Those of you who want to see an index of my video clips, go to this address, from there you can view any of them. They are up to date too:
http://www.pathometrix.com/Movies/
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Here is a detailed view of my Cephalon PCCRC. Here you will see how one can take profits and moderate risk with proper transformations.
First, take a look that the previously published video clip
http://www.pathometrix.com/Movies/CEPH.mov
Then look at the new video clip, published today, Jan 6, 2006
http://www.pathometrix.com/Movies/CEPH1.mov
If you'd like, take a look at this trade, if you have optionetics. This is an actual trade, some of you may have follow the entry and modifications almost real time. In the videos above I explain the logics bhimd the modifications to reach this one-of-a-kind trade.
http://platinum.optionetics.com/cgi-bin/platinumv30/op4email.php?trade_name=I|CEPH™_date=2005-12-19&sym=CQE&num_legs=12&tra0=-10:A06:55.000:2.550:CEPH:2005-12-19:30.64200020:FFFF99:0:0&tra1=10:M06:55.000:0.400:CEPH:2005-12-23:49.31700134:FFFF99:0:0&tra2=-10:M06:55.000:1.650:CEPH:2005-12-19:32.40800095:FFFF99:0:0&tra3=-15:N06:55.000:1.233:CEPH:2005-12-23:50.88800049:E8E8E8:0:0&tra4=20:E06:55.000:5.400:CEPH:2005-12-19:31.94899940:99FF66:0:0&tra5=-10:E06:55.000:8.640:CEPH:2005-12-22:32.12300110:CCFFCC:0:0&tra6=20:Q06:55.000:3.800:CEPH:2005-12-19:32.43500137:66CCFF:0:0&tra7=12:E06:60.000:5.630:CEPH:2005-12-22:31.53100014:CCFFCC:0:0&tra8=-12:E06:60.000:9.380:CEPH:2005-12-23:37.20500183:CCFFCC:0:0&tra9=14:E06:65.000:6.360:CEPH:2005-12-23:35.27500153:99FF66:0:0&tra10=-14:E06:65.000:8.300:CEPH:2006-01-06:35.2639! 9994:FFFFFF:0:0&tra11=14:E06:75.000:3.200:CEPH:2006-01-06:31.! 39500046:FFFFFF:0:0
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11 comments:
Juan,
Thanks again for all of these free insights into what you are doing. Have learnt again more about the PCCRC trade.
I viewed both videos clips. The first one took one minute to load. The second one, your more recent success, took around 5-6 minutes to load. For some time I thought it wouldn't so I mention it for others to persist if you have already tried and given up!!!
I like the way you change the option trades. I like the idea of 'ratcheting up' the Option Strike price, taking money off the table etc.
A few question;
(1) Should you not have bought back the five extra 'front month' Puts (Feb06 $55) you sold, if now you are anticipating a bearish move?
(2) Anticipating the bearish move, sell more 'front month' calls (a couple at least), as you now have 14 $75 May06 Calls? This change could pay to buy back the five extra Puts, as I mentioned in the first question..
(3)I haven't done this manoeuvre before on Interactive Brokers, so I don't know what the margin requirements would be, when you 'ratchet up' the bought 'back month' Options up to the next strike, whilst keeping the sold 'front month' at the same starting strike?
Juan,
RE: "is a 455% return possible in just a few days?"
Your current entry psition on Platinum is $1374.5 and profit is $5740.5, which gives a 417.64% return. However that is not strictly true as you started the trade with $14,200, so that would strictly mean a 40.4260563% return since the 19th December 2005, which is 18 days.
18 days is one twentieth of a year (365 days), so 1.404260563 to the power of 20, equals 889.1069138 return... **Smiles**
Correct me on the maths if I have fouled my calculations up.
Best Wishes.
Thanks Juan for the case study.
I love your PCCRC TLJ trades. I have back tested it myself and love it. However, I don't have capital outlay to put for these kind of trades.
Reason I say you need large capital outlay is that you would be able to adjust Delta, Gama, Theta and Vega better that way (not impossible though).
Fortitude said: I viewed both videos clips. The first one took one minute to load. The second one, your more recent success, took around 5-6 minutes to load. For some time I thought it wouldn't so I mention it for others to persist if you have already tried and given up!!!
I have some flexibility on the area of the video clip, and this is a compromise between what I need to show and thehow to prevent excessive bandwith usage. Unfortunately, the results vary, particularly if you do not have broadband. I have little control over that. I appreciate your description of how long the clips take to load because then I can try my best to make better adjustments.
I can do practically nothing to edit the video, so I have to live with my mistakes and accent. If I took the video to some editing software, I will considerably enlarge the file size (not to mention the load of work I will be giving myself). I do my best to prepare before I record, but I have to admit, English is not my native language, and I don't have a prepared text when I speak. I think reading will only make things worse.
I hope you can take the clips for what they are worth, and make some allowances for my studdering and my mistakes of english.
Fortitude about the Cephalon trade: (1) Should you not have bought back the five extra 'front month' Puts (Feb06 $55) you sold, if now you are anticipating a bearish move?
Well, no. I am not exactly bearish, I merely want to prevent a loss of profit that I have won so nicely and unexpectedly. By buying back $55 puts, I am bringing more money into the trade, so that does not favor my "profit taking" strategy. Besides, the stock is currently near $70/share. In my estimation, even if CEPH was to tank now, I am comfortable with the idea that the Feb96 $55 puts will expire worthless. So no, I don't have an inmediate urgency to buy those back. If is the long puts that will make me the money, if the stock begins to decline at an accelerated rate.
Fortitude said about the Cephalon trade: (2) Anticipating the bearish move, sell more 'front month' calls (a couple at least), as you now have 14 $75 May06 Calls? This change could pay to buy back the five extra Puts, as I mentioned in the first question..
I'd like to see a double top before I go completely bearish. At that point selling all the $75 calls would make for a bearish trade with much of the profit having been collected. What I like about the current configuration is that a stong movement either way will make me money. A sideways move would be OK too. We have until MAY for that strong move to occurr... Not a bad bet, is it? It is a long-term straddle practically all paid for: not a bad place to be.
I only change winner trades if the change offers me a good opportunity. As of right now, CEPH could keep going higher, but I am protected against even the rarest unforeseen circumstance.
fortitude said about the CEPH trade: (3)I haven't done this manoeuvre before on Interactive Brokers, so I don't know what the margin requirements would be, when you 'ratchet up' the bought 'back month' Options up to the next strike, whilst keeping the sold 'front month' at the same starting strike?
Excellent question. I DO keep away from margin requirements. Since I always have same or more longs than shorts at the same strike price, there is no cash requirements. This is easy to figure out before placing the trade with OptionsXPress, and they are very helpfull in explaining how you can figure this out, so I won't go into the details.
For my calls, I have equal number of 55 calls that are long and short. When I sold 55 calls to take profit and move up the additional calls, I made sure that I kept my shorts protected. If you do that, you won't have cash requirement... I hate that!!!! hehehehe
RE: "is a 455% return possible in just a few days?"
No, that is an exaggeration, of course, the original trade was $14K or more. However, the transformations are worthwhile because you can use the cash to find other opportunities, and that is the beauty of the PCCRC. Going forward, though, I have a position that is costing me less than $2000, and has accumulated 4x that much in profits.
How you interprete your winnings in the long run will depend on how many successful trades you make. Nevertheless, if you follow my instructions, you hardly ever lose money with these. Even if you don't make more than 20%, you can keep large amounts of money fairly safe.
Varum said: Thanks Juan for the case study. I love your PCCRC TLJ trades. I have back tested it myself and love it. However, I don't have capital outlay to put for these kind of trades.
Don't completely dismiss it outright. The PCCRC's don't have to be that rich, we have one going on IGT for $1700 (we legged into it, as you'll recall, take a look at my posting on that).
You need to be patient and do the CRC's and PRC's with the Sarmiento system, or any other system you may have test it. Eventually, hopefully, you will have enough money that you'd like to invest in this fairly protected trade.
This is not a TLJ, I would like to stay away from that nomenclature because I have based my trade on my own reading. The "TLJ" is something Optionetics has described in detail and it varies substantially from what I describe.
Read the book Options as a strategic investment by Lawrence G. McMillan.
Frankly, calling my trade a TLJ underestimates the effort and time I have put into developing it and testing it. So let's not call it a TLJ, please
Varun said...
Reason I say you need large capital outlay is that you would be able to adjust Delta, Gama, Theta and Vega better that way (not impossible though).
The way I look at it, is that you can protect your capital better because the risk is less. In my trade you keep a 2/1 proprotion between longs and calls. You enter the trade as a long and a short straddle sequencially, so you could do the trade with 2x1 and 2x1 contracts, and that should not be took expensive. You can stay in that trade, without modifications until a volatility spike occurs (Vega gains), or the stock moves strongly Up or down (Delta gains). Every month expiration you have the choice to exit the trade and take profit or small loss (Theta gains).
So you DO NOT have to make any transformation, if you don't want to or can't. See what results you get with that strategy..!
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