2/20 Daytrades

I wanted to try and post real-time today but the action was just too fast and furious. Expiration day continues to be my favorite day of the month to trade. Premiums dry up so you can trade the big movers with limited risk and potential for big gains. Many traders take options expiration day off due to the volatility. If you're a daytrader, that makes no sense, especially with options where you can control your risk.

Today, you can just sense the fear in the market. BAC/C were getting whacked. I went with the weakness early on and then bet against it as the panic-selling built up.

SKF - This was a big winner for me back in November and again today. My first attempt @ 204+ was stopped out. After peaking above $210, I went back into the Feb 200 Puts which were only trading $1.oo at the time. As I've mentioned previously, the key on expiration day is to continue position-sizing as usual. If you normally risk $1000, then risk the same. In today's case, with the dried up premium, you'll probably be able to pick up twice the normal position for the same amount of risk. In my case, I had 3x the amount of calls at $208+ than I had at $204. The market averages started strengthening, RSI/MACD declining and a narrow range developed for risk-control. I took partial profits at $196 for $6.00 profit. The oversold bounce got me emotional so I set a limit order for $10.00 to close out the position at around $190 for $9.00 profit. The range for these puts were $0.45 - $18.20 so I definitely left a lot on the table but am still happy with the profits which easily offset the hit I took with the UYG Calls.

FAZ - I traded the market weakness with FAZ early on. A narrow range developed and I entered @ 78.50 on the break of the range. I took profits at $81.00 when the RSI indicated overbought conditions. I highlighted the same exact set-up later on in the day. I was too distracted to trade this but the set-up is the same....break of a narrow range in the direction of the market momentum. The narrow-range allows me to easily define a stop point.

GS - Here's a trade I mentioned on a chatboard that I chickened out on. During the panic selling midday, I noticed the potential double-bottom on GS. RSI and MACD were both diverging. The GS Feb 80 Calls were trading $0.95. With a stop at $79.00, the true risk was proabably only $0.50. That would have been nice for $5.00...