The Options Blog

October Summary

Sat, 04 Nov 2006 16:50:32 GMT

Win Ratio: 47.0%
R Expectancy: 0.59 Overall results: +4.9%
Average Daily Edge over DOW and NASDAQ: +0.22% Best Day: 10/9/06 +12.97 R
Worst Day: 10/20/06 -3.74 R Number of Positive Net Days: 10
Number of Negative Net Days: 7 Long trades: 17 positive, 15 negative
Short trades: 8 positive, 14 negative Note: So far, I'm only doing paper trades. R represents the amount of capital risked on each trade. My positions were sized based on a risk of $100 per trade.

Idea for 10/12/06

Wed, 11 Oct 2006 18:51:58 GMT

Short AVID. Enter on weakness below 37.13. Stop at 37.36. Target of 35.73. Risk/reward ration of 1:6. Would you risk $0.23 for the potential to make $1.40?

Trades for 10/2/06

Mon, 02 Oct 2006 17:38:52 GMT

I entered the position with a hard stop 13 cents away. I tightened my stops as the trade went in my favor. Even though the move didn't follow through, I still eeked out a tiny profit before comissions.

Date	Action	Qty	Price	Amount
CELG - CELGENE CORP
10/2/2006	Sell Short	100	$42.84	$4284.00
10/2/2006	Buy To Cover	100	$42.72	-$4272.00
+$12.00

(I've decided to post all trades from here on out. No sense trying to make myself feel good by only posting winners.)

Trades for 9/29/06

Fri, 29 Sep 2006 17:35:24 GMT

This trade on Halliburton was a non-event. I was looking to risk only 20 cents, but ended up getting filled for a loss of 30 cents. No real harm done.

Date	Action	Qty	Price	Amount
HAL - HALLIBURTON CO
9/29/2006	Sell Short	80	$28.15	$2252.00
9/29/2006	Buy To Cover	80	$28.42	-$2273.60
-$21.60

Loosing 6.6x my Cost Basis

Mon, 18 Sep 2006 18:16:31 GMT

A brutal reminder than you can lose more than your initial investment. Last Friday was options expiration. I sent a GTalk message to Andy...

me: i put in a little dumb options trade on ISRG within 30 minutes of options expiration
Andy: lol

ISRG was hitting resistance at the $100 level. I decided to paper trade $220 on 100 SEPT PUTS. My cost basis was $0.55, and the stock closed at 99.38. The options were automatically executed and my position had a theoretical profit of $.07 per share. After commissions, I would have broke even. No biggie, I thought. However, because the trading day had ended, I couldn’t cash out of my short position of 400 shares. When I woke up this morning, ISRG had gapped up on an upgrade and even though I only put down $200 on “a little dumb options trade,” I was down $1,333.00! I had no more appetite for dumb trades, so I exited with a loss 6.6 time greater than my cost basis. I'm glad I can learn these lessons on paper rather than with real money.

Monday night recap

Mon, 11 Sep 2006 23:50:18 GMT

I closed out three positions for nice profits. I sold my HAL puts for a 200% profit (10.7R). FCX puts gained 89% (4.17R). ISRG puts were sold for a 27% profit (1.86R). Hopefully the good trading will continue. I have two open positions: a bullish play in APA looking for a bit of a rally off today's severe drop and a new bearish position in ISRG.

Last 5 Days

Tue, 05 Sep 2006 21:44:10 GMT

Here's the rundown for the last 5 days Winning trades: 4 Losing trades: 7 Best trade: SEP 60 Call (.FCXIL) +40% or 2R Worst trade: JCOM SEP P (.JQFUE) -50% or -3.67R Expectancy: -0.53 R

Impatience on IMCL

Tue, 05 Sep 2006 21:40:51 GMT

Last Thursday, I bought some SEP 30 Puts on IMCL. Although I never got stopped out, I became impatient and closed out the position at break even. Less than 40 minutes later, IMCL took a downturn and the options I just sold for $0.80 were trading at $1.60. I ought to not pull out of a position prematurely if indicators are still in my favor. Today it cost me a 100% cash gain (or 8 R).

Guess the Dow

Sat, 02 Sep 2006 19:52:27 GMT

Last weekend, I was reading TickerSense and decided to participate in the weekly Guess the Dow contest. Turns out... I won. My guess of 11,463 was just 1.15 points from the 11,464.15 finish. Do I get a cookie? Nope. Instead, I get a one month subscription to Birinyi Newsletter Service. I'll take a closer look at the service over the long weekend. At the end of the subscription period, I'll write up a review.

Nice gain on PLCM

Sat, 19 Aug 2006 10:49:16 GMT

Another options trading success (in the virtual account). Up 89.5% on the position overall.

Date	Action	Price	Result
QHDHX - PLCM AUG 22.5 Call
08/16/2006	Buy	$0.65
08/16/2006	Sell 1/2 of position	$0.95	+46.1%
08/16/2006	Sell 1/2 of position	$1.45	+123.0%

There have been some failures as well. My AEM Aug Calls expired worthless, and the NVDA Puts lost 50%. If you don't put in a stop, you risk it all. Note to self... always have stops.