Stock and Options Spread Trading

[SpreadTraderOpt]

Hello everyone!

I am starting a new trading journal that keeps track of my stock and options trades and adjustments.

Favorite trades:
Collar Trade, Covered Call, ITM Covered Call, Call Calendars, Put Calendars, Long Calls, and Bull Puts.

Goals of this journal is to keep track of my trades and to start doing more TA, and sentimental analysis on stocks before I enter them.

If possible I like to adjust loosing position to make them winning ones. I also like to use options to hedge or protect my whole portfolio in down times.

First trade is a covered call on DNDN. I like to trade covered calls because the short calls lower my cost basis and if the stock starts dropping too much I can add a long put to make it a collar trade.

I placed a covered call today on DNDN - Sell an October 39 Call to get $2.54 and buy the stock at $37.55. My total risk in the trade is $35.01. My risk is that because I am getting 2.54 cents per share with the short call.

My primary exit point is to let the stock get called out at $39. My secondary exit point would be to adjust to add a long put to adjust to a collar trade. I can also roll my short call down and out or just down to bring in more credit.

The benefits to posting on the trading journal forum. I get to make sure that I am following my primary and secondary exit points. Begin to start making better choices on entering trades. I want to use more graphs to do technical analysis. I also want to start doing more sentimental analysis on stocks before I enter the trade.

Let me know your thoughts!

 

[SpreadTraderOpt]

Trade on DNDN is still looking good. We will just let that sit.

I have opened a new trade on AAPL. AAPL has found a lot of support in the past around the 242-245 range. I am hopefully going to be in this trade for a short time and make around a 25% gain. I am looking for a bullish movement but this trade can also work if it is stagnant.

If the trade doesn't go my way I will roll the short call to bring in more credit and lower my cost basis on the long call. I will do this when the stock breaks below 240.

LC Jan 2011 250 for a debit of $19.90
SC SSept 260 for a credit of $1.72

For a total net debit of 18.18 per share.

 

[SpreadTraderOpt]

DNDN looking good still no adjustment needed.

I made an adjustment to the AAPL Call calendar on the drop on Friday. I probably should have waited but with how this market has been reacting I did not want to take any chances. It also hit my Secondary Exit Point where I said I was going to adjust if it got below $240.

I rolled down my short call to a lower strike price.

I rolled from a Sept 260 to a Sept 250 to bring in a credit of 1.60. Primary exit is still the same. SE is now to roll down the short call again if bearish or roll down and out. Also if the stock is too bullish now we will need to adjust the short call up or adjust up and out.

Note: if we did not adjust we could have been up about .16 cents per share vs down .07 cents per share. However, this did lower our overall cost basis on the trade. Right now we want the Short call to expire worthless so we can sell another one.

We will sit and hold both trades now.

 

[Martinghoul]

I like the way you're doing this, STO, so best of luck! Just out of curiosity, is this in a demo environment? Just curious why your screenshot shows 0 commissions everywhere... Maybe it's just the way your platform shows things.

 

[SpreadTraderOpt]

Thank you!

This is in a demo environment but I am doing the same trades in a real account too. I only use very liquid stock and options so the spread is very small and you can usually get right at the mark.

I am taking the screen shots all from my demo account. I will add the normal Think or Swim commissions to the screen shots.

 

[Martinghoul]

Thank you!

This is in a demo environment but I am doing the same trades in a real account too. I only use very liquid stock and options so the spread is very small and you can usually get right at the mark.

I am taking the screen shots all from my demo account. I will add the normal Think or Swim commissions to the screen shots.

Ah, makes sense... Looking fwd to seeing more of your stuff.

Another question, if I may. I am curious whether, given that you're adjusting positions, you have looked at the transaction costs your strategy incurs? I mean both commissions and bid/offer, although the latter would depend on how you decide to enter a position.

 

[SpreadTraderOpt]

Yes I have looked at the cost the strategy. If you over adjust the position, the commissions will eat into your profits. That is what my PE and SE exit points are for so I don't over adjust.

The other thing that I did find is that if I play lower priced stocks like 5-20ish (maybe more) commission seem to eat up more of my profit because you are playing with a lot more contracts and you have to pay more commissions. I usually play with stocks that are $60 and up.

The bid/ask or offer really don't come into play that I have found.