Today, a breathe is monitoring for the overall market without any selling, a typical sign so far for market breathe. The market leader sectors and leading stocks are not performing,or even pull back. Remember pulling back strong hands are good opportunity for sharp investors who took the advantage of those weak hands. For example the AOB case, which tumbled to $8.4 after its ER, shaking out all the weak hands and pulled back right away to $10.5 in 2 weeks. Traders only follow the momentum while investors follow the value. Traders only care about the volume/price change, while investors care about bargains.
For each stocks, to beat the traders on the street, you need to use "dirty" mind and "clear" heart set in order to catch the opportunity once it appears. But finding the value of stock isn't that easy, we will discuss in another thread.
Check your style and make your move. Now WFR will be another case for investors for which its value based on my model will be $78. Let's test it in three months.
7 comments:
Yeah! Strong Support on this one. WFR dropped sharply after its ER last year and then keep climbing up. I have a lot of respect for this stock.
ice call has been stopped out after losing 20%. at the same time, close nmx 135 call, 100% gain.
it's such a surprise that ice didn't break out today. I thought the 100ma should be strong enough to hold the trend.
besides, smell dangerous today, a consolidation will come. only holding oil stocks in hand now.
the book I read was "The Option Trader Handbook: Strategies and Trade Adjustments "
conclusions from my option trading
1, must set 20% stop limit. option is one of the most emotional plays in this world. even a fool has chance to make 100%, however, it's possible you lost your underwear before you can make 100%. don't ask me whey set it to 20%. according to my experience, if a option call down 20% from my enter price, it will dip another 20% in one day.
for call
2, play with under valued stock/going to break out stock, these are the best ways to prevent time decay. I don’t like straddle.
3, don't call stock in the downtrend, don't call stock with rsi close to 80, william % close to 0.
4, if the stock price doesn’t change that much but option price up huge, sell.
5, if option price up over 100% in a day, which isn't in OE day or there is not very good news to support the break out, sell.
6, once the price meets your expectation, sell. one of my friends told me that I can sell 50% and let the rest run on themselves. it doesn’t look like a good idea to me.
7, for stock with good fa/ta/undervalued, at the beginning of month, play out of money option. by the end of the month, you can only play with in the money option whatever how good the charts/news is.
8, don't put all the eggs in one basket. usually, i have 50% money in oil, 25% each in others. Oil is very stable income, I have never lost in oil stock.
9, strongly recommend you start with oil/drilling equipment stocks. the reason for why oil is long bull is because the baby boom generation put most of their retirement investment in oil sector. since the stock is in long term uptrend, it is a lot more easy to predict the top and bottom. every time 2.5 to 3.5% price interval can bring you with 20 to 30% nice gain.
10, long term call. I have just started after re-studied mummy's post.
11, in the oe day, if the out of money call price is <=0.1 for a very active stock, and the strike price is within 5% of current stock price, use <$500 to gamble, you may have big chance to win more than 3 times in half day. My best record is to make 100 bucks become 700 bucks in 2 hrs.
For put
12, I am bad at this. all i know is to put goog when market down. :)
nice option class! :-D
still remember 2 stocks metioned to u last week?
xmsr up 8.8 percent after er. gg will break out soon
yes, I remember those two stocks. hehe Really nice nmx call. The problem with ICE is that after being downgrade, normally it will take sometime to recover, won't be too quick.
Really nice Option experience, and I open a thread for you in case others will have questions on you. hehe
i closed nmx and ice because I wasn't that confident with the market on last friday. and their er are approaching early next week.
nmx could be a very good one before and after the er, I enter at 0.9 may 140 call, my first target price is to reach 3. may get in again.
ice's mm is one of the worst in the world. hard to play with. although the return is really good.
last time, I predict the first 2 daily high price at 131.98, 134.45, very close to the actual #. the next one will be 138.**, which is based on it won't break 100ma. i don't really trust it's a true break down by considering the volume. my play will be determined base on tomorrow's pre-market price/volume. I have long term option position on this guy.
everyone of my option summary can be extend to many pagers discussion with real cases. i follow it because it's simple and stupid. I won't lost big money in the most dangerous option play by following these rules. and that is why I put 50% money on oil stock although I can only make average 20 to 30% out of them monthly. reduce the risk is my goal.
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