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
---------------------------------------
I am sure you have noticed that LRCX has jumped above my break even poing and I have some profits now. I could easily monitor the stock from here and exit the trade when I felt that the rally was slowing. However, I am going on vacation tomorrow and will be out for a week. SO I need to take my profits and modify the trade to make it more Delta Neutral. I touched on this before. Our goal is to transform the trade into a straddle, every chance we get, thus taking advantages of the rocking action of the markets. Here is my modified trade:
From this chart you'd notice that if tomorrow there is a dramatic reversal of the rally, I could gather further profits. I believe that this transformation gives me peace of mind during my vacation. Who knows, LRCX may go up 10 more points, but I am OK with that too.
All I did was to close my long calls at 45 and buy evn more calls at 50, with a credit of almost $8000. My debit is gone down to a reasonable figure, yet, I have the potential of making good money, should the rally continue or reverse.
Note that the volatility has been on the increase, but there is plenty of room for more Vega gains. IF the IV had been above 50%, for example, the wise thing to do would have been to leave the trade and take my profits. I think I will be OK and IV may actually increase some more.
I hope that the three trades I have shown you: SBUX, DNA andLRCX have all given you an idea of how the PCCRC is a low risk trade, as long as you stay with it, and learn to make the pertinent modifications at the right time. Remember that the objective is to take advantage of Delta, Theta and Vega. I hope you have further questions to get a good discussion going here.
6 comments:
Juan,
In modifying why not close out the Put positions, both back and front months and place them on the $50 strike instead? Plus sell front month Calls on the $50 strike too?
Just to get the discussion rolling. **Smiles**
Moving the Put portion higher would increase the cost of my trade. If I begin to feel bearish again, I would do other things that would actually continue to reduce my cost. First, I could sell more calls until the shorts match the longs. It is imperative that you carefully consider the volatility. You must try to sell high I.V. and buy low I.V. This is were platinum comes handy.
You Could actually increase the number of short puts, because you are getting closer to expiration while the stock is moving UP. However, you have to consider how practical this is really, considering that the amount of premium may be too low, even to justify the commissions.
What I did is probably the easiest, fastest thing to do. At this point, the trade is profitable, so any change should be oriented at reducing costs, taking profit and set yourself for further gains, either UP or DOWN. Platinum is a good tool for evaluating the advantages of every move.
Juan,
SBUX looking good.
Just looking at LRCX and DNA which I exited before you.
DNA has gone down another $2.00 per combination.
LRCX has gone up $3.50 per combination.
I had two positions on DNA and one on LRCX, so currently I would be down a further $0.50, if I had stayed in.
No worries, just observations, on how quickly these trades can go if they go.
It's not so easy to get used to these blogs, etc. But I believe I've made it.
Juan, I love low risk trades, and the only thing is that with so many legs I may have to find a cheaper broker than OX.
I love the risk graph, and also the IV lines. It really can't go lower to hurt your trade.
Danny
Danny, for the time being, select stocks that are $50 or higher. That would reduce the number of contracts and result in good gains if the move is strong. If the stock is below $50, you may have to buy/sell more contracts to achieve the same effect.
Start doing this with a limited amount of money (mine are between 16K and 20K). I may have between 10 and 14 at the same time. be sure you do plenty of paper trading and backtesting. The secret is to act to take profits, not to have a set up that meet your judgement about directionality of the trade.
Recently, I made a bit of money on the downside on DNA and AON, which move down, contrary to my expectations. I think that there is going to be a few downside winners in my portfolio next week.
---------
The way this blog works is like this:
For every article I post, there is a comment hypertext that allows you to enter your opinion about the article, or anything at all. The problem is that if you post a comment it may not be seen by others if I enter new articles. Sometimes I publish on a daily basis. However, you can be sure that I see all comments because I get an e-mail copy of them. My reply is directly below your post. No comments are erased, they simply are left behind with each new article.
I have no problem in you copying old comments and pasting them the most recent articles, if there is something you want others to see, that had been left in the past.
Any comments about how to deal with this problem are welcome. One day I could have my custome made blog, but for now we are going to have to live with the cheapest solution.
Post a Comment