Daily Wealth Newsletter
Daily Market Updates delivered right to your inbox. Stay up to date with everything going at InvestForIt.com. Enter your best email address below!
Menu
Daily Market Updates delivered right to your inbox. Stay up to date with everything going at InvestForIt.com. Enter your best email address below!
IMPORTANT NOTICE! No representation is being made that the use of this strategy or any system or trading methodology will generate profits. Past performance is not necessarily indicative of future results. There is substantial risk of loss associated with trading securities and options on equities. Only risk capital should be used to trade. Trading securities is not suitable for everyone. Disclaimer: Futures, Options, and Currency trading all have large potential rewards, but they also have large potential risk. You must be aware of the risks and be willing to accept them in order to invest in these markets. Don’t trade with money you can’t afford to lose. This website is neither a solicitation nor an offer to Buy/Sell futures, options, or currencies. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results.
CFTC RULE 4.41 – HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.
5 Responses
Hi Tyson:
On the GOOGL trade why did you pick options for Dec 13 and not longer? Was it based on expected move?
Thanks,
SP
Hi SP,
The main reason is because the target of around 176-177.50 shouldn’t take longer than a week or so if the pattern and play works out. So giving ourselves 2 weeks should be enough time but not so so much time where we have to pay a larger premium for more time than I think we need is the way to go. If I gave myself 1 more week out to the 20th the cost would be about $2.50 compared to the cost of $2. This makes a pretty big difference in Risk v Reward: Risking $2 with a target of $6 give us $4 of profit for $2 risk (2X risk). Where if I pay $2.50 I only get $3.50 of profit for $2.50 risk (Only 1.4X):
If the target was more like $10-20 higher then I would give myself more time.
Hope this makes sense.
Tyson
Yes, that makes sense. Helps to understand the logic.
Tyson:
I put the trade on at 2.0 and got fill Fri. morning at 1.9,maybe at the open as I was eating at that time. .12 profit so far.
I did a Fib retracement on this and found 50% ~170.75 and 61.8% `172.6. If it hit only the 50% target of 170.75 what would the option be worth? I realize that this is a time function and late give less, but the reaches in a say or so?
Hi Tarry,
It does depend on time but if it expires and price is at $170.75 and you own the $170 call then the intrinsic (real) value of the trade would be $.75. Assuming there is no time left in the option (Its at expiration):
Hope this helps