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)

The $10K Day-Trade – $SPY Options on Fridays

This is all about buying calls and puts for day trades.

And again, ITM 261 SPY weekly option, expiring today, has vaulted past 100% for the day for another trending day (see other posts below).

The white flag on the lower right of the chart below is the dollar gain today so far per $10K traded, also the percentage gain.

The key to these trades is they are day trades in the most liquid call or put, in or at the money, on the nearest expiration to minimize time decay and to get the biggest bang for the buck; using whatever entry a trader is comfortable with, using a stop loss to guard against big losers; and finally taking full or partial profits when one has them, on a breakeven reversal, or on a trailing stop, or into too much strength, but no later than the close of the day.

The day trades on Friday have accounted for 57% of the gains this year.

(click on the chart for a larger view)

Buying $SPY Puts for a 12% #DayTrading profit…

There are only three things that can happen if a trader BUYS an option – the option goes the trader’s way, the option goes against the trader, the option goes sideways losing on time decay.

Two out of the three are bad for the option buyer.

So is it a fool’s game?

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

Let’s take SPY options as an 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 trend for the day, can be substantial, even rather astounding.

The key, as always, is an entry signal the trader is comfortable with. Each signal is for a buy-in of $5,000, up to five signals ($25,000).

TODAY:

Had four buy signals during the day (three early, one later, see the chart below) for the weekly in-the-money SPY 259 PUT. The net gain for the day on the close was $2400, or 12% on the four trades worth $20k.

Interesting to note before the market firmed up late in the day, the peak of the first three trade was $8000, and on the four trades was $7200. An intraday exit on the first red bar after the peak (see the chart) would have netted $6000 instead of waiting for the close.

Sometimes it pays to be nimble. But not waiting for the close, in other words “not being mechanical”, can often wreak havoc on a trader’s psychology and emotional stability over the long run. Just saying…

(click on the chart for a larger view)

Buying $SPY calls for a 12.6% #DayTrading profit…

There are only three things that can happen if a trader BUYS an option – the option goes the trader’s way, the option goes against the trader, the option goes sideways losing on time decay.

Two out of the three are bad for the option buyer.

So is it a fool’s game?

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

Let’s take SPY options as an 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 trend for the day, can be substantial, even rather astounding.

The key, as always, is an entry signal the trader is comfortable with.

Had five buy signals as SPY trended steadily up during the day. With each buy at $5k, the trades on the weekly 258 calls (expiring Friday) totaled $25k, and netted about $3150, or 12.6% for the day trade.

(click on the chart for a larger view)