SHLD - Aug 80 & 85 Calls
With another bloodbath in the markets, I'm only holding SHLD overnight. It held up very well today and at one point traded close to $84.00. I definitely should have taken partial profits at that point but didn't think the averages would come down so much in the afternoon. In anycase, I'll be moving the stop up to $79.50 giving a little room below today's opening range low (79.99). If I get stopped out, I'll definitely look for a re-entry.
LEH
I sold the Aug 17.5 Calls as the OR low could not hold...should have switched over to puts.
Loss - $0.50
BG
I got a great entry on BG as it closed the opening gap. I daytraded some share as mentioned in a previous post. BG was doing great until rolling over hard in the last 30-minutes. I was stopped out for a $0.70 loss on the calls. I'll be looking for a low-risk re-entry as I really liked the earnings report and believe it will trade back up shortly.
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6 comments:
Hi
I am a new reader to your blog. I am seeing tht you day trade options. I am not much into option trading but the other day I tried buying a LEH put. I placed my order at the bid for almost like 15 minutes and still did not get filled. Then I placed my order in the middle of bid and ask and still did not get filled.
Finally I did not get filled untill I placed my order at the ask!
Is it same with all the brokers. Do you always pay the ask price while buying and bid while selling? Or is it due to my broker.
The spread is too much to digest.
How do you manage to day trade with options?
Thanks
Hi Dian,
This early in the month, the bid/ask tends to be large as time and volatility factor more into the pricing. As you get closer to expiration and/or the options move in-the-money, that spread will close. It really depends on the strike price you were bidding on. If there is a lot of volume, the competing market makers will probably be willing to sell you the put for $0.05-0.10 below the ask. For a $20 stock like LEH, I'll bid $0.05-0.10 below the ask and get it. If it doesn't fill for a couple minutes and the stock starts moving, I'll pay the asking price. Most trades nowadays are routed electronically so I doubt that it is your broker's fault. However, if you see this happening often, consider a brokerage specializing in options if you decide to trade them more often.
In terms of the spread, you're right, sometimes it is hard to digest. If you'r scalping for $0.10-$0.50, the spread in options will kill your profits. In my case, I focus on big movers so missing out on $0.10 is okay if I can pick up $1-5 on the trade. In the past, I've placed limit orders $0.10 below the ask that did not fill and the stock subsequently ran up $10+. A couple experiences like that will give you a different perspective on the spread.
In terms of daytrading with options, my watchlist consists of very volatile stocks that usually move AT LEAST $1-2 in either direction. This helps to counter the bid/ask spread. From there, I try to be as patient as possible to trade the best risk/reward setups. Hope this helps!
-OE
just wanted to tell you how much you are appreciate, thanks for you info and help,
jim
Thanks for the quick response. Which Broker do you use?
I think TOS is really bad regarding order execution.
Thanks
OE,
Great post and great blog.........
Quentin
Jim & Quentin,
Thanks for the kind comments and for stopping by guys!
Dian,
I use OptionsXpress. Their "contingent" orders are exactly what I need for my style of trading options based on underlying stock movement. Their customer service has always made good on any execution issues.
OE
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