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.

$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)

UPDATE (12/5): $QQQ and $SPY weekly options – a recurring plus 100% dream…

UPDATE (12/5): As suggested yesterday the day began with the Nasdaq (TQQQ) rallying, but unlike yesterday, which was perfect for a QQQ weekly option trade, today would have taken some nimble trading to secure any profits in the QQQ calls and the SPY calls. On a $5k buy close to the open, the QQQ in-the-money call for this week (152 strike) rallied up 56% at its peak, violated a trailing moving average at up 48% ($2400), before selling off all the way to breakeven. Two $5K buys on the SPY in the money calls first stopped out for a 1.2% loss, and on a reentry rallied up about 25% before collapsing again to breakeven.

However, the options day-trade play of the day came in the SPY in-the-money put (265 strike) which triggered later in the day and finished at the close up 66% ($3300 on $5K.

Not a terrible day, but a trading test at best.

Haven’t had a chance to update entries here since Wednesday (11/19). Given what happened in the market today, it is as if nothing has happened since. Today was almost an exact replay of last Wednesday with the Dow up, the SPX relatively firm and Nasdaq Composite slamming down 72points.

Take a look at the post below. My first sentence was:

The Nasdaq sold down hard right from the start today, and that is a day-traders dream in weekly options.



If there are recurring nightmares in life, can there be recurring dreams?

No doubt.

With the Nasdaq selling down hard right from the start today, the $5K day-trade in the weekly QQQ in-the-money put finished on its peak at the end of day up 120%, $6000 on a $5000 commitment to the trade. Even the SPY in-the-money weelky put cash in on the market’s the slide, netting 118%, $5900 on the $5000 play in the option. The key to this day-trading system for options (as I have written before) is having an entry a trader is comfortable with, likewise a comfortable protective stop, and on the days (like today) when the stop is not hit, the gain, obviously, can be substantial.

I’ll let the great trader and “market wizard” Linda Bradford Raschke sum it up: “Always take the trade,” she once said, “and sometimes you just get lucky.”

So what now? Once again TQQQ may have dropped too far too fast so I will not be surprise if that 3x-leveraged Nasdaq ETF bounces tomorrow like it did last Thursday and takes the rest of the market with it. Maybe for a couple of days…or more.

LONG-TERM BREADTH: Buy (Day 9).

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

CONTEXT:

SPY CLOSE – 264.14
QQQ CLOSE – 152.71
CNN MONEY’S FEAR AND GREED INDEX: (63, falling, greed level).
NIFTY-50 STOCK LIST: 20 Buys; 13 Overbought, 13 Oversold, 7 new buys today, 4 new sells.

Playing the Nasdaq drop in the weekly $QQQ puts…

The Nasdaq sold down hard right from the start today, and that is a day-traders dream in weekly options.

The system I’ve been developing a system for day-trading weekly options with a mere $5K in capital on each trade on the major ETFs SPY and QQQ has its main premise discussed here:

Buying options – is it a “fool’s game”?

Today, the QQQ puts put on the show. And an almost completely incredible show it was!

The drop in the Nasdaq (the composite would close down 87 points) began on the first five-minute bar (see charts below) and quickly became a bloodbath before leveling out in the usual mid-day to the close sideways chop. At the peak of the bloodbath, the gains in the weekly puts were astonishing and even with the leveling and sideways late in the day they remained spectacular.

My main trade was in the in-the-money 157 put, expiring Friday. It peaked at 330% and closed he day up 210%. Great, great as trades go, a definite home run, but on days like today, the in-the-money is the “conservative trade.” Out of the money has possibilities beyond home runs, beyond hitting it out of ball park itself…more like hitting it clear out of town.

See the charts below: the closest out-of-the money QQQ put, the 156, peaked at up approximately 395% and closed at up about 345%; the next strike, the 155, peaked at up 844% (about $42K on a $5k trade!) and was up about 585% ($29k on the $5k) at the end of the day trade. I don’t even want to talk about the 154, the next strike’s peak and return, in which on would have to buy nearly 500 contracts at around 12 cents each.

The “approximately” and all of the “abouts” in the above paragraph are because I didn’t trade those out-of-the-money positions. I just charted them to see the “entertaining” returns (see charts below). Out-of-the money options two days before expiration are really just wild-ass gambles while in-the-money can be methodical.

Remember all of this is just a journal for me alone and presented for no more than entertainment purposes here and should not be construed in any way as trading or investing advice.

(click on the charts for a larger view)

#DayTrading $AAPL calls…

CONTEXT FOR THE TRADE

From the link below:

And, of course, if the market rallies it is also likely AAPL will again participate (always good for a bounce, a scalp, or an option-play).

The weekly, expiring Friday, in-the-money 170 calls for a day trade. Currently up 70%, from 2.00 to 3.26. $3100 on a $5K position, 25 contracts.

Will update later:

END OF THE DAY UPDATE – up 62%

$SPY Options – day trading weekly 258 calls

THE FOOL’S GAME

CONTEXT FOR THE DAY TRADE

Long $10K (in two $5k stages) in the weekly 258 calls, expiring Friday from 1.48. Currently at 2.11 up 40% for the day. Stop now at 1.90.

Will update later:

END OF THE DAY UPDATE – up 34%

Day trading SPY options for 72% so far…

Day Trading SPY options – is it a “fool’s game”?

CONTEXT FOR THE TRADE

Playing the fool’s game today.

Buying the weekly SPY 257 in-the-money call, expiring Friday, with a limit of $10K. At the moment up $7200 (72%) on two trades, $5K each (see the chart below).

Will update.

UPDATE END OF THE DAY: The trade mechanically closed the day up $4800 (48%). At its peak (see green vertical line on updated chart below) is was up 83%, and there was a possible exit after the peak at up 72% (the while line of the chart).

(click on the chart for a larger view)

Day trading SPY options for 72% so far…

Day Trading SPY options – is it a “fool’s game”?

CONTEXT FOR THE TRADE

Playing the fool’s game today.

Buying the weekly SPY 257 in-the-money call, expiring Friday, with a limit of $10K. At the moment up $7200 (72%) on two trades, $5K each (see the chart below).

Will update.

(click on the chart for a larger view)

$SPY calls 11/15 – averaging up for a 11% day trade

FYI: Presented for educational and entertainment purposes only.

This is a gamble. Pure and simple.

Buying 50 contracts in stages on the weekly 255 calls, expiring on Friday. Bull market gaped down and fell sharply.

The first 50 contracts came on the open after the first bar that failed to make a new low. Once that trade held its profit, and provided a break-even cushion for subsequent entries, added three more 50-contract buys, averaging up as the SPY continued its bounce from the lows. In total 200 contracts for the day.

The trade closed up $2200 on a total $20,000 capital commitment (see the yellow bar on the lower right on the chart below). At its peak, the trade was up slightly more than 30% ($6K), and there was a possible (and reasonable) exit at just under 26% ($5k and change) on the chart’s green vertical line. Working on how to grab those profit spikes but regardless there is always the end of the day if one is not stopped out during the day.

(click on the chart for a larger view)