Well, pretty ugly day today, Dow down 366 Nasdaq down 74 OUCH!
Well, GOOG ended up gapping up to 558, that should have then added 18 dollars of intrinsic value to my option and where did it open? Why, 3 dollars higher than yesterday... This illustrates the collapse of IV clearly those calls were way over priced. I luckily got out though with a 100 gain.
I was not satisfied with that and figured on such a day it would be great to do some day trading the front month contract. I watched and waited and bought after GOOG had put in a pretty good bottom at 546, bought 50 contracts at 1.60, this was also during the middle of the day and we were down at 230, at the time i figured there would be a slight rally also, it did indeed go up as expected, I didn't want to get greedy so I set my sell limit at 2.00. A quick 2,000. Then I got to watch it go all the way up to where I thought and the calls were worth 3.40, oops could have had a quick 8k out of GOOG, however I set my targets, plus that is a large position and didn't want to hold it too long. I then got into another 10 contracts later and made another 500. Overall, made an extra 2,300.
That extra 2,300 was very helpful because after that I went shopping for options, BIG mistake(today at least), at about 1pm. New rule, on a down day like today, always wait till the end of the day to see if I should still get in. What happened is I got in at my exits, and they sat around them until the end of the day and most significantly broke so I had to exit again immediately, which I am glad I followed rules. Due to some circumstances Ameritrade fucked up and I couldn't exit some trades. So, at the end of the day, I still ended down 1,200 largely due to getting into those new options.
I am desperately needing to diversify as the market seems to be wavering, if we break 1500 on the S&P I think we go down, and if the Fed holds in october, people will likely sell quite a bit.
lessons of the day: Wait till the end of the day on big down days to take trades(and in general), DIVERSIFY, calls and puts.
Ben
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3 comments:
Ben, I didn't realize that you did day trading. Do you also do swing trades?
Krystal, I actually don't normally day trade, however in this case I felt it would be to my advantage because I could get ITM options very cheap due to expiration, and GOOG normally has a large average range that I felt could be exploited.
I don't know if I swing trade, I trade with the trend and choose a target based on the chart. In the case of GOOG I wanted to see how/if I could apply technical analysis to short term trading vs. my usual intermediate trading. It worked out this time, but it was being very actively traded. To be honest, if it is possible to trade short term on GOOG like this is could be a profitable thing to pursue. But only time will tell. :-)
Once I get back into the black I may start trying some different strategies with smaller amounts of capital.
Do you swing trade?
Thanks for the question!
Ben, I do primarily swing trading. I think that day trading is something I would LOVE to try my hand at, but with a two-and-a-half year old and a 7 month old, it's next to impossible. Boy I wish I knew how to do this when I was in college! I had SO much free time then!
I'm happy for you that you're learning to do this early in life. I mean, I'm only 27, but you get what I'm saying. Good for you!
See you on the next post! Thanks for sharing your experiences with us!
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