Tonight's Trading:
The first thing I did was pull up Yahoo finance and Google finance to see how the day went. I like Google's chart right off the bat that shows you what happened on all three major indices in a glance. Then scanned the headlines. Things that jumped out at me:
- All three major U.S. indices are up. Great news for my positions!
- Interesting headlines with Tesla (TSLA), Bank of America (BAC) and Fox/Time Warner (FOXA/TWX). I think I'll be keeping an eye on those. (And the entertainment industry is an interest of mine, so I try to keep on it, at least a bit.)
- Interesting article on Ms. Yellen's comments to the Senate today. I found myself thinking that I really should keep better tabs on what's going on with the Fed, as that can impact everything.
Current Positions:
Next, I pulled up my TOS platform and checked how our paper-trades did throughout the day.
- Micron Technology Inc (MU) is doing what we wanted it to do. It hit a high today that you have to go back to 2002 and earlier to surpass. Definite uptrend! Which is very good for me because I have a bullish position on. I've got my stops on from yesterday, and now I'm wondering if I should adjust the stop-side of the OCO.
- At the current mark price of the vertical, I would make a small profit if it closed out tomorrow.
- If something changes in the market and the price falls, I would lose all that gain and could potentially wind up with the max loss I'm comfortable taking, per our rules (coming soon!)
- So now I have to decide:
- Leave the stop as is, per our rules. -- This option gives more room for flexibility in terms of price fluctuation. Downside, if underlying price falls, I could wind up in my max acceptable loss. (Note that is different the actual max loss on the trade. We use a formula to figure these out.)
- Adjust down to protect profits. -- The downside to this choice is that if there's too much price fluctuation, and the stock bumps too close to the new stop, I could get out sooner than I want and miss riding the trend to greater profit on this trade.
- Nick's suggestion: change stop order to a trail stop with a 10-cent window. -- (I'm not sure on the terminology, but that's how we think of it.)
- Decision: go with Nick's suggestion. I cancelled my stops from yesterday and replaced them with a 10-cent trail stop, and then the OCO incorporating our profit target.
- I think that worked... now to see what happens.
- Apple (AAPL) closed down today with a lower low, but also a higher high. I did get into this position, but I'm kicking myself for it a bit. Earnings are next Tuesday.... Not only did I not double check that before putting the trade on, but I actually knew that already from looking at Apple last week. I had a note on my calendar about it and everything! It was big and red saying get out of any Apple positions by tomorrow so as to ensure out by earnings.
- Ugh. now what?
- Well, I'm going to put the stops on as fits our rules, and we'll go from there. I'll leave it alone this week and see what happens.
- At least I would put the stops on as normally, but there's a weird error on TOS right now. Sigh. So I put the stop to minimize any potential loss, and we'll go from there. Nick and I will chat again tomorrow to see if we just close out or wait and see.
- And, now I'm going to add "Check earnings" to my checklist. Our general rule is to be out of any position at least 4 days before earnings. But since I just put this one on, we're going to bend that rule a bit, and maybe even break it....
- Gold (GLD) -- the price never hit my condition today to put on yesterday's trade, so I'm trying it again. Same trade (selling the August 127/128 call vertical) with the condition that the underlying comes down to $124.68. We'll see what happens.
Tonight's New Trades for tomorrow:
I'm going through the list of stocks and ETFs that have become our go-to over list over the last few months looking for opportunities. These are based on those goals and rules we've developed, which I was going to talk about tonight. However it's rapidly becoming late (and I should run tomorrow morning), so that topic will be covered this coming weekend. Are you looking forward to it? ;)
On to today's options that we're attempting in paper money, and my/our thought process going on in the background.
- iShares Russel 2000 ETF (IWM) -- this looks like it's going to keep going down. I don't feel the need to put a condition on it, though I am wishing I attempted to get into it on Monday instead of today. Oh well! It still fits our rules (again, will explain more this weekend), so we're going to attempt to get into it.
- Action taken: Selling the Aug 14 117/118 Call vertical.
- 1 contract
- Goal: Price of underlying continues to fall (or just stay enough below 117 that we don't get stopped out), and we make money on time decay.
- Absolute latest to be in the trade -- August 7.
- Microsoft (MSFT) -- caught my attention because of the big jump in stock price today. However, I'm not sure what to do with it. There's a bunch of headlines about the company cutting thousands of jobs tomorrow. I think I'm going to hold off and see what happens tomorrow.
- Oracle Corp (ORCL) -- long term growth looks like an uptrend until about a month ago. Then there was a gap down at earnings followed by a mostly sideways pattern. I was thinking about either selling a put vertical or an iron condor on this. However, there are no put verticals or iron condors that fit our delta rules. So this one is a bust tonight.
- Pfizer Inc. (PFE) --
- Intermediate Trend (last 2 months anyways) -- upwards
- Short term trend -- definitely upwards. However, this looks like it could be right at the top of a bull flag pattern and possibly turning around to come back down the flag portion. Either that, or it's going to keep going up until it creates a new resistance or hits the $32/per share resistance.
- None of the options fit my rules, so I'm not trading on this tonight.
- I will keep an eye on it and see what happens with that might-be-bull-flag-downside-set-up. If I'm right, maybe I can get in on the upside next cycle.
- Plug Power Inc. (PLUG) -- This looked interesting. There was a relatively big gap up yesterday, but then the bearish traders drove the price back down. I think it might be a Dark Cloud Cover pattern, so I'll watch it again tomorrow to see if I could be right.
- In terms of the options available, nothing fits my rules this time either. Thought I was close on selling a call vertical, but not so much. Not enough Return on Risk to justify the Risk.
Concluding thoughts for the night:
1. It's way too late for me right now. Good morning! I need to get off to bed.
2. I now have 4 active positions -- 2 entered into and 2 waiting for markets to open.
3. Remember the rules, and check earning dates!
Nick and I generally try to have 5 positions on at one time. Currently, we're talking about 1 contract in each of the 5. Right now I've got 2 on and 2 possibilities. One short, but I can't do any more tonight.
Good night all!
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