Real Time Tutorial: create a PCCRC

How to view the entire chart:


1. Try clicking on the name of the most recent article in the column on the right. This will remove the "Archives" list.
2. Try right click on the chart itself and open it on a separate window.


I am sorry that I cannot always make the chart small enough to fit neatly on the left column. I want you to be able to see the details I want to point out.


I Hope this helps,


Juan

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Using Platinum, I have selected this candidates as the faster moving stocks of the last 90 days.

NTRI VRTX NDAQ ATI CRM AMD SLAB MVK JOYG LRCX CEPH ESRX MRVL SLB MYOG KOMG NUE

I will be selecting amont them the stocks that fit my requirements for a PCCRC and I will enter all details for everyone to follow.




I have examined the 2 year IV chart and rejected those candidates with IV's above 40% or IV's at the high end of their range (even if that IV is below 40%). See the chart below as an example. Here is my list of remaining candidates: LRCX ESRX NUE





Of those 3, only LRCX has an IV/SV ratio below 1 and currently on the rise.





I have checked the earnings schedule on LRCX. I used earnings.com to find out that LRCX just reported (perhaps this is why it volatility is low, and it is due to report again in April. Unfortunately, there are no April options, but it there are July options, a month in which LRCX will report again.

Here is the trade I propose, you can use any number of options as long as you keep te proportion. However, I will try to shave off some of the cost, because I am not happy with the risk go the downside.




Next I go to OptionXPress, and under the Toolbox menu, I select "Pricer". I entere my trade as formulated above, to see what are the market prices for the trade I am about to enter. This calculator is real time, so I know exactly what to expect. Unfortunately, I cannot enter the whole trade as a unit. However, I DO have my own entry bias. I will describe it to you.




Now, I will enter the LONG portion first, as a straddle. That is a long call and a long put. You will require more cash than what the trade will end up costing, but I prefer to enter it in this way because I want the order filled at the low point in the day's volatility. that is usually between 2:30 and 3:00 Eastern time. BUT, I have still some hours to go, I have the opportunity to have the order filled at a low price. I am entering that portion at the BID, eventhough it is not likely to be filled, I can change that order as we get closer to the 2:30-3:00 critical time.

I now delete the short portion of the trade from the trade calculator, and see the cost of my long portion (this is a long term straddle). Sure that I have enough cash in acccount before doing the shorts, I am ready to place the order.



I just have to click on the Preview Order bottom in the page above.




So now I have entered the trade at the BID price. If I wanted immediate execution, I would be placing an ASK price. BUT, I will be coming back to this trade later today.

Back to my trade, it is 2:30 here, and I changed my bid to $0.10 below the ask price. Wouldn't you know it, it filled immediately.



Now I will enter the short portion at the ask price and monitor the trade until 3:30 pm. I will keep you posted.




Now I have entered the short portion at the ask price. By 3:30 I will know if I need to me less demanding on the price.


I changed the order and it was filled only minutes later. Here is the fill:


Here is the resulting trade. The difference with the original trade was $375 in my favor.