Glenn thank's for your insightful comments...I agree with the points taken... My common error is overtrading... Luckily I've been very careful to diversify (i.e. pharmaceutical,heavy machinery, chemicals, banks,financial services,oils services,computer peripherals, networking, semiconductors, software, electrical components, graphics) so I can usually sell about 2-3 of my options a day..When my oils were down Friday I had 2 good banking plays. It is very tempting to make the plays especially when you are comfortable with the underlying...I've bought RMDY options 3 times this month and SCOP twice since mid-june..I've played INVX about 6 times in as many weeks...
What attracts me to options is the ability to get into great companies like "CAT,DELL,DD,MANU,ORBKF,CCI,MRK," with just a small cash outlay.I always buy "in the money" and sometimes "at the money" and am not attracted to long range options far into the future... I find that the low beta (yes BETA,not DELTA only) underlying seem to hold their own better than the very volatile high betas...I've been stung this month with ASND and MCAF... MCAF giving me a very unexpected hit... (70% of 5k so far)
I've got more calls and a couple of puts for this month and into September mostly because of earnings plays and I've only missed one earnings play this month..I tend to buy a limit of 25 contracts...and I buy 10 or so if I'm not 100% comfortable with the choice...(i.e. my $1,000 I put into QDEK options gave a $600 profit last week and I just cashed it in) I never like to spend more than 2 1/2-4 for a contract and I try to be 'level-headed'. I bought 30 contracts of DD for the obvious reasons and the $12,000 I plunked down on this one has doubled save 1/4 point and I'm holding a bit longer. I might have been wrong not to just sell but DD seemed to be holding its own on Friday and managed to be down only -1/8.
CDG, I had 50 contracts which gave me a 250% twice.... I'm going to hold off on this much trading... I will keep your post around and look at your 7 points to keep me in the proper prospective.
I tripled my WDC contracts...but now I'm down about 25% on my WDCJH.. but I have time with those, 50% down on VVUS October calls. FORE calls (October 15's) are now at breakeven coming from a large loss. ESST also breakeven coming from a large loss with 3 weeks to go before expiration. Still holding HAL, BTGC coming back from a loss to a 1/4 point gain (bought at 3/4 now it's about 7/8-1)
I am 30% down on LSI.. 50% down on CDG October 50's. (this time I bought less). I'm up 100% with ORBKF calls and with that company reporting earnings on the 4th I'm still comfortable with a hold... I sold MDYN calls for a double only to see the stock rise and other 1 1/2 point the next day...Sold PCAR for a double... I'm up about %25 in SLB but WLA was 60% ahead and has since only broken even. I'm also even with my Gillette 100's for October...(that's got good potential)and even with my FTU 100's for August... I doubled my AOL puts and also my EK puts and TWA puts (this last was great since I lost 3 points in the stock). I'm down on EK calls (just bought a bit) and down on my PERI calls (also just bought a bit)..I'm even on ATML and up in FM (foodmaker). That about covers it...
I also do my regular short-term trading with STOCKS at the same time I'm buying/selling options (PAIR,TEAM,MCRL,CYBX,OCAD) were some of the great plays for me this week. The good thing about buying stock for a change is that I'm more comfortable when it DOES go down that I still have an investment... 2,000 shares bought of SCOP went down 1 point but I'm confident in a reversal... either way I can hold the stock forever...Same with VECO... tanked over two points on Friday, but I can hold that one too.
I also read the McMillan on Options and Elder's Trading for a Living... although the latter is not about options it gives a very interesting insight into the psychology of daytrading... I know I a bit more risk tolerant than the average person and can take a loss and move on..I always know thats because my long-term portfolio is still working for me... |
