or Connect
HotStockMarket › Forums › HSM Stock Forum › Stock Market Today › Stock Market Intraday chat: Feb 6th - 10th
New Posts  All Forums:Forum Nav:

Stock Market Intraday chat: Feb 6th - 10th - Page 5

post #81 of 1100

I don't agree. It depends on how deep the options you are looking at and what the expected move will be. There are too many variable to control. Theta (which is less since its deep in the money, Delta, Vega and overall implied Volatility.  

 

 

Quote:

I am welcoming your thoughts on the following strategy!

 

Imagine you have an IRA account where you can only do covered calls but no other options or short positions. As you all know, to write (sell) a covered call, I must first own the stock.

 

Now, I found a stock that is going to tank big time. I am fairly confident about it and wants to buy puts on it. However, I can only do covered calls.

My thought process is to buy this stock (knowing that this will go down) and then sell deep in the money covered calls and get higher premiums. When the stock falls big and becomes out of the money by the expiry date, those gains from the covered calls would more than offset the losses from the stock price decline.

 

Appreciate your feedback!

 

post #82 of 1100

I've thought about doing something like this before but in my situation it didn't look like it was going to work out.

 

The loss from a stock dropping offset any premiums collected. I think you'll just have to get out the calculator and guestimate the earnings but if I was choosing I'd want something that's expected to remain flat or rise to sell calls on
 

Quote:
Originally Posted by Philosuffer View Post

I am welcoming your thoughts on the following strategy!

 

Imagine you have an IRA account where you can only do covered calls but no other options or short positions. As you all know, to write (sell) a covered call, I must first own the stock.

 

Now, I found a stock that is going to tank big time. I am fairly confident about it and wants to buy puts on it. However, I can only do covered calls.

My thought process is to buy this stock (knowing that this will go down) and then sell deep in the money covered calls and get higher premiums. When the stock falls big and becomes out of the money by the expiry date, those gains from the covered calls would more than offset the losses from the stock price decline.

 

However, I feel the current low VIX makes this kind of play unattractive and also deep in in the money calls would exactly have the difference between current price and strike price as the premium.

 

Appreciate your feedback!

 

 



 

post #83 of 1100

Deep itm call option isn't going to have much premium.

post #84 of 1100

Markets going to rally near the close on short covering in fears of a Greek solution tonight? Or will longs take profit and cause a sell off incase there is default? hmmm

post #85 of 1100

I think you both are right! low time premiums and low volatility, would almost make the gains offset the losses, making it not a worthy play.
 

Thanks Oldy. I cant do collars as there is only one account and it can only do covered calls.

Quote:
Originally Posted by UWouldLose View Post

I've thought about doing something like this before but in my situation it didn't look like it was going to work out.

 

The loss from a stock dropping offset any premiums collected. I think you'll just have to get out the calculator and guestimate the earnings but if I was choosing I'd want something that's expected to remain flat or rise to sell calls on
 



 



 

post #86 of 1100

I've tried this before in the Canadian version of an IRA account.  It didn't work so well for me, I find you're better off waiting and buying at a lower price.   The longer timeframe you sell your calls the less value they lose when the stock drops.  If you sell front months then there's no premium in the way ITM calls.

 

If you find a stock w/ high option premiums that you like, buy it and sell front month or weeklies on it.  I've found that to be the best.

 

Quote:
Originally Posted by Philosuffer View Post

I am welcoming your thoughts on the following strategy!

 

Imagine you have an IRA account where you can only do covered calls but no other options or short positions. As you all know, to write (sell) a covered call, I must first own the stock.

 

Now, I found a stock that is going to tank big time. I am fairly confident about it and wants to buy puts on it. However, I can only do covered calls.

My thought process is to buy this stock (knowing that this will go down) and then sell deep in the money covered calls and get higher premiums. When the stock falls big and becomes out of the money by the expiry date, those gains from the covered calls would more than offset the losses from the stock price decline.

 

However, I feel the current low VIX makes this kind of play unattractive and also deep in in the money calls would exactly have the difference between current price and strike price as the premium.

 

Appreciate your feedback!

 

 



 

post #87 of 1100

15 million volume in UNG

post #88 of 1100
Quote:
Originally Posted by Philosuffer View Post

I think you both are right! low time premiums and low volatility, would almost make the gains offset the losses, making it not a worthy play.
 

Thanks Oldy. I cant do collars as there is only one account and it can only do covered calls.

 


Stick to what you know and are best at. (probably get stick for not saying spread your wings etc etc.. but bug&&er it I just trade for money.. being the resident HSM parasite)

If its that new to you paper trade it for a bit first.

 

Totally torn on this market at the moment, people I respect are saying both up and down. Still mindfull of that *golden Cross* SJE pointed out and I got slapped down for commenting on saying it may play out.

I sleep better with my hedge on the common and calls I have.  Good luck Philo.

 

Quiet here today.... zzzzzzzzzzzzzzzzz


 

 

post #89 of 1100
Not including Christmas week and day after Thanksgiving (always lighter volume), today looks like it should be SPY's weakest volume since late April. Weak vol across the board. Major, major snoozefest, BVSN woke up again to ream shorts, I'm not getting involved but it's the only thing keeping me awake... had to take a long lunch today to fight the boredom.
post #90 of 1100
Quote:
Originally Posted by rando View Post

had to take a long lunch today to fight the boredom.



was it a liquid lunch?

 

 

post #91 of 1100

you can always depend on tvix to fall off a cliff EOD

post #92 of 1100

Any idea as to what is causing this continuing decline in volume?  Maybe a general disbelief that the markets shouldn't be at these levels?  If so, wouldn't that cause some selling pressure?
 

Quote:
Originally Posted by rando View Post

Not including Christmas week and day after Thanksgiving (always lighter volume), today looks like it should be SPY's weakest volume since late April. Weak vol across the board. Major, major snoozefest, BVSN woke up again to ream shorts, I'm not getting involved but it's the only thing keeping me awake... had to take a long lunch today to fight the boredom.


 

post #93 of 1100


Quiet before the storm?(JK)

Quote:

 

Quiet here today.... zzzzzzzzzzzzzzzzz


 

 


Day off today,

Trying to feel out risk toleration ATM. No clear signs.

Bonds making a week attempt to gain ground. Gold and oil down, but not too bad. Lumber speculation saying that economy and housing likely to improve.

Euro took a run at 1.30 last night whilst I slept. Now she's making a run at resistance. My flag is looking pretty tattered. Now it resembles a pennant that's been in the wind too long.laughing.gif Still within daily channel at 1.3130. A break above 1.32 wound signal risk is OK and there will be partying and dancing in the streets of Europe.

 

My conspiracy about the Euro weekly trend almost always opposite from the first day open might still pan out.

 

Judging from the way today is closing, I would say 1340 not a bad place to start a base for the week.

 

Still watching my numerology conspiracy theory just for fun.

If I don't reset the count then Wed. is day 5 (pop day) or if i reset after the last pop then Fri is day 5.

I know nothing to put any faith in, just curious to watch.

 

 

Charts on these subjects in my log.

post #94 of 1100

ya and... .... which do you think it is?
 

Quote:
Originally Posted by hermanpu View Post

Markets going to rally near the close on short covering in fears of a Greek solution tonight? Or will longs take profit and cause a sell off incase there is default? hmmm



 

post #95 of 1100

I thought this was well thought out and worth digging up.
 

Quote:
Originally Posted by RagingBull View Post

Any idea as to what is causing this continuing decline in volume?  Maybe a general disbelief that the markets shouldn't be at these levels?  If so, wouldn't that cause some selling pressure?
 



 

 

From an earlier post of Rando:

http://www.hotstockmarket.com/t/189855/stock-market-daily-chat-jan-30th-feb-3rd/420#post_2824835

 

Quote:
Bingo. Worth quoting this to repost it. I think I posted something along the lines of the below example recently, if not I've been thinking about it a lot in the last few months.

 Let's say SPY averages 200 MM shares, regardless of the directional move. Right now, at least in general since the QE2 rally got underway in H2 2010, you're right, higher volume has typically been on down days and lighter on up days. This is a general guideline, not a hard rule. Let's say on average down days SPY pushes 225 MM shares, maybe the balance of seller-driven transactions (i.e. during down ticks, sold on the bid, etc.) is 125-100 in favor of sellers over buyers. I realize there are 225MM shares bought and sold, just roll with the example. Now on up days let's say there is 175 MM shares on average, and buyer-driven volume dominates 100-75. This is a gross oversimplification, just meant to make the point more accessible. What's missing between the two? Obviously... 50 MM seller-driven shares transacted, between an up day and a down day. IMO it is quite fair to suggest that buying demand is probably more consistent than selling demand over the long haul, due to a constant input of 401K and similar buyer transactions. So where does that 50MM of seller-driven volume come from? Hedge funds and big money? Perhaps what we are witnessing is a simple lack of sellers... it seems obvious this is what is enabling this slow, steady drift up the charts. Hopefully this oversimplified example helps put in perspective how a lack of sellers may be contributing to this move up. I do feel that some of the lighter volume is due to a general lack of participation across the board, which makes it easier for big money/algos to push price in either direction. The tight channel may just be a reflection of consistent market conditions year to date. I am done trying to anticipate when it breaks. We had one more wave of disbelievers knocked off their stools today... we need at least one more wave, but who knows, maybe we need ten more of these cycles where we base for a bit then pop. Who knows... trend - friend.

 

 

 

post #96 of 1100
machines just buying retail holdings on the bid and turning around placing those shares on the offer. Seems like that and nothing else going on right now. This is the lamest market action I can remember, makes Christmas eve trading feel racy.
post #97 of 1100
Quote:
Originally Posted by RetireYoung View Post

you can always depend on tvix to fall off a cliff EOD


I was noticing the same thing... almost a sure thing to buy XIV the last hour for a quick scalp

 

post #98 of 1100

Seems to be "Smart money" is buying

post #99 of 1100

Just testing...smile.gif...specially for the new ones....it doesnt matter the time frame, but in case its 1d chart. Company name is hidden on purpose...

 

How would you trade this setup? Long, short, now later, stoploss (yes/no)...etc?

 

I will open a new thread in Group for training. I will allways hide names, to avoid bias analysis. Hope you enjoy it!

 

bes.jpg

post #100 of 1100

im thinking lack of volume caused buy less and less ppl chasing this market higher, and the reason why we not dropping is cuz those that bought at lower levels haven't been taking profit yet.. basically the only ppl playing this market are those that are long, and there aren't many of them
 

Quote:
Originally Posted by RagingBull View Post

Any idea as to what is causing this continuing decline in volume?  Maybe a general disbelief that the markets shouldn't be at these levels?  If so, wouldn't that cause some selling pressure?
 



 



 

New Posts  All Forums:Forum Nav:
  Return Home
  Back to Forum: Stock Market Today
HotStockMarket › Forums › HSM Stock Forum › Stock Market Today › Stock Market Intraday chat: Feb 6th - 10th