Get started

CALL

Netflix is nearing a pivot pointHey traders, so Netflix NASDAQ:NFLX has been dropping the last 6 sessions and has fallen into one of my favorite areas for catching a pivot trade. Basically, the strategy here is to wait for Netflix to pop above the lower Keltner channel after being in between the lower Keltner and Bollinger bands before taking any long trades. Price still could move towards the lower Bollinger Band, so we need to be patient and not rush into a bullish trade, unless you are ok with having some drawdown, which I am not. I trade options, so I try to wait as long as possible before the pivot happens because theta decay eats up the long call position if I get in too early. If you are buying the stock, the passing of time will not hurt your stock position. On my trading platform, I wrote an indicator that automatically plots cyan dots whenever price is between the lower Bollinger Bands and Keltner channel, and then it plots a white dot once price crosses above the lower Keltner channel. I manually drew an example of what that looks like on the chart above. So now that you know what I am waiting for, I'll tell you a couple of things about this strategy. Sometimes, the move I am waiting for ends up happening in between sessions. For example, if tomorrow NFLX gaps up and opens near the upper Keltner Channel, I wouldn't take the trade because the move I was hoping to capture with the long call already happened. I am looking to ride the long call as the stock steadily moves itself across the Keltner channel until it reaches the upper Keltner or Bollinger band. Another thing that could happen, is price could fall past the lower Bollinger band. If that happens, it invalidates the trade (at least for me it does) and I would wait for the price to come back between the lower Bollinger band and Keltner channel so that I'll be ready to try again it crosses above the lower Keltner channel at that time. Note for Options Traders: I usually try to buy calls with this setup, but I almost always experience a period of sideways movement which end up hurting the long call. To avoid the negative effects of theta decay, you can substitute the long call with a put credit spread since put credit spreads benefit from theta decay making them cheaper to buy back.
NASDAQ:NFLXLong
by UnknownUnicorn6775423
2
Time consideration short-term vs long-term buy call options Hello traders, In my previous post, I wrote about, At the money / In the money / Out of the money call option, basic definitions, and the 6 factors that determine the option pricing. I remind you that options pricing is based on the partial differential equation from the Black–Scholes model, the solutions to this equation are not linear, which means it is hard to visualize how the option price will behave. A short explanation about “time premium” and “intrinsic value” and “premium”. To buy an option you pay a “premium” the price of the option contract. The premium is the combination of time premium and intrinsic value Out of the money and At the money only have time premium. (intrinsic value is zero) At the money options have the most time premium. In the money options have intrinsic value and time premium. The intrinsic value of an In the money call is the amount by which the stock price exceeds the striking price. For example, the strike price of the option $90, the stock price $100, the intrinsic value is 100-90 =$10. To this, we add time premium for this example we assume $1, The Total price of the In the money option, called premium is $11. The Theta Theta is a measure of the time decay of the options. This is the risk measurement of time on the option position. Theta is usually expressed as a negative number, it is expressed as the amount by which the option value will change. For example, an option bought for $7 and have 14 days until expiration, the theta of the option could be (-0.5), which means the option will lose half a dollar per day if all the other variables stay the same. Options trader should know that time is the enemy of the option buyer and a friend to the options seller. (Options selling will be explained in another post) Long-term options (one year for example) are not influenced by time decay in one day’s time. The theta of a long-term option is close to zero. Short-term options, especially At the money options, have the biggest theta because they are the most exposed to time decay (The less time you have, the more rapid you lose time premium). At the money have the most time premium, do not get confused with premium (“time premium” and “intrinsic value”), Out and In the money options have less time premium. The time decay (theta) of options on a very volatile stock will be higher than of options on a low volatility stock. The volatility of options will be explained in another post, but what you should know, the higher the volatility of an option the higher the price is (more “expensive”). The higher the price, the more time premium the option has, therefore more time premium to lose daily, which means those options have higher theta. I want to note again, that the equation and their solutions are not linear, options will lose more of their daily value near expiration. Chart explanation and conclusions: We see two options in TSLA, short-term, and long-term, the faded colors belong to the short-term and the strong colors to the long-term. Differences between the options: the option price, the days to expire, the volatility, and other “greeks” like the delta. The strongest factors, stock price, and the strike price of the options are the same. We can see that the long-term options have a much sharper angle (more flat) than the short-term angle, meaning the time decay of the short options is much greater as we expect. The profit lines (3,2,1) of the long-term options are above the short-term options. The break-even and the loss lines of the short-term options are above the long-term options. If you have questions ask them in the comments.
NASDAQ:TSLAEducation
by ZoharCho
1
Options Idea: Buy The Jan. 21, 2022 INTC 40.0 Call @ $13.90Intel just gapped down after its last earnings release as margins tightened from almost 60% last year to 53.3%. Trouble lies ahead as well since Intel’s 7-nanometer manufacturing is delayed which will give AMD a 6 month head start to eat away at Intel’s market share. Intel has responded by initiating a huge $10 billion stock repurchase program. This is in addition to the Oct 2019 repurchase program already in place, bring total repurchases to around $20 billion. Even though Intel is in trouble, we think there’s an opportunity for a longer-term play. Observe the historic Price/Sales ratio for Intel in the weekly view. We are buying today at 2.75. We’ve marked entries over the last few years at the 2.75 PS level. Every entry would have been successful over a 1 year holding period. The 50 week average on the PS ratio for Intel is 3.32. Nevertheless, we like to reduce risk with options, so we are not going long in Intel. We are buying a deep in the money LEAP call on Intel today at $13.90, which gives us unlimited profit potential above $53.90 and limits our losses below $40. Since this is such a long term LEAP call, we have 16 months (or 72 weeks) to sell monthly or weekly calls against this position. So while our current breakeven point is $53.90, we intend to lower our cost basis through the sale of out of the money shorter term calls. This is strategy is called the poor man’s covered call. The important point is that with a $53.90 breakeven, the lowest priced call we can sell is $54. If we sell a lower priced call and INTC were to rise too quickly, the trade could lose money. Selling next month or next week 15 delta out of the money calls should produce more than enough income to compensate us for the loss of dividends on this position and reduce our breakeven to $51, which is where Intel was trading today when we opened our long position. Our objectives for short call income generation against this position are as follows: Initial Objective: $2.90 (Extrinsic Option Premium), reduces breakeven point to $51 Secondary Objective: $4.55 (5 Quarters Dividends on 100 shares) Stretch Objective: $13.90 (100% of capital recovered) If we complete our initial objective we’ll have recovered our extrinsic option premium, giving us the benefit of going long in INTC at no additional cost. If we complete the secondary objective we’ll have not only recovered the option premium, but also generated 5 quarters of INTC’s $0.33 dividend, making our position equal to a long position in INTC, but at 20% of the capital outlay. And our final stretch objective is to recover $13.90 over the life of this call, recovering our capital early. Standard Exit : We exit the trade for a profit when the PS ratio on INTC approaches 4. Early Exit : We exit the trade for a profit as soon as INTC has recovered the 50-week moving average. 20-INTC-03 Opening Date: Sep 1, 2020 Expiration Date: January 21, 2022 DTE: 507 IV: 35.81% IV Percentile: 69% Odds of Winning: 32.60% (before selling short calls) Odds of Losing: 67.40% (before selling short calls) Win: > 53.90 @ Expiration (before selling short calls) Loss: < 53.90 @ Expiration (before selling short calls) Reg-T Margin: $0 (long position, uses $1390 cash) Chart Legend Green Area: 100% Win Zone. If we finish above or in the green area, we’ve made a profit on our call. This is a long call, so our potential gain is unlimited. Red Area: If we finish in this area we have a loss. The size of the red area is the size of our maximum loss. Since we’ve bought a call instead of gone long, we have no additional losses below $40. 1 standard deviation, 2 standard deviation, 3 standard deviation projections from Opening Date to Expiration Date are included. Follow us here on TradingView to get updates as we adjust this trade with the short calls we will be selling against this position.
NASDAQ:INTCLong
by OptionsCoach
10
Home Depot - Potential for break outHome Depot is currently trading near its 21 day EMA. Bulls will need Home Depot will to push through the 21 day EMA resistance level to take the stock up to its recent high. Although we see a double bottom, which is known to be a bullish reversal pattern, please be aware that this chart can also be interpreted as seeing a simple price consolidation pattern, such as a wedge or triangle pattern. We will be monitoring Home Depot this week to see if it breaks above the 21 EMA.
NYSE:HDLong
by UnknownUnicorn6775423
1
Options Idea: Buy The Oct '20 JWN Call Calendar Spread @ $2.35Nordstrom has been a big loser since COVID-19 and is on a long-term downtrend. However, it's been on a short-term uptrend since late August and just blew through its July highs. The next objective will be the early August highs around $17.50. Our goal is to ride the short-term trend for as long as it lasts during September and October. We don’t want to own this stock long-term, but we’ll hitch a ride on this short-term trend with a long-call. Since we’re not long-term owners of JWN we’re buying an Oct. 16 2020 call and we will sell weekly out of the money calls against it to lower cost basis. Look at the yellow trend line for a reference as to where JWN might be and that’s the area to sell weekly out of the money calls against this long call. Make sure your weekly short calls don't run up against the trendline. Here’s how we set-up the trade: Sold the September 11, 2020 $17.5 Call @ 0.25 Bought the October 16, 2020 $15 Call @ 2.60 Our objectives for short call income generation against this position are as follows: Initial Objective: $1.23 (Extrinsic Value of Long Call) Stretch Objective: $2.60 ($0 capital outlay) We on the way toward meeting our initial objective by selling the Sep 11, 2020 call at $0.25 and next week we’ll sell another weekly out of the money call to get closer to our initial objective. 20-JWN-01 Opening Date: Sep 8, 2020 Expiration Date: October 16, 2020 DTE: 38 IV: 93% IV Percentile: 56% Odds of Winning: 36.60% (before selling more short calls) Odds of Losing: 63.40% (before selling more short calls) Win: > 17.35 @ Expiration (before selling more short calls) Loss: < 17.35 @ Expiration (before selling more short calls) Cash Requirements: $235 Chart Legend Green Area: 100% Win Zone. If we finish above or in the green area, we’ve made a profit on our trade. Since our position has a long call that means our potential gain is unlimited after Sep 11, 2020. Up to Sep 11, we are limited in our gain by our short call. Red Area: If we finish in this area we have a loss. The size of the red area is the size of our maximum loss. Since we have no uncovered options, our loss is limited on this trade to the price of our long call minus the credit taking in on our short calls. 1 standard deviation, 2 standard deviation, 3 standard deviation projections from Opening Date to Expiration Date are included. Make sure to follow us on Tradingview for updates on this idea as we continue to reduce our cost basis in this trade.
NYSE:JWNLong
by OptionsCoach
Trade Log NIFTY August 25In my yesterday’s trade log, I said "NIFTY is on it’s way to the upper boundary of the gap -11633. I don't know how fast it can travel, But I expect that target to get achieved in this expiry. If It gets to 11633 in the next two sessions, I plan to take a reversal trade with tight stop loss. Till then, just ride the trend using intraday breakouts." Nothing much has changed. My trades I sold 11500 CALL when the opening range broke. It was covered later. My observations NIFTY had a choppy day. It was 4th straight higher high higher low day. It closed 0.05% up. BANK NIFTY gained 1.13% VIX up 0.44% Advance Decline ratio 21 to 29. Reliance Industries continues to drag by losing 0.65% My view for tomorrow For tomorrow, I don't have clear bias. I think there is not going to be a gap up opening tomorrow. NIFTY did 3 consecutive gap ups. Tomorrow, it may be flat to gap down opening. It needs to be seen how the gap gets bought. Intraday, short trade is more probable if there is no large gap down and NIFTY fails to keep opening range. The support is placed at 11400 and 11360.
NSE:NIFTY
by Observe_Think_Act_Think
PPL Finally Breaking outI've been waiting for PPL to set up breakout of a few months now, and its finally here, unfortunately it formed a gap to $27.30, so it will go back down to fill that gap, but after the gap is filled the target will be: $31.02, and if it breaks from there we are going back to $36.20. Also me and one of my buddies decided to make our own Trading Community, it is free but right now it's only about 5 people large. Message me if you'd like to help liven the place up a bit. Also I just built a Computer and will be able to do more things... Yay
NYSE:PPLLong
by GoEasyScoobs
Trade Log NIFTY August 13From August 11,12 I had the same view NIFTY likely to have a pending upside for the climax to 11380. And then possible formation of an intermediate top which has to be confirmed by moving down below at least the recent low of 10880. Overall, NIFTY is slow moving and the climax move has not happened yet. There is sideways movement in the tight range of 11240-11360. My trades today I sold the next expiry call on the break of the opening range low. I covered that near the end of the day. My observations for the day NIFTY closed flat again with less than a percent down. BANK NIFTY closed -0.30 % down. VIX down -1.33% Advance Decline ratio is 26 to 23 Tight consolidation range between 11240-11360. NIFTY has given 3 daily closing in the 20 point range. My view for tomorrow I have a bearish view for tomorrow. I consider the 1 hr candle (11.00 AM) which failed the opening gap and for the day, there was no attempt to recover above 11320. This view is invalid when NIFTY stays above 11360.
NSE:NIFTY
by Observe_Think_Act_Think