Emails

DAYTRADE OPTIONS?
Hi Brian,

Just recently discovered your blog. Great job!
I have been trading with options for about a year with some success and failure. Some weeks up, some down. Made a really bad call yesterday on the SPY and got hammered.
Anyway, what are your thoughts on entering some of your day trades / swing trades with option positions? Is there really enough price movement with these to make anything considering the options pricing spread?
Also, are you pre-programming your trades or watching the charts all day?
And finally, am I at a serious disadvantage with a trading platform like ********? Its charting sucks.

Thanks for your effort,
Rick

Rick,

I trade options as well as stocks and I generally do so when I have a longer term view of the stock (calls on SWY). I also day and swingtrade options, but typically only when there is 1-7-8 days left til expiration when there is not a lot of time premium or if I want to make a bet on earnings (am considering MROI july 20 calls, they report tonight and last quarter was a big one for them). I believe that options are not just a way to get leverage in a positon but a way to mitigate risk (losses are limited to a known amount and you can gain exposure to an event such as an earnings report without getting killed if you are wrong) It all depends on your stock picking…. I watch charts all day. As for brokerage, I have not used ******** so I cannot comment on them. I use RealTick platform through Terra Nova brokerage and I am very happy with both.

Brian

SHORT EXPOSURE
Brian,
If you were to go short on an ETF, where would you put your money? I was thinking on Profunds: SDS, MZZ, QID, or DXD. What you say. I need help.
George

George,
I wont give advice as to whether it is the right time to short or not but if I wanted short exposure to the market I would short the QQQQ, SPY or IWM because they have much better liquidity and tighter spreads than the profunds. the only reason I would chose profunds is if I wanted to have short exposure in my IRA

good luck!

OUCH!
Brian,

I was wondering if you could offer your advice on what I should do.

I emailed you last week about your opinion on CRYP because I was holding it long, and it was stuck in the trend between the moving averages and slightly below 25 for nearly half a year. My portfolio has been 100% cryp.

Last week, cryp slipped slightly below it’s narrow range to 24, and against my logical thinking, went on heavy margin and bought more. The stock kept on slidding to 22 on Monday, and I was deeply in the red about 8%. I was holding the stock, because I believe CRYP also has good value.

However, then on Tuesday, all of hell broke lose. The CEO of betonsports was arrested, and there was all this commotion of the crackdown of online gaming in the US. CRYP lost 15% on tuesday, and I had lost over 100K total in the last couple of days.

Today, the news cooled a bit, and CRYP rose 7%, but I’m still down over 80K, over 15%. In addition, I have received a margin call from TDAmeritrade (my broker) for 40K, the money which I don’t have.

I’ve been trading for over 5 years now just as a hobby, and I haven’t had this happen to me in such a short period of time, losing so much money. I really didn’t follow my own advice of keeping a stop, because I thought cryp would recover, (before the 15% drop).

If Cryp continues going up, then my margin call will go away. However, I can’t keep my future and my money betting on cryp to rise in such a short period of time. Also, I’m very afraid that what happened today was a dead cat’s bounce.

Can you offer me some advice? Personally, I’m a wreck, and I’m having trouble calming my emotions in order to make a good decision.

Thanks

Jason,

You’ve made one heck of a mess for yourself with this position, why on earth would you put all your money in one stock in a bear market, forget the bear market, why all in one stock at all? There is a saying “never throw good money after the bad” referring to never meeting a margin call and “your first loss is your best loss”, I could go on forever with the mistakes here but that is not going to help. I cannot tell you what to do here, that is your decision to make. If I tell you to sell it will probably go up tomorrow, if I tell you to hold it will probably decline significantly. I can tell you what I would do and that is to sell it all and move on. The stock is in a downtrend and we are in a bear market. I have felt the pain you are in READ and I did not regret how I handled this loss.

Best of luck

Brian