http://www.pathometrix.com/Movies/
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I have closed the IGT PCCRC with a good profit. The conversion from CRC to PCCRC as I described before (see below), allowed me to keep the trade through earnings (normally I would have exited the trade as earnings is always a wild card). Today IGT jumped after good results.
Instead of modifying the PCCRC, I decided to close it and open a CRC ATM, since I was not going to get much money from the rollovers, and the CRC fits the Sarmiento system rules. I also noticed that the volatility of the short-term options was higher then the volatility of April options. Since April is the next earnings report, the April calls should appreciate helped by volatility, a nice plus for this trade.
Here are the changes to the account today. In order
1. Closed the PUT side of the PCCRC.
2. Closed the CALL side of the PCCRC.
3. Opened a CRC at $35 (ATM).
4. Placed a contingency order.
I have also rolled over the Jan MRK and Jan SLAB shorts to Feb. Here is a detail account of my changes today.
Here is what I said before on the PCCRC transformation:
I have good money accumulated in this IGT trade, so what do I do now to make sure I keep those profits, yet stay in the trade for further gains?
Consider transforming a CRC into a PCCRC
http://www.pathometrix.com/Movies/IGT.mov
IMPORTANT NOTE: I forgot to metion in the video clip that the stop loss on the CRC is no longer needed. You will notice in the very last portion of the movie, that I have cancelled my contingency order.
11 comments:
Juan,
IGT rose well today, up $3.
Please remind us what your projection is for this one.
Thanks again.
Best Wishes.
Juan,
Bad day for some on the markets today if you had Calls. **Smiles**
An update on the trading account would be interesting to review please.
Thanks.
Fortitude
When doing long term studies, drug companies often find compounds that are so successful that it becomes unethical to deprive paceebo recipients of life saving drugs.
The CRC, PRC strategy has been less than favorable. Today, I closed MRK and SLAB on T.A. grounds, while the URBN was triggered out at a loss. I have left the IGT trade in place as the only one.
YET, the PCCRC strategy has been good to me, as stocks have suddenly jumped or declined strongly. Yes, I have a PCCRC in GOOG, with a $5000 profit today. Just a few days ago I showed the returns on CEPH.
One question was whether it was worth doing a PCCRC with only a few shares. I will post a report on my GOOG trade later, explain it and demostrate that a trade can be successful with only a 4/2 ratio.
Thus, I am now closing my challange as a failure. I am opening a new one, with PCCRC's. Details will follow.
When I started learning from Juan, I was doing a number of PCCRC with 2/1 ratio successfully. When I found that I could not adjust it to achieve a good looking risk curve, I just closed the trade to take profit. Nowadays, my trades have a ratio between 4/2 to 10/5 on a discretional basis.
Juan,
RE: "Thus, I am now closing my challange as a failure. I am opening a new one, with PCCRC's. Details will follow."
You are being too hard on yourself on this. I feel that your basic concept of trading CRC and PRC is correct.
The problem is, and I am guilty too, the 'natural' inclination to look for shares that are going long. I have currently three trades all are CRCs. Most of your recent trades have been CRCs.
Have a combined trading account using the CRCs, PRCs and PCCRCs together.
I don't think your challenge has failed, the success is just around the corner.
Juan,
If you feel that PCCRC are the trades to go for, then let us all focus on that for the time being.
It will be interesting to say the least. **Smiles**
Juan,
It would be very useful if you would carry out a money management analysis on all the CRC/PRC trades using the Platinum money management function which will give a performance summary like percent winners/losers, largest winning/losing trade, average winnings/losings, ratio gains/loss...The results might provide valuable information to help improve the Sarmiento System.
It is simple and quick to do the analysis. Here are the steps:
1)Use the Folder Tools to create a new folder in Platinum.
2)Copy all the closed CRC/PRC trades to the new folder using the Edit Folder tool.
3)Then go to the Money Management function located under the Profit Tools. Choose the folder you want to analyse, enter start date and end date and hit the GO button.
HK, I will do this in due time. I do not keep all trade in the account listed in the platinum, so I have to go back and make an inventory, which I promise to do.
If you want to go directional, I still think that the Sarmiento system would be the better way. However, considering the success I've been having with the PCCRC, by comparison, it makes little sense to focus on what has proven to be erratic.
Still, I recognize that there are great opportunities that should not be passed. We could do some CRC's in stocks that are very promising, like IGT and SLAB and then at some point transform to PCCRC's to limit the risk.
Juan,
RE: "We could do some CRC's in stocks that are very promising, like IGT and SLAB and then at some point transform to PCCRC's to limit the risk."
Again, don't forget the PRCs. Trading falling stocks can be very profitable. **Smiles**
From the experience of the CRC/PRC trades, I felt that there is a difference between doing a bullish and bearish trades, and it seems to indicate that setup for a bullish trade may not work well when used in reverse for a bearigh trade. So I went to the library to look for books on how to short stocks. I manage to find only 2 books on this subject. One of the books that I am currently reading is a relatively new book by William J O'Neil "How to make money selling stocks short'.
Point no. 1 in his short selling checklist is "The general market should be in a bear trend, and preferably in a position that is relatively early in the bear trend. Shorting stocks in a bull market does not offer a high probability of success, and shorting stocks very late in a bear period can be dangerous if the market suddenly turns to the upside and begins a new bull phase."
Another rule is "Set 20-30% profit objectives, and take profits often!"
HK,
Interesting comments on shorting stocks. What I am seeing in my 'minds eye', is gradual gains for a number of days or weeks for stocks, then a major correction down, like last friday. There were signs for it, before it happened and there appears to be an annual cycle in certain stocks.
We can see it in the graphs and the volatility also indicates it too. Look at the recent fall back in AMZN, it is almost predictable....
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