So the watchlist was not a great watchlist. It was many stocks that were very low volume stocks. And some SUNV is an OTC stock. I want to stay away from OTC stocks for options trading.
Stock
Close
Change
Volume
Notes
EFG
48.22
+2.68 (5.88%)
361,061.00
OK Volume.
SUNV
0.640
-0.020 (-3.03%)
130,320.00
Low Volume. OTC stock.
IRY
26.72
+0.82 (3.15%)
900.00
Non existant volume.
GILD
47.07
-0.24 (-0.51%)
9.99M
Above MA 20. Might be consolidating here. Seemed to bounce off of resistance.
First, of all there’s a lot of stuff that I’ve been tracking. The market charts (Indices), MSFT chart and now a watchlist. It will get a little confusing discussing previous day’s watchlists and posting new ones and discussing charts and all. So hopefully, I can have a clear format and keep it simple.
Market Analysis - Nov. 4th.
The markets did well today. There was something of a pre-election downturn but in the end, I guess most people decided it was still time to buy.
On the other hand, let’s see how MSFT did. It seems to have done well for the day. RSI is already making higher lows. MACD seems to be making level lows and CMF is lessening selloff pressure. Hopefully, it will allow the stock to rise higher and cause the option premiums to gain value. Not holding much hope of getting higher. But it is still nice to know that technicals point to a climb higher. However, on the fundamental side, the election could swing the market either way tomorrow. Most people says it should go higher on election rally. Tomorrow will solve that mystery.
With election day, it will be tough to navigate the markets. It might be best to not play. However, in general using some candlestick patterns here’s a watchlist.
Bullish Abandoned Baby
EFG
SUNV
IRY
Bullish Engulfing
GILD – Target $50. Higher volume than yesterday.
DUK – Target $17.30 – $18. Volume bar low than yesterday.
LNC – Not above 20 MA Yet. If breaks on 5 min and holds then Targets $26 – $30. Higher volume last bar.
BRCD – Above 20 MA. Declining volume. Might have a quick play. Not a target higher than $4.1. Next stop $6. MACD higher lows. Price falls straight without making many lows.
YUM above 20. MACD higher lows. RSI almost crossing 50. Volume lower. If crosses $31 then might go to $32.
Currently, my portfolio is down 87% or something crazy. This goes to those rules I hadn’t made yet and that I didn’t stick to. Well, not having made the rules is an excuse, since I really knew money management is the only thing that separates the tranders from the dice rollers.
All I can say it that having my money tied in microsoft has taught me the following:
Just because the stock is a good stock, doesn’t mean the options are worth trading. If the stock is not trending those options mean nothing. Actually, in that case those options are losing time values everyday. Especially, with front month options.
Too far out-of-the-money options lose value very fast once there’s only 3 weeks or less left.
When you’re down more than 50%, get out. Some people might be more inclined to cut their losses earlier, however, with options you have to give it some room. I have been down 40% and then gotten out at a good 10% profit and watched the options to up to almost where it would be 100% profit. When it’s down 40% and you’ve been holding for 2 weeks, it is already time to cut the losses and leave. Realize that at that point anything short of a huge spike in the stock is not going to get to even breakeven.
Refine the trading rules and make them a concise list of rules that can be easily be followed.
Looking at the MSFT chart, is shows it might go up a little tomorrow. However, in general this is such a slow moving stock and anything less than one of those 900pt rallies in the DOW will not make the options move.
I was also playing options way far out of the money to get cheaper options and hoping that buying more would benefit more. That is simply not true. Closer to in-the-money or at-the-money options will move that much more if the farther out options move a lot. So still bigger gains will be at the closer to at-the-money options.
Might have to try to get out around 0.10 or .11 or possibly higher. Although, I won’t hold my breath for .11 or higher. Just wanting to free up the money to play other trades.
Seems it stayed quite alright until 1:00pm – 1:30pm. After that more of a selloff. Possible pre-election feelings? It sounds as if both parties will possibly have a positive effect on the market. Not like either has a really good plan. So it has to be either a downturn on either due to lack of a plan or that people slowly start getting back in the market and letting the winner take office and move on with running the office. Hopefully, it will be the latter. Otherwise, it will just whipsaw until next year and go nowhere as people wrestle with different emotions.
Keep in mind that as options traders, we don’t really care which way the market moves. Just that it moves. And possibly more important than that is that we possible the trade on the right side of the market.
Which reminds me that my next post will discuss my current portfolio.
