It is very important that you all realize that not all trades are going to turn out this good. In fact I had never exceeded $12,000 reward in a single trade. I want to make you aware that no other method of trading could be safe enough to give you a gain of $31,000 gain while risking only $1,800. That is at 1,722% return on my risk. Even if I have had an $1,800 in long calls, I would not have reached more than $21,000.
Keep in mind that this was a huge cash offer by the cash behemouth Microsoft and that it is unlikely to happen again any time soon, even when merger mania is hitting Wall Street. None the less, if it does happen, it may well be in a stock with a set up predictable by my strategy. So take the time to learn it, it will serve you well as it has served me. AND I am giving it to you FOR FREE, as long as you PAY IT FORWARD, doing something really special for someone else in the world.
The Secret has worked for me. You know I have been working in this strategy for years now, making about 30% per year. Last month, I said to myself that I will make the secret work for me. I then posted a sheet of paper on my wall with this statememt: "I am a great trader. I make $30,000 every month and 80% of my trades turn a profit". Today, I gained $31,000+ in a single trade that I opened on May 8th, and closed today, May 21st. Spooky huh? Ask and it is given. But most of all I am giving back by asking you to PAY IT FORWARD without hesitation, and you too will be rewarded. I guarantee it.
16 comments:
Juan,
Congrulation on your big win. Out of the 13 TOS trades, you have picked 3 big movers.
I am definitely convinced of your PCRCC method. But the issue is to pick the counters for the trade out of those meeting the criteria. That probably requires some experience as well. Is there any other observation that you have recently gathered on the criteria before you put on a trade ? Or what is your advice on that.
Chiu
Be very aware of the reason why the stock jumps 10%. If a company says that they are increasing their earnings expectations will move the stock further within the next few weeks or months. You'd be surprised as to how high and how fast they can go up. BUT be also prepared to take profit, either by selling calls (adding to your shorts, or removing some of your longs). Eventually, a strong market pull back will also make you money to the downside.
Also, don't be too cocky. The main feature of this trade is its hedging. Transform it to delta neutral when possible.
Juan,
Congrulation !
I tried to place a PCCRC order in as one ticket, but seems never got executed in either IB or TOS. How do you place your oder, leg in or all in one ticket ? Do you place then at nature or middle ?
Thanks,
Zack
Hi Zack, thank you for your comment.
Please give us more details about what you entered and what was the asking price.
We can comment but I trust that it is your broker who can best answer questions about the entry.
I think you can middlesplit, but the fill will depend on the liquidity of the underlying. I get suspicious when my orders don't fill, I might even change my mind about the trade, if the liquidity is such that my trade does not fill. Be sure that you pick stocks that trade at least 1M shares/day over the last 90 days.
Also be cautious about the I.V. make sure that you SELL more IV than what you buy. That is, the front month IV should be same or higher than the IV of the back month. Never to exceed 40%.
Please share with us the stock you chose and why! then I can give you my opinion.
Thanks for your contribution.
Juan,
Well done on the paper trading account.
Hi Juan,
Love the Blog. I have a question. Let's say you have a PCCRC on a stock at $50 and the stock moves up to $60. It seems you sell the $50 call in this case. Why not sell the ATM $60 call? It should have the most time value, and it will not increase your margin since it is covered by the long 50s. Thanks, Chris
Fortitude: I did place this trade in my own account. It was an IRA, though, so I cannot take a vacation, as I could have done with the money.
Chris: Thank you for your comments. Please be sure to contribute any time.
The flexibility of the PCCRC is great. You can certainly do what you suggest. It sound like a covered call. I for one look carefully at the risk graph and make sure that the transformation I make fits my expectation for the stock.
Also, there is nothing wrong in taking profits. That is, to close the position and open a new one at a higher strike price, as long as they fit the I.V. profile I have described in previous articles and in my original rules document (pdf available upor request by e-mail to Paperprofit1@Mac.com).
Hi Juan, thank you for your reponse.
The trade I tried to put on is:
RYI Jun/Sep 35 put and 40 Call. I forgot the bid/asp spread at that time (5/22, 5/23), but RYI is around $37.50 and I place the one ticket order about $0.10 above the mid. It didn't get executed for 2 days, good thing is the stock went done today. any comment on the trade ?
Thanks,
Zack
Zack you should have a very good reason to enter the PCCRC...
for example:
1. a break out to a new high
2. a jump of >10% in stock price.
3. Estelar earnings and increase in earnings expectations.
4. Possible cash buyout.
IV must be below 40%, according to my rules. The ATM calls of 35 is high in IV, you may be subject to a volatiltiy crush.
I suppose that you were trying to enter this trade back when IV was low, and now has taken off.
I deal with the fill on a daily basis. It is a compromise between my need to fill quicly and to fill at a good price. IF the spread between bid and ask is large, your risk graph is not going to look very promising, and you will start off by a loss that is too large, then perhaps it is not a good trade.
I rarely get my trades filled when I middlesplit in Interactive Brokers. TOS makes better fills than IB, in my limited experience.
Remember, there are ALWAYS candidates, almost on a daily basis, specially during earnings season. So be patient, and be sure that all the rules are completed.
As for RYI, I would pass as of today.
A trade placed at the double top on 5/10, with less long calls than puts, would be breaking even today, thanks to the increase in IV. BUT that is another trade, designed to take advantage of IV spike.
I did notice tha the spread betweeen bid and ask was large those few days ago.
Juan,
Thank a lot for the analysis. I didn't have a valid reason for the stok, just saw the skew in IV. I guess it's not a goog trade.
Thanks,
Zack
For the IV skew, you may choose to buy less calls than puts, as to create a more symetrical trade. In such cases, you could make money if the IV skew corrects.
Great trade Juan!
What's impressive, besides your PCCRP skills, is finding the stock to place this trade on.
Would you say that it's a stock that had something special about it, or, not much different from any other good PCCRP candidate?
Well, you've shown us the light at the end of the tunnel!
Thanks!!! Dan
Great trade Juan!
What's impressive, besides your PCCRP skills, is finding the stock to place this trade on.
Would you say that it's a stock that had something special about it, or, not much different from any other good PCCRP candidate?
Well, you've shown us the light at the end of the tunnel!
Dan, I have been setting up trades like this for almost 2 year now. I have described the set ups that include: 1. high fliers. 2. IV skews. 3. 10% jump after earnings, or in general any stock you feel bullish about.
AQNT fit my profile when I entered the trade. Here is the news on May 8th:
http://biz.yahoo.com/ap/070508/earns_aquantive.html?.v=1
What happens thereafter is the coincidence or good luck. MSFT bid 6Billion in cash for the AQNT which quickly doubled in price.
I always like long calls or puts, ratio calendars and PCCRC's because they leave open the possibility of unlimited gain. So there was more than luck. If I had had a vertical spread, I would have made only a fraction of this winner.
Armed with this sort of knowledge, you MAKE your own luck. You MUST understand that not all trades work out this way, but you have to be prepared to allow the profits to come while limiting the loss. The PCCRC does both.
Anonymous how to place trade on the PCRCC. One way that I have tried is to work out the average debit price for the position, then I will send it to tradedesk in TOS, to tell them the position that I want and maximum debit that I am willing to accept, they will do it for me without extra charge. That is the great service by TOS. Try it.
If you have difficulty entering the trade through TOS or IB, call them up and/or chat with them on line.
It is critical that you enter the ENTIRE TRADE in one ticket with one DEBIT PRICE.
IF this is an issue, I could probably create a video on how I enter my trades.
HI,
Your AQNT PCCRC Theta is -6.59. Why? I though the Theta for PCCRC should be positive???!!
Happy trading
Post a Comment