Trading The Markets-Risk and Reward

Taking Care Of Business

2008-12-12T19:38:00.001-06:00

Taking care of things at home. Be back in a few months.

Happy Holidays!
Dave

Slow Week

2008-11-05T23:12:00.002-06:00

TOS made some app changes so I'm working on a way to show P/L. On a side note here is an interesting video.

Fib What... Here is the visual.

2008-10-28T19:50:00.002-05:00

Fibs and Trends = Profits

2008-10-28T19:32:00.015-05:00

=Music from the past! What a movie!

Forex, Fib lines and night trading

2008-10-26T18:36:00.005-05:00

So I plan to post my results every night I night trade. Not looking for a huge home run unless it comes but base hits. So here above is tonights results. My Max risk at anytime was $50.

Fibs and Trading

2008-10-23T22:22:00.002-05:00

I just LOVE Fibs! Even when the market is NUTS (VIX Spike over 90) we can still use fibs for support/resistance entries/exits. I shorted this a few times tonight with tight and easy stops.

Learning From Mistakes

2008-10-23T22:15:00.002-05:00

Learning from Mistakes

We all have winners and some we don’t like to talk about but I’ve come to the painful conclusion to TRADE WITH THE TREND. Better to stay on the side on the counter trends.

Why?

1) The counter trend move is not going to be the largest of the move and will most of the time be the smallest.

2) The trending move direction will help overcome the Bid/ASK spread AND the missing the perfect top and bottom.

3) If I am not able to nail the perfect top and bottom and I have to make up that Bid/ASK spread as in number two (above) then the Risk/Reward will NEVER be worth taking the trade.

4) The ONLY exception would be a trend reversal.

Simple but basic rules ONCE APPLIED has some nice $change$ to my account.

Now What

2008-10-12T19:31:00.002-05:00

After a nice butt kicking this week trying to go long multiple times and getting whipped around I'm saying now what? Friday looked like a nice short term reversal point. Over 1000 point range on the DOW. A drop off the cliff at the open and then a bounce, drop off again then a bounce with volume things were setting up for a reversal. Looked pretty good going into the close and tonights future opening confirmed it. We might fill the gap over night but the market is soooo over due for a few bullish days and I believe we are here. I don't believe this is over by any means. Once the bounce stalls, I'll be shorting this market with just about everything I have.

Forex Markets

2008-10-05T22:23:00.007-05:00

Seems I was right and wrong about being bullish on Friday. The Bill passed the house and then the market dropped. I have a few long positions and while hedging the downside overnight I started to swing trade as profits were coming pretty quick.. Turned out to be a pretty good night swing trading. My max loss was at any time was $180 and I did get to $-140 early on in the trade when the pair was slowly coasting up while being overbought(I was shorting). So here is the result of tonight’s trades.

Dave Turns Bullish With Stops At Todays Low

2008-10-02T23:16:00.002-05:00

The SPY is showing we are at support looking on 20 day 30 min chart. I'm long AUD/USD which tracks the market well on the up side. Shorting EUR/JPY works well shorting the market.We shall see, but my stops are at the low of the day.

Dave

Place Your Bets!

2008-09-26T14:23:00.000-05:00

This reminds me of when I lived in New Jersey when I was younger. We use to place bets on horses. Win, Show and Place if I remember. This whole bail out seems just like that. I’m in cash going into the weekend. A coin toss doesn’t cut my trading rules. Trading with an edge does.

40 minutes left. Place your bets if you so desire!

Have a great weekend!

Dave

Market Forecast

2008-09-21T19:39:00.001-05:00

My Magic 8 Ball is saying we are going to start to sell off this large 2 day run up. 1) We are at resistance, 2) Intraday chart shows no follow thru, 3) Volume was less on Friday than Thursday. 4) News has been priced in IMO. 5) This bail out is just an outline as the deal is not done yet. 6) Since this will drag on into next week I would expect some very wild swings. The SPY/SPX hit a 50% retracement on the weekly chart and closed at the 61.8% retracement (Bullish).

Into The Groove

2008-09-21T01:19:00.003-05:00

Powerful Music

A short clip showing the emotions of the audience.

Music From the Past! U2: 40

2008-09-21T00:36:00.004-05:00

I have always loved this song from U2 ever since seeing them in concert on Sept. 1987 at JFK stadium in Philadelphia. U2 Played this song close to the end of the concert, the crowd sang "How Long To Sing This Song" for about 10 minutes until the band came back out for another 20 awesome minutes. Truly one of the best and most memorial moments in my life. I don't know the exact number of people that night that attended that concert, I would guess 80K to 100K, but it was truly amazing having that many people singing the same song.

What a way to chill after a wild week in the market.

Red Monday as LEH Goes DOWN!

2008-09-14T23:00:00.003-05:00

Trading the Forex this evening. Current open plays within the last few hours.

Long EUR, Short USD-Stopped out.

2008-09-07T16:32:00.002-05:00

Initial Stop at 142.00

SPY 40% Return in 42 Days. Iron Condor. Filled

2008-09-04T22:48:00.003-05:00

Call me Crazy but I'm putting my money on it.

RUT 2000 Umm! 750 Stopped Again!

2008-09-04T22:38:00.003-05:00

Nice 10% 24 hour profit taken today.

Bears Are Back 1260 Gone! Nice 38% Gain on my TXT Puts

2008-09-04T22:34:00.004-05:00

Oh! Non-market related

2008-08-30T13:50:00.001-05:00

One of the things I need to do this weekend. The bulb in my LCD screen for my laptop went out..

Time to bring out the tech in me!
http://www.laptoprepair101.com/laptop/2007/12/09/replace-laptop-backlight-ccfl-lamp/

Stops

2008-08-30T13:20:00.004-05:00

I might pick a direction on a stock like ILMN or oil, gold etc. Well what if I am wrong.. Happens! My entries are based on 'x' and 'y'. If these start to fail then I am out and then wait for another setup. I have taken a loss larger than I care to have again. On the flips side I have taken a gain as well,, so if the reasons I took a trade are no longer there, then I exit, loss or profit I am out.

My entry on ILMN is based on the channel and price support and over sold MACD. If we see a breakdown of Fridays price action then I will exit. NOW,, I might still hold if the overall market pulls back hard with a jump of the price of oil. To a point.. A very short point.. I also have a bullish spread on oil and bearish on an index so a pullback with an increase of oil would be just fine with me.

Chart attached.

Busy

2008-08-30T13:10:00.002-05:00

I have been out of town a lot and busy with wife, kids and work, computer hardrive and LCD monitor failures......
I always check in on the market and swing in and out of small positions. USO being one. TWM being another. I have pulled off my RUT 640/650s for a profit. The 750/760s have been a pain this month. Got a little to greedy but I have been close to my shorts before and understand that time is on my side here.
Since we are in an election year I would not be suprised to see leaders of all the parties helping out and trying to keep oil prices down with this huge hurricane coming.

Market In A Channel.. Looks bearish for Thursday, Turned out to be Friday. News Trumps All.

2008-08-27T19:36:00.005-05:00

Busy with life and sweating the RUT 750s...

2008-08-18T23:54:00.003-05:00

5 weeks straight up and a nice topping tail last week. More to come this weekend.

Oh! Long CHK with a close stop.

Looking Forward with OIL (USO)

2008-08-03T14:19:00.002-05:00

BUY BUY BUY if you ask me. Stop at $95.00 (Trade at own risk)

Looking Forward with Gold and Silver

2008-08-03T14:16:00.002-05:00

BUY BUY BUY if you ask me! With a stop at $156 (Trade at own risk).

Looking Forward with the NDX

2008-08-03T14:05:00.003-05:00

On the daily we are over sold and building a base or is that resistance? Use the fibs we lost the 31% fib mark and are trying to get back to it. We did hit the 23% mark and usually if we bounce off the 31% mark we are going back to 0%.

On the weekly chart we are still in an uptrend with intermediate over sold conditions. MACD is mixed which I would see a neutral.

Looking Forward with the Russell 2000

2008-08-03T14:01:00.003-05:00

Just like the SPX we are over sold on the weekly and over bought on the daily. Notice the MACD on the weekly(In the upper reversal zone).. The RUT is also at the top of the downtrend channel. I see us heading down with a stop of 730 if I am wrong.

Looking Forward with the S&P500

2008-08-03T13:54:00.004-05:00

Weekly chart shows over sold. Daily chart shows over bought. Bollinger Bands are squeezing the price. We should see a big move. Which way I’m not sure. We could move to the top of the channel to 1325... That I can see and the same for the short term berish side since we are over bought.

Showing The Actual Damage To The Banks

2008-07-15T19:02:00.003-05:00

This Ticker came from Tim Knight's Blog.. Years of gains. Gone in no time!

Buying POT.. The Ticker!

2008-07-14T18:12:00.002-05:00

My order for buying a Dec. 190 Call was filled last Friday. Looking good so far. I'm in with the strong support at 200 and the MACD about to roll to the positive side. Up 9% today on ROI not ROR.

The Next Bottom Leg... Drum Roll Please!!

2008-07-14T18:10:00.003-05:00

Looks like the SPX will find some support pretty soon at 1200. This is the next lower Fib line.

Where are the bulls? When are the bearing going to stop?

2008-07-13T13:49:00.001-05:00

Peter does a great job with a video market analysis at the link below.
http://www.redoption.com/shadow_video.php

Why Long Term Berish On The S&P 500

2008-07-09T20:38:00.003-05:00

One more chart. If you notice on this SPX chart we retraced down to the 78% mark like normal. Then we didn’t make another high, but went lower to the 61% and bounced as we should with Fibs..

Now the bounce of the 61% hit the 78% mark and turned down. Normally I would call this weak but not over, but it looks to me like we are losing the 61% mark and are heading to the 50% mark. A bounce off the 50% and to the 61% would be normal for a Fib bounce then a turn down next to the 38% would be in order after than….

Bought Calls on JOYG

2008-07-09T00:18:00.001-05:00

Bought QID PUTS

2008-07-09T00:16:00.001-05:00

S&P 500 finds support.

2008-07-09T00:12:00.002-05:00

With wayyyy oversold daily conditions we were due. This is a stop at support but is this 'the end of the bears' ? Don't think so if you ask me. Anyway I'm bullish for now. Long QID PUTs, Long SPY calls, Long JOYG calls, and neutral with the RUT Condor. I did move my lower condor leg down (swinging my way). My RUT shorts are 750 and 570.

Attached is the S&P chart.

RUT Rolling! Rolling! Rolling!

2008-07-03T11:35:00.004-05:00

I've closed my Russell 2000 Aug. bear calls for a very nice profit yesterday. Today I opened up bear calls at 750/760. Kind of playing defense as well for my bull puts as I see the Russell 2000 as weaker than the S&P 500. While I don't see a move of the Russell to the 630 price point it sure could vist 645 and I'm hedging that move. With all this going on I'm taking in more credit for Aug. which increases my return to 35% in 55 days, in turn I'm going to need to hold the August trade longer than I initally wanted. Holding most likely 52 of the 55 days. So as of now 42 dys left before RUT 2000 August expiration.

I'll be watching my 630 short as time moves on and roll it IF needed. I would rather defend it than move it at this time. If we move down to that point I will be able to close out my 750/760s for a profit. Profit on the topside again which would help on the bottom roll.

S&P 500 Takes a short break from the downside. More downside to come!

2008-07-03T11:29:00.003-05:00

The S&P 500 has taken a beating. It seems to be taking a break from the downtrend at a Fib. line. I'm seeing 1200 or 1175 as my next S&P price target. That would be a retest of the lows from 2007. We might pause at 1235 but my target is 1200.

Funny Pic from Incometrader Blog

2008-07-01T20:11:00.003-05:00

http://incometraderblog.com/

S&P 500 Finds a short term bottom / Russell 2000 finds support but very weak

2008-07-01T19:57:00.003-05:00

S&P Nailed The Target

2008-06-27T21:41:00.001-05:00

My View Of The Big Picture-- Bearish (For Now)

2008-06-20T19:20:00.008-05:00

With the SPX overbought it has been selling off. I see the next target of 1275. After that who knows. The daily chart is oversold so we might see a few 'pops' or maybe an 'up' week. We are due!

The RUT is being pulled along with the market and I'm in for a August Iron Condor. 25% return in 55 days...

That is all folks. Oh! My July Iron Condor was closed with a net 13% return in just over 35 days.

Closing Down July's RUT Condor with a NICE profit

2008-06-19T23:24:00.006-05:00

I started closing down with limit orders in. Pretty much all my Bull Puts are off the table and about 1/2 my Bear Calls are still on which I'm thinking I'll be closing these at Fridays close with trading action from 3pm CST to 3:15 CST when the markets are closed and the indexes still trade.

Enjoy some music to start the weekend.

Inspiring Words For This Week

2008-06-18T21:38:00.001-05:00

http://www.simpletruths.tv/movies.php?movie=FJOY

Longer Term Bearish On The S&P 500

2008-06-16T21:02:00.002-05:00

If I were to take a tennis ball and drop it, it will bounce but not all the way to where it was released. In my view I see the S&P doing the same(at this point). A climb and close above 1425 will null that view point. Just calling what I see. I see a down trend.

July RUT Iron Condor Looking Awesome

2008-06-16T20:56:00.003-05:00

Who says a 25% High Prob. return is crazy. Trading an index with 2000 stocks smooths out the day to day news.

High Gas Prices. Bear Markets.

2008-06-11T21:53:00.004-05:00

Updates this weekend. My condor is looking GREAT! Nice roll over in the market. We took that forecast stance after last Fridays price action.

Found this Pic surfing some forums. Kind of funny!

Going Against the Tide/Trend

2008-06-08T19:29:00.003-05:00

Well I never really like fighing trends which is bullish/up as of late but we have reached a 50% retracement point on the RUT and the SPX. Both backed down and both have overbought indicators turning over. This bullish move has been pretty fast. While my Magic 8 ball is still at Spencers (need to buy it), so it is of no help,, I'm looking for a downward turn in the market or at least some 'chop' action which is fine for my RUT Condor.

Up or down is fine with me. I'm just calling what I see,,, and I see us rolling over. Please see the charts for reference. They are weekly charts since for me they hold more weight.

Loving The Price Action-More Late Tonight. Enjoy Some Music!

2008-06-06T15:35:00.002-05:00

Everything Setting Up Just Right

2008-06-04T06:59:00.004-05:00

Futures are down this morning. EUR/JPY is down overnight and profitable.

UPDATE: I was stopped out. EUR had 'interest rate' news overnight. Must have been pretty good.

Short EUR/JPY

2008-06-03T23:23:00.003-05:00

Since I'm thinking we are heading sideways to down I'm taking this Forex trade. 87 PIP Risk for 200 PIP Reward (1st Target).

The Bears Are Showing Up. Bulls are Tired.

2008-06-03T22:29:00.004-05:00

On the weekly charts but the S&P and the Russell 2000 Index are both overbought and turning over. At the same time they are both stopping at the 50% retracement mark.

Pivot Point Charting Video: John Person with TOS

2008-06-02T23:06:00.000-05:00

http://mediaserver.thinkorswim.com/demos/2008/TOSDemoPlayer.html?vidSource=/transcripts/2008/20080528.swf

Comedy: Stupid Human Tricks

2008-06-02T19:58:00.001-05:00

Every once in a while I run across a funny video. This one is just too funny.

Closed EUR/JPY with NICE PROFIT

2008-06-02T17:29:00.002-05:00

A Nice Home Run In Play

2008-06-02T06:53:00.003-05:00

So I had $40 at risk and this morning that Forex trade is up $361! More to come and I believe this is just the start. The price action in red on the chart is todays action.

Current Open Trades. Weekend Review

2008-05-31T11:51:00.006-05:00

My July Condor is looking great. Interesting that we had a high of 850ish and a low of 650ish and we are getting toppy around 750ish.. About a 50% retracement of the market correction.

After trading this a few times early in the morning and at night I'm only risking $40. I'm short 3 mini's. Stop at 164.35

Time for the weekend Option Time Decay. Take Me Home.

2008-05-29T21:54:00.002-05:00

Closed GBP/USD

2008-05-26T20:44:00.004-05:00

I closed the GBP/USD trade last week for a nice profit. I didn't catch the closing price.. Being out of town and late at night might have something to do with it.

So

2008-05-26T16:32:00.004-05:00

So when we have our meetings on Thursday evenings I often use my paper account and actually take some of the trades. I would say about 30% of them. Well I checked that account today and interesting enought I found some pretty good returns. Now that 775% return was not a penny stock buy currently a $49 one. I just use options as a trading vehicle most of the time.

Long GBP Short USD

2008-05-16T23:23:00.003-05:00

Took this trade the other night as the price was right at a support point with linited risk.

RUT July Iron Condor

2008-05-12T22:47:00.008-05:00

My May condors were closed from standing orders today. I’m all cash right now. Looking at July Short 800, long 810, short 630, long 620. This order is going into tonight. This would be a 25% return in 66 days. I did look at June but if we break out here(north) we could run 770-780 and I would need to roll at that point if I wanted a decent return in the first place. Don’t care to roll!

760, 770,780, 790 and 800 are real strong resistance point and 700, 680, 650 on the support side.

I’m attaching my RUT weekly chart and the data I’m using to calculate my risk. I’m to exit at the latest by July 14th.

On the data chart I’m including the Gamma Risk this round. When the Gamma starts to explode so does my risk at the very end. I’m camping out for a happy medium Gamma and price.

Update: I was filled at 2.05 as shown in the charts above.

A link to a video of what this trade is all about.

http://www.sheridanmentoring.com/demonstrations/20071107TOSChat/

and

http://mediaserver.thinkorswim.com/transcripts/2008/20080227.html

Jim Rohn - To Invest In Yourself

2008-05-11T14:53:00.003-05:00

S&P 500 Battleground

2008-05-09T17:48:00.002-05:00

Notice how we hit that 1425 mark and stalled. That line also happens to be the 50% retacement line. It will take a lot of bulls to push the SPX beyond the 1425 mark if you ask me.

Friday Close Review of my Active trades

2008-05-09T17:34:00.008-05:00

(Above chart) I went short USD/JPY early this week and have moved my stop to breakeven. I'm up about 150% up on risk and up 250% ROE so far.

(Above three charts) All Looking great. USO is still making higher highs which will increase the price of gas at the pump. RUT and SPY condors are almost fully profitable (about 90% so far).

Where to next

2008-05-04T17:53:00.001-05:00

Check out Peters charting and view point.
http://www.shadowtrader.net/videos/sunday050408st2.html

Oil and Gas Prices--A Hedge for the consumer

2008-05-04T15:53:00.002-05:00

See the pic for details.

S&P

2008-05-04T15:30:00.003-05:00

Turning off the drama news and just look at action the bulls are at a resistance point. My hat is off to the bulls for making a 50% retacement in such a short period of time. Our SPY and RUT Iron Condors are still in tack and looking great. So this is the current weekly chart.

Non-Event Fed Day

2008-04-30T20:26:00.003-05:00

IF I didn't know the fed was releasing a statement and might drop the rate today,,,, but the movment or lack there of was a flat day if you ask me. Good for my account as time ticked away. We actually moved down some and my overall delta is coming closer to a neutral position.

Delta And Time

2008-04-27T11:19:00.003-05:00

http://www.optionsxpress.com/educate/advanced/greeks.aspx

Managing Delta

2008-04-27T10:49:00.002-05:00

Looking at my account I can see if I'm too bullish/bearish and adjust accordingly just by looking at my delta number. I found this article below which helps explain Delta.

Going Beyond Simple Delta: Understanding Position Delta
by John Summa, CTA, PhD, Founder of OptionsNerd.com (Contact Author Biography)
Email ArticlePrintComments
The article Getting to Know the Greeks discusses risk measures such as delta, gamma, theta and vega, which are summarized in figure 1 below. This article takes a closer look at delta as it relates to actual and combined positions - known as position delta - a very important concept for option sellers. Below I begin with a quick review of the risk measure delta, and then proceed to explaining position delta, including an example of what it means to be position-delta neutral.

Simple Delta
Let's review some basic concepts before jumping right into position delta. Delta is one of four major risk measures used by option traders, all of which are outlined in figure 1 below. Delta measures the degree to which an option is exposed to shifts in the price of the underlying asset (i.e. stock) or commodity (i.e. futures contract). Values range from +1.0 to –1.0 (or +100 to –100, depending on the convention employed). For example, if you buy a call or a put option that is just out of the money (i.e. the strike price of the option is above the price of the underlying if the option is a call and below the price of the underlying if the option is a put), then the option will always have a delta value that is somewhere between 1.0 and –1.0. Generally speaking an at-the-money option usually has a delta at approximately 0.5 or -0.5.

Vega Theta Delta Gamma
Measures the impact of a change in volatility. Measures the impact of a change in time remaining. Measures impact of a change in the price of underlying. Measures the rate of change of delta.

Figure 1 - Delta and the other "Greeks".

Figure 2 contains some hypothetical values for S&P 500 call options that are at, out and in the money (in all these cases I am using long options). Call delta values range from 0 to 1.0, while put delta values range from 0 to –1.0. As you can see, the at-the-money call option (strike price at 900) in figure 2 has a 0.5 delta, while the out-of-the-money (strike price at 950) call option has a 0.25 delta and the in-the-money (strike at 850) has a delta value of 0.75.

Keep in mind that these call delta values are all positive because we are dealing with long call options, a point to which we will return later. If these were puts, the same values would have a negative sign attached to them. This reflects the fact that put options increase in value when the underlying asset price falls. (An inverse relationship is indicated by the negative delta sign.) You will see below, when we look at short option positions and the concept of position delta, that the story gets a bit more complicated.

Strikes Delta
950 0.25
900 0.5
850 0.75
Note: We are assuming that the underlying S&P 500 is trading at 900

Figure 2 - Hypothetical S&P 500 long call options.

At this point you might be wondering what these delta values are telling you. Let me offer an example to help illustrate the concept of simple delta and the meaning of these values. If an S&P 500 call option has a delta of 0.5 (for a near or at-the-money option), a one-point move (which is worth $250) of the underlying futures contract would produce a 0.5 (or 50%) change (worth $125) in the price of the call option. A delta value of 0.5, therefore, tells you that for every $250 change in value of the underlying futures, the option changes in value by about $125. If you were long this call option and the S&P 500 futures move up by one point, your call option would gain approximately $125 in value, assuming no other variables change in the short run. We say "approximately" because as the underlying moves, delta will change as well. (To understand this relationship, Getting to know the Greeks.)

Be aware that as the option gets further in the money, delta approaches 1.00 on a call and –1.00 on a put. At these extremes there is a near or actual one-for-one relationship between changes in the price of the underlying and subsequent changes in the option price. In effect, at delta values of –1.00 and 1.00, the option mirrors the underlying in terms of price changes.

Also bear in mind that this simple example assumes no change in other variables like the following: (1) delta tends to increase as you get closer to expiration for near or at-the-money options; (2) delta is not a constant, a concept related to gamma, another risk measurement, which is a measure of the rate of change of delta given a move by the underlying; (3) delta is subject to change given changes in implied volatility.

Long vs. Short Options and Delta
As a segue into looking at position delta, let me say a few words about how short and long positions change the picture somewhat. First, the negative and positive signs for values of delta mentioned above do not tell the full story. As indicated in figure 3 below, if you are long a call or a put (that is, you purchased them to open these positions), then the put will be delta negative and the call delta positive; however, our actual position will determine the delta of the option as it appears in our portfolio. Note how the signs are reversed for short put and short call.

Long Call Short Call Long Put Short Put
Delta Positive Delta Negative Delta Negative Delta Positive

Figure 3 - Delta signs for long and short options.

The delta sign in your portfolio for this position will be positive, not negative. This is because the value of the position will increase if the underlying increases. Likewise, if you are short a call position, you will see that the sign is reversed. The short call now acquires a negative delta, which means that if the underlying rises, the short call position will lose value. This is getting us closer to an actual discussion of position delta.

Position Delta
Position delta can be understood by reference to the idea of a hedge ratio. Delta is in effect a hedge ratio because it tells us how many options contracts are needed to hedge a long or short position in the underlying. It is a very easy concept to grasp.

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For example, if an at-the-money call option has a delta value of approximately 0.5 - which means that there is a 50% chance the option will end in the money and a 50% chance it will end out of the money - then this delta tells us that it would take two at-the-money call options to hedge one short contract of the underlying. In other words, you need two long call options to hedge one short futures contract. (Two long call options x delta of 0.5 = position delta of 1.0, which equals one short futures position). This means that a one-point rise in the S&P 500 futures (a loss of $250), which you are short, will be offset by a one-point (2 x $125 = +$250) gain in the value of the two long call options. In this example we would say that we are position-delta neutral.

By changing the ratio of calls to number of positions in the underlying, we can turn this position delta either positive or negative. For example, if are bullish we might add another long call, so we are now delta positive because our overall strategy is set to gain if the futures rise. We would have three long calls with delta of 0.5 each, which means we have a net long position delta by +0.5. On the other hand, if we are bearish, we could reduce our long calls to just one, which we would now make us net short position delta. This means that we are net short the futures by -0.5.

Conclusion
This article explains the concept of simple delta and then proceeds to explain how position delta is a measure of how net long or net short the underlying you are when taking into account your entire portfolio of options (and futures).

Original Article Link:
http://www.investopedia.com/articles/optioninvestor/03/021403.asp

Something to reflect on this weekend

2008-04-26T00:09:00.000-05:00

http://www.simpletruths.tv/movies.php?movie=WKTK

Current Layout

2008-04-25T22:24:00.002-05:00

Since we seem to just jump around often lately I've change my account status layout. It seems to be much easier to trade this way. Also, when trading condors and spreads I'm using weekly closing prices.

Potash On Crack

2008-04-25T22:21:00.001-05:00

If you can take the waves...

RUT and SPY Condors Looking Great

2008-04-25T22:13:00.003-05:00

What the heck?? Iron Condor

2008-04-22T18:54:00.002-05:00

Craig does a such great job going over his Condors let see if this helps explain it..

Two of the best DVD music videos I've ever seen. Get the DVD.

2008-04-22T18:12:00.002-05:00

Current Iron Condors

2008-04-22T18:04:00.002-05:00

I rolled my lower May leg up and started entering in June. My Credit for June was $2.10 with shorts at 800 and 640. Since the trades are longer in length and are selling time I’m using weekly closing prices before making any adjustments.

The chart above shows my trades. The Green brackets are a 23% Return in 57 days.

Building a June SPY Iron Condor Position

2008-04-20T19:00:00.001-05:00

I’ll be starting to moving into June in the coming weeks with the following Strikes.

Are The Bulls Back For Real?

2008-04-20T17:13:00.004-05:00

Set aside the never ending higher cost of oil, gas, milk, well everything and the Fed saying we will just give you money and you have no worries. At some point we shall pay the price and the market will adjust but for now the bulls are back with higher highs and higher lows.

Walk The Talk

2008-04-20T11:15:00.001-05:00

http://www.simpletruths.tv/movies.php?movie=WKTK

Theta

2008-04-17T23:56:00.003-05:00

Option Theta
Theta shows how much value the option price will lose for every day that passes.
An option contract has a finite life, defined by the expiration date. As the option approaches its maturity date, an option contract's expected value becomes more certain with each day.
This Time Value, also called Extrinsic Value, represents the uncertainty of an option.
Theta is the calcuation that shows how much of this time value is eroding as each trading day passes - assuming all other inputs remain unchanged. Because of this negative impact on an option price, the Theta will always be a negative number.
For example, say an option has a theoretical price of 3.50 and is showing a Theta value of -0.20. Tomorrow, if the underlying market opens unchanged (opens at the same price as the previous days close) then the theoretical value of the option will now be worth 3.30 (3.50 - 0.20).

The above graph illustrates the effect on a OTM call option as it approaches maturity date. The increment as each day passes is what the Theta calculates.
You will notice that in the last remaining days of an option's life, it looses it's value quite rapidly.
This is one of the concepts traders use as a reason to short option contracts - to take advantage of this rapid rate of decay in an option's value as each trading day passes.

Credit:

http://www.optiontradingtips.com/greeks/theta.html

Long EUR, Short USD

2008-04-17T23:24:00.003-05:00

I'm Long the EUR and Short the USD. This is a new high plus a hedge against my other trades. With all the bullish in the market my portfolio delta is just slightly negative. Meaning my neutral trades while very much right where they need to be would be perfectly happy if we dropped some. Seeing how GOOGLE blew away earnings I see the market heading up Friday which will devalue the US dollar.

Music To Start Of The Weekend; Best part for me starts at 2min. 30 sec.

2008-04-17T23:23:00.001-05:00

Weekends

2008-04-17T22:50:00.005-05:00

Heading into the weekend = Options Time decay. My RUT and SPY trades are looking good. Not much happening this week. I did have an XLE iron condor that was run over on a 52 week high breakout. I rolled the bottom up and added twice as many lower spreads along the way. This certainly helped out in taking a much smaller loss.

Tonight Matt held an online meeting as Nicholas's baseball team had a team to beat as Ernie or I couldn't make it tonight! Sounds like I missed a great meeting.. Below are notes Matt posted to our Yahoo group. Thanks Matt!

"Below is a list of topics that we discussed during the online group meeting tonight. Please feel free to ask any questions that you may have.

Tickers:
MOO - Agricultural ETF (Tracks stocks like POT, MOS, etc.)

XME - Metals and Mining ETF

POT - Not a whole lot to say about this one other than it's bullish and earnings are coming up. The 190/185 Bull/Put Vertical has a nice credit if it can stay above these levels (I'm personally expecting a pullback before earnings).

CAM - Looking for a pull back; bumping up against resistance at 50; earnings coming up.

FWLT - Shorting opportunity; 64 appears to be good resistence

FLR - Shorting opportunity? A pullback could be in order and there are visible signs of divergence with the MACD (higher high's on less momentum; 160 is resistence

TSN - Broken above 200 MA on good volume. Today's action was extremely bullish with BIG volume and BIG white candle. Also, thanks to Terry, he pointed out that it's resting SMACK-DAB on 50% Fib line from the swing high of June 07 to the swing low of Jan. 08...Will it keep going?

$VIX - Last but not least....what's this thing going to do? I personally have it breaking below the uptrending support line and resting on a horizontal support line at ~20.35 (today's low). You can argue that MACD is getting weaker and this thing is going lower (divergence).

So where we go from here who knows, just manage your risk; Plan your trades and trade your plans..."

28 Year old U2 Video.. Oh! I'm feeling old about now.

2008-04-12T20:14:00.004-05:00

Forex and Spring Boards

2008-04-12T13:22:00.003-05:00

For the last 4 months or so the Forex market has been making strong moves and becoming oversold or overbought real quick just like the US market. A one week move might just take a day or hours. Being on the right side of the trade this first time makes it that much more critical as a move against me is not unheard of and is usual but hitting my stop and then going in the original direction just draws down the account. So as of late I'm taking profits after a quick oversold/over bought move then going back in once the spring board is back to it's normal self with defined risk until the market finds some stability when a trend is more stable.

S.O.H.

2008-04-12T11:55:00.004-05:00

Sit On Hands! Well the trades in my account are working just fine. All that needs to happen is time to tick away for about 4 weeks for the full credit but instead I'll roll out into June in about 3 weeks depending on where my positions are and opportunities at that point.

Closed GBP/JPY and EUR/JPY

2008-04-10T12:42:00.006-05:00

Closed 6:50am this morning with a 120% ROI. 150% on risk. These are bear market trades and the market is pretty bullish as of late.

Ticker of 2007 and 2008? POT

2008-04-09T20:06:00.002-05:00

May SPY Iron Condor 20% Return in 37 days

2008-04-09T20:01:00.004-05:00

Triggered today.

12:30am Forex Trades- Short GBP and EUR against JPY

2008-04-09T19:58:00.003-05:00

Silver Update

2008-04-09T19:57:00.003-05:00

After looking at silver last night I belive it has been oversold and will rise BUT I have too much overall direction risk currently so I shut it down.

Music To Start The Week

2008-04-06T22:28:00.001-05:00

Long Of Silver Futures

2008-04-06T21:58:00.002-05:00

Thinkorswim Spead Hacker. Ideas!?!

2008-04-05T20:59:00.005-05:00

Take a good look at the numbers.......... Mind blowing %!

The Best is always different. Email from Thinkorswim (Trading Broker)

2008-04-05T20:49:00.002-05:00

Hello swimmers-

Our programmers are smart. Very smart. As babies, they reverse engineered the jack-in-the-box and turned their cribs into lowriders. As children, they arbed the lottery to earn enough money to buy new parents. As teens, they commandeered satellites with their laptops to share their secret anti-acne formulas with their super-genius/hormonally-challenged brethren. And in college, well, let's just say it wasn't your IT guy who averted a Y2K meltdown. Now as adults, they build thinkorswim. But don't be nervous. They're on your side.

We will be releasing version 1084 on Saturday, March 29, at 5:00 am CDT. New features include:

New Futures Format including quotes for Options on Futures
We now offer a new futures layout that displays all the tradable months and the corresponding option series. Please note that trading options on futures will not begin for approximately another two weeks. The new futures user interface will use the root symbol for each product such as S&P 500 (/ES), Russell 2000 (/ER2), MidCap 400 (/EMD), Eurodollar (/GE), Nasdaq 100 (/NQ), Corn (/ZC), Gold (/ZG), Silver (/ZI), Soybean (/ZS), Soy Meal (/ZM), Soy Oil (/ZL), Oats (/ZO), Wheat (/ZW) and Fed Funds (/ZQ), and will expand from there. ...................................................................................

Warren Buffett on CNBC In March 2008

2008-04-05T18:06:00.001-05:00

Does 41% Return in 39 days with a high probability sound good?

2008-04-05T15:27:00.002-05:00

Here is a trade I'm taking with on Monday. ETF of the S&P 500.

The shorts/longs are 2 points apart. So short 145/Long 147. Short 125/Long 123