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IF YOU HAVE ICHAT OR AOL INSTANT MESSENGER, ADD "PAPERPROFIT1@MAC.COM" IN YOUR BUDDY LIST AND JUST KEEP ON WATCHING TO SEE WHEN I AM AVAILABLE.
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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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I have received this trade from our friend Rick.
For those with Platinum, here is the URL
http://tinyurl.com/hp767
His comment was posted below the first article in this series:
http://stockoftheday.blogspot.com/2006/05/another-imcl-pccrc.html
I have a PCCRC on IMCL on my own. Here it is:
For those with Platinum, here is the URL
http://tinyurl.com/qa4ly
In only a few weeks, I have a 14% return on my investment, and RIck is doing well too although his trade has been on for ony a few days. What happened? the stock has hardly move, really. Well obviously we have Theta gains, but there is more than that. Remember that we entered this trade with high IV for the front month options.
Here is what has happened with the front month volatility. What do you think happened here?
Here is Part II on this series
http://stockoftheday.blogspot.com/2006/06/imcl-pccrc-making-money-with-vega-part.html
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UPDATE
I have closed my position on IMCL for a $2700 profit.
15 comments:
Both of your trades are looking good. It is the managing of the trade which I wanted to learn more about on the Optionetics Advanced 3 Day Course and it was hardly covered.
Rob Roy told us at a Seminar that I attended, that Phil Weigand made $1 million in 2002 using a strategy based in similar techniques. He referred to the risk graph as the 'swinging vine'.
I am learning more about these type of trades on this Board than I did or was supposed to do on an Optionetics 3 Day Advanced Course.
Well done Juan and Rick for these couple of examples.
Fortitude
Thanky you for your comments. I am glad to see that you are benefitting from this trade. To be honest, when I started using the PCCRC I was more interested in creating a bullish trade with a hedge to the downside. As I have shown here, if you take a few steps to select the right candidates, you hardly ever lose money. Having said that, I think that the only way to make $1m with my trade would be to trade $5M, heheheh. Unless you could handle 100 of these trades, you would have to invest $100 or more per trade, and the legs would have to be huge. So huge in fact, that you would probably would not get them executed by most brokers in most stocks. That would be my thought. I don't know what optionetics does, but I find it hard to believe that anyone could make millions trading options. Of course, I would certainly ask may questions of Phil Weigand if I had him in front of me for 1 hour. In other words, I am extremely skeptical of statements such as Rob Roy. In the end, they leave it to us to figure out strategies to make that much money. Obviously the IMCL trade has show us that the skew PCCRC is easy money.
I want to make something perfectly clear here, my trade has absolutely no connection with what Optionetics teaches in the 3 day seminar. What I developed was based on much evaluation, backtesting, paper trading and of course my own risk. To say otherwise is to overlook the effort that I have put into perfecting what I do to make it reproducible in most circumstances. You are right that Optionetics hardly ever elaborate beyond a limited demonstration, so I could have not develop what I have without tenacity and perseverance, and it has certainly NOT been handed to me by anyone.This is important to say because I do not intend to comment on the 'swinging vine' or other trades that are Optionetics' developments.
I agree with Juan. I have been to Optionetics ICT and advanced classes. They didn't teach me how to build this trade, except to just play with the ratios until I get a good looking graph. The problem with that approach is you can have real high IV risk and not realize it. They don't give real good rules for entry, exit, or adjustments.
So far both the trades are looking real good. I feel that neither is better than the other, just a different view point and different time frames. They are presented on the here as learning tools, not as recommendations. Rick
At the risk of sounding repetitive, my strategy was born of the combination of two Calendar ratios one with puts and the other with calls at the 1:2 ratio (short and calls) all at the same strike price, following the instructions of Lawrence G. McMillan (with my own variations) as described in his book "Options as a Strategic Investment". Another way to view my trade is the name "calendar Straddle" also described by McMillan, except that my ratio is different than his. Because I use it in a flexible maner, sometimes rolling over the shorts as a Condor, sometimes changing the strike price of the longs, no single definition would fit my trade. My trade is my own, based on effort, and hard work, that I am only happy to share with you all for you to make your own modifications, based on your own observations.
6/12/06. the risk graph this morning showed high pos. delta, I want to be neutral or slightly bearish. I needed to sell calls or buy puts to reduce delta. I sold 6 Jul 40 calls at $3.00 (IV was about 53%) when the stock moved up to $41.13 (almost the high of the day). I plan on buying back those calls at about half price to get back to a PCCRC. OX shows a profit of about $940 now.
6/20 update, BTC the 6 Jul 40 calls at 1.95. Imcl make a wild run up/down today. If I had of closed the extra shorts earlier, I would have sold them again this morning at $3.20 and made another $600+. Hindsight is excellent. Rick
Rick, please send me the URL of the trade with all steps you finally did, I seem to have erased the original. I will post mine and yours side by side for comments.
I very much appreciate your participation.
Juan
Thanks for sending me the trade.
looks like our trades are giving about the same about of money in profits (give or take a couple of hundred dollars).
My phylosophy on this trades is to be REACTIVE, not ACTIVE. What I mean is that if the stock jumps 10 points (to give you an example) and I could make the adjustments then, rather than modify the trade in advance of the move (if I suspected it was imminent). The same is with the volatility. If volatility jumps to 60%, then I exit the trade and run with my profits. I don't much worry about a point or two change on a day to day basis.
With this phylosophy, I accomplish the following:
1. I don't let profits sitting on the table.
2. I don't make countless modifications when I know that there are always opportunities out there.
3. I keep commissions as low as possible.
4. I let the market them me when to take profits and not the other way around.
It is important to be cool and let things happen with this trade. You never know where the surprising profits are going to come from. Right now It looks as though we are going to have DELTA gains....
I also notice that we seem to be having the same results, only my trade was cheaper!! hehehehe!
Enjoy, this has been working well.
Here is a screen shot of my trade today
http://homepage.mac.com/paperprofit1/.Pictures/IMCL2/IMCL26.png
And Rick's:
http://homepage.mac.com/paperprofit1/.Pictures/IMCL2/IMCL27.png
simply copy the URL and paste it in your browser's address line.
If you have platinum, paste either of these two url's to copy the trade into your platinum trade folder:
This is Rick's trade
http://tinyurl.com/ncrjw
This is mine:
http://tinyurl.com/nu5ad
Juan, A little friendly competion is good.
To be fair, I opened the trade 7 days after you did when the IV skew wasn't as good. I also haven't been able to roll yet. My higher debit is due partly for the extra puts to make me more delta neutral and the longer time in the Jan options.
On the the 12th when I sold the extra calls I was reacting to the market. IMCL had increased in price, Iv was still high. and I was real long delta. I wanted to be delta neutral, so I had to sell calls or buy puts.
Right now, I am longer Vega and Theta. I show a much higher min. profit. I also have 2 more months to make money on rolls. Over time and with an increase in IV, I may even catch up to you.
We both have great trades, proving there is more than one way to make money. Rick
>>Juan, A little friendly competion is good.
Agreed. I think that this exercise is worthwhile because we are both learning how we would both react independently of each other with similar trades.
>> To be fair, I opened the trade 7 days after you did when the IV skew wasn't as good. I also haven't been able to roll yet. My higher debit is due partly for the extra puts to make me more delta neutral and the longer time in the Jan options.
I noticed that you sold July's while I sold June's. Perhaps that week differential made you decide further out to get more premium. When you chose Jan I thought that my trade would be able to make the profit in a shorter period of time. This may be important because I could reuse the cash in another trade while you are still waiting for more rolls. Because volatility may jump sooner in my Nov than in your Jan, I might be able to cash out before you do. However, you DO have more time for a Delta or Vega jump to occur. As I become more and more familiar with this form of trades, I realize that it is better to take a 30% profit (or more) and look for a different trade.
>>On the the 12th when I sold the extra calls I was reacting to the market. IMCL had increased in price, Iv was still high. and I was real long delta. I wanted to be delta neutral, so I had to sell calls or buy puts.
OK, I see what you mean.
>>Right now, I am longer Vega and Theta. I show a much higher min. profit. I also have 2 more months to make money on rolls. Over time and with an increase in IV, I may even catch up to you.
You show higher minimum profit because my trade is skewed to the bullish side. In reality, when a stock falls it does so with an increase in volatility. In my experience, you are actually bearish. You are more likely to make money (or more money) in a strong decline with a spike in IV. I am more or less even, the risk graph notwithstanding. Unless IMCL decline in low IV. when this happens, though the stock usually bounces right back.
>>We both have great trades, proving there is more than one way to make money. Rick
Agreed.
Excellent comments and insight. You are right about my reasoning on selling July rather than June. I should have sold June and rolled.
This is my first PCCRC trade. You have much more experience with which options to buy and sell. Most likely I am bearish. I will look at buying less puts and less time next time. However, I am reaaly pleased with my first real money PCCRC. Today was a good day with the increase in IV. You are still ahead of me. Rick 06/22/06
6/29/06 update. closed for $3007 net profit. About 21% return on total debit in 23 days. 6/12 to 6/20, I did an extra trade of sto/btc 6 calls for about $600 profit. Rick
Rick, did you change this trade before today???
http://tinyurl.com/ncrjw
Juan, I made no changes to trade. It was as you posted it. I closed the calls 06/29 at 10:36a and the puts at 11:05a and 11:11a. IV dropped on the long term options during the day. I feel fortunate to exit at the prices I got.
I need to learn to copy OX order screen like you do. Platinum is giving a bad quote on the Jan07 35 puts. Happy Holiday and trading. Rick
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