| StockFetcher Forums · Stock Picks and Trading · Follow The Money (Options) | << 1 ... 27 28 29 30 31 >>Post Follow-up |
| 15minofPham 170 posts msg #142764 - Ignore 15minofPham |
3/15/2018 1:36:47 AM Follow the Money Play of the Day - IWM Premium of $2.5 million on 5,000 of the 9/21/18 $150 Put for $5.07 with ETF at $158.06. A very bearish play for almost the rest of the year. Breakeven of $144.93 is 8.1% away from today's closing price of $157.71. This could very well be a hedge, but interesting to see this far out of the money. This is a dangerous play since one bullish month will have the put at the -50% stop loss. Total option volume Put/Call ratio was 71-39 and bullish order sentiment was 36% which is right in line with its 30-day average of 38%. ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ Tuesday's spotlight - TNTR, $682,500, 19,500 4/20/18 $2.50 Put for $0.35, Stock $4.38 Fell -12.18% but since Put is so far out of the money, it's actually at -28.57% ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ Portfolio picked up two more wins today with STZ 7/20/18 220 Call and IWM 9/21/18 161 Call. The former fell back to +50% so it was sold. The latter opened at $6.24 which made the Call fell below +50% so it was closed for +48.22% profit. February's winning pct is at 64.71% and portfolio is back above 60%, not too bad considering how the market has been consistently faded over the past six weeks. 
The purpose of this paper trading portfolio is to find out if following the big money plays, aka smart money is truly smart. Rules: 1) Picks are based on one big purchase or multiples of purchases adding to a large premium 2) Prices are end of day except if below event occurs intraday 3) Gain: Sell at +100%. The purpose is to see how many plays can double. If price climbs above 50 & 75 pct target then threaten to fall below intraday, then sell kicks in. Example: X stock started the day at +93% but then falls to +75% intraday, stock would be sold at +75% 4) Loss: Sell at -50% 5) Sell before earnings |
| lavapit315 47 posts msg #142769 - Ignore lavapit315 |
3/15/2018 8:06:35 PM I know it's an earnings play but check out HIBB. I'm in the 16Mar 22.50P. Have to wait till morning though to see how it works out. |
| 15minofPham 170 posts msg #142772 - Ignore 15minofPham |
3/15/2018 11:02:34 PM Looks like you may have guessed right Lavapit. |
| 15minofPham 170 posts msg #142773 - Ignore 15minofPham |
3/15/2018 11:21:05 PM I'll be busy packing for the upcoming move to another state so I will no longer have time to continue this thread. I think most of you get the idea that following the smart money is very profitable during a market's uptrend. During a choppy trend such as what we're experiencing now, you'll need to pick your spots. Wait for a pullback and sell at resistance and take your profits quickly! I hope you've enjoyed reading this the past two and a half months and thank you for participating. I'll go back to lurking like I did the previous nine & a half years. |
| shillllihs 6,090 posts msg #142774 - Ignore shillllihs |
3/16/2018 1:35:23 AM Great effort and was fun, take care. |
| lavapit315 47 posts msg #142777 - Ignore lavapit315 |
3/16/2018 11:22:23 AM HIBB worked out great. Gained about 70% |
| BoCap 18 posts msg #142778 - Ignore BoCap |
3/16/2018 11:30:58 AM Pham , may i have your email again plz... |
| lavapit315 47 posts msg #142788 - Ignore lavapit315 |
3/17/2018 2:50:06 AM So is this thread dead or will others still post what you see? I'll try and post but would like others to verify also. It won't be kept up like Pham did as he was exceptional at it. Pham, any chance you continue this after getting settled in at new place? Thanks for all the time you put into it. |
| four 5,087 posts msg #142794 - Ignore four |
3/17/2018 10:30:39 PM Problems with Implied Volatility Calculations Traders relying on implied volatility (IV) to time trades are relying on a deeply flawed calculation. The debate over whether to use implied or historical volatility is pointless. The one (historical volatility, or HV) is based on actual stock prices in the recent past. The other (IV) is an estimate of future option volatility based on assumptions that are not accurate. In other words, HV and IV are not different ways to calculate the same thing’ they are entirely different. An assumption often heard among options traders is that implied volatility leads price, but the opposite is true. Volatility in the underlying price (HV) determines IV as a direct result. And while IV serves as a sentiment indicator, it does doe reveal the direction of movement, contrary to popular belief. To arrive at IV, the use of a risk-free interest rate is involved. This is an elusive and theoretical rate that does not exist in the real world. The U.S. Treasury bond rate often is used for this, but given the potential for rapidly changing market rates, this is not risk-free in a real sense. An even bigger problem with IV is that it uses the midpoint premium value between bid and ask. This value is never applicable, since buyers pay the ask and sellers receive the bid. The midpoint is meaningless. It is also inaccurate because the wider the spread, the higher the distortion between bid/ask and the midpoint for each side of a trade. One study of this concluded that: … small price movements in very low-priced options can lead to large percentage increases in the bid-ask midpoint, while these price movements are still in fact less than the bid-ask spread itself. Therefore, in many cases, using the bid-ask midpoint as the option premium leads to a large positive return, while using the original ask and the subsequent bid leads to a negative return. [1] The IV is acknowledged as a measurement of market sentiment and opinion, and for that it provides value. Measuring likely volatility through indicators like the VIX is helpful if the underlying assumptions (notably risk-free interest rate) are applied consistently. However, that mid-point between bid and ask distorts the outcome. It would make more sense to perform the calculation twice, once for buyers based on the ask, and once for sellers based on the bid. The midpoint is a nonexistent “price” that does not apply to either buyers or sellers Some traders rely on IV and its calculation to estimate probability for an option ending up in or out of the money. This seems like a worthwhile calculation to perform. However, because it relies on an artificial risk-free interest rate and an unreliable midpoint between bid and ask prices, the probability itself is also inaccurate. Problems with IV calculations present one of the many inaccurate assumptions that go into option pricing, estimates of volatility, and calculations of probability. Since all of these are inaccurate, it makes historical volatility look like a far more reliable method for judging the current volatility level and whether it is increasing or decreasing. This is easily viewed on a stock chart by overlaying Bollinger Bands. The bandwidth itself serves as one form of historical volatility and presents an easy solution to the problem of trade timing. [1] McKeon, R. (2013). Returns from trading call options. Journal of Investing 22(2), pp. 64-77 Dorothy Klocek dorothy@optionsmoneymaker.com |
| lavapit315 47 posts msg #142797 - Ignore lavapit315 |
3/18/2018 6:53:45 AM Hers my pick for Friday's close TSM 18-May-18 45P 5,000 bought at $1.80 Total Trade Value $900,000 Thoughts? |
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