Price Targets 08/13/2013

Here are some price targets for short-term trades:

GOOG – reaching oversold territory ($876), may be a good day tomorrow (8/14) to initiate some calls.

AAPL – not done yet after today’s monster run. We should see at least 520 out of Crapple.

Other tickers on LONG watchlist:

QIHU
GS

 

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June 2013 Trading Performance

I’ve started questioning myself whether to keep this trading blog going because after I’ve managed to lose 87% of my account value in May, June had some great trades, but the last trade initiated in June has not gone well which I’ll talk about in a minute.

In June, I managed to lose 21% of the account, bringing a sub $1k account further down to $755 and change.

Going forward and lessons learned below.

Play to the %, not the $

Your trading goal should be a realistic % of your trading size according to your trading timeframe.

If you day trade, a 1% to 5% gain intraday is very doable in options. Done consistently, you would see a 30% to 150% accumulated gain each month.

If you are doing a $5,000 trade, you should be happy to close your trade with a $50 to $250 profit, and call it quits for the day. Most traders (myself included) let greed get to them, they want to make $500/day with a $5k trade size in a single trade. Yes, you may get lucky from time to time, but most likely a 20% ($1k) profit on a $5k trade would not be doable on a single day trade.

We all want fast profit, and we all know it’s so much easier (and probably can do this very consistently) to make $50 profit on a $5k trade, but most of us don’t close the trade when we have a $50 profit, why? Slow & steady wins the race again.

FB Strangle into July

If you look at the SPOT Trading Lot, the last trade initiated was a July ’13 OTM 26 call and OTM 22 put strangle play. What this means is that FB will need to trading outside of the current $22 to $26 range for this strangle to play out.

Both the calls & puts premiums have been killed due to the sideway trading action by FB. If FB continues to trade in this range then we are looking at both calls & puts going to zero value (and we’ll stop the short-lived trading performance report). We’ll see what happens.

You can learn more about risk management, get real-time trade alerts, and join other elite options traders in our SRT Mastermind Group.

See you again next month!

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High Probability Trades For Thurs 6/6/2013

Here is one that should give you at least a $1 (~1.5%) swing by the end of the week time frame:

Join SRT Mastermind Group for access
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May 2013 Trading Performance

This is the 4th month I am reporting my options trading performance. After last month’s stellar performance, I once again not only gave back all the profits I made, plus putting a big dent in my starting capital.

In May, I managed to lose 87.75% of total account value, bringing it down from $7,800+ to less than $1k.

Below I’ll summarize some of the stupid mistakes I made in May:

Missed Fortune

May wouldn’t be a bad month at all had I let the trade just play its course. Some notable trades were HLF calls, JNJ strangle, SFD calls that would have paid really really nicely had I held on just a bit longer.

Lack of conviction, not carrying out the trade as planned (ie. take profit too quickly on swing trades, and not stopping loss quickly on scalps) all caused my trading account to suffer.

Unrealistic Expectation

In last month’s report I mentioned to have hoped May to perform, if not outperform the spectacular gains I experienced in April (pretty much doubled my account).

In options trading, it is not unheard of that a trade can quickly return 50% or even 100%+, but it is really a matter of consistency. Statistically you will have a higher probability of making 5% return than 50% return in 5 consecutive trades.

Overtrading

I might have mentioned this mistake on a previous performance report, yet I committed the same sin in May. It is hard to fight the temptation to want to get back into trading and quickly make back your losses.

I had the good fortune of having a Mastermind member visit me over the Memorial holiday. He left me with something that I once told him before: “Slow and steady wins the race.”

Well, if it isn’t the “Those who can’t do, teach.” Hehehehehe :)

Summary

Going forward, having suffered a 75% loss in capital would mean a steep climb ahead to sea level. I always like to tell people, if you are going to fall, fall forward. I will press on.

Lastly, whatever you bring to the table, be prepared to lose it all, especially if you are trading options.

You can learn more about risk management, get real-time trade alerts, and join other elite options traders in our SRT Mastermind Group.

See you again next month!

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WLT break out alert

WLT finally broke out of the 3 month downtrend. We alerted our members of possible breakout on 5/8. If you jumped the gun, but held on then you are rewarded today (and possibly for weeks to come).

Conservative price target of $22 (should be 50 day SMA by then) should be met easily, and if momentum continues we can see this thing go back up to $28 range.
Image

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ADI forming WV pattern

ADI is forming a textbook WV pattern.

There is only one way: UP UP UP!

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How to trade WMT post earnings

WMT had a technical breakout today, however, earnings will be announced before market open on 5/16/13.

Anything can happen and traders should keep an open mind.

Trade long on break of today’s high of $79.96 and trade short on break of today’s low of $78.65.

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C possible breakout of triangle wedge

C closed above a 2 month wedge. We are biased long in C, however, use today’s hod ($48.05) as entry point just to make sure there is follow through buying.

If this breaks out, we expect a $5 move to around $52.

Remember, keep an open mind, trade price, not opinion, and stay unemotional.

 

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WDC High Of Day (HOD) test tomorrow?

We suspect WDC will touch/test a previous high set on April 25th of $57.96. This should give you a good $1 profit run tomorrow.

However, enter long on confirmation of breaking today’s high of $56.79.

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April 2013 Trading Performance

This is the 3rd month we are reporting our options trading performance. After last month’s learning experience, April had some great trades, and not so great trades. We did, however, manage to get back on track where we left off in February.

In April, we roughly had a 70% win/loss ratio so that’s not too shabby at all. We had a 101% return, and hope to perform, if not outperform, April’s ROI this month.

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Below I’ll summarize some of the stupid mistakes I made in April:

Playing earnings

We had this in our Options Trading Rule – we absolutely do not trade earnings, yet I manage to open some AAPL puts a day before the earnings report.

AAPL gaped down pretty hard the next morning, however, because there is so much premium built into the option, plus the fact I picked a 380 strike, I was still out of the money on my option, and they of course just killed the premium right at open. I was immediately red on this trade.

Lessons Learned: Know when the companies are announcing earnings. I did this trade while on vacation and conveniently “forgot” to check the earnings calendar. Talk about stupid.

Fear of being left out

I see this all the time in our chatroom, traders asking what other people are trading, anxious to place their bets on the roulette table.

I forgot that cash is always a position, and a very safe position I might add.

Lessons Learned: Must remain calm, trade price, not opinions.

Summary

There are still 8 months left in 2013. 100%+ in options trading is very doable and you will see our Mastermind members do this day in and day out. The key is still managing risk so you can hold on to your profits. Remember, we are trading here, not gambling.

You can learn more about risk management, get real-time trade alerts, and join other elite options traders in our SRT Mastermind Group.

See you on the inside!

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