”

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)