The Stock Market - A daily diary

Artdb... how you doing  ?  I'd like to hear how your medical/biotech stocks are working out for you.   If interested in medical stocks,  You know how i feel about the XLV ETF ..  Buy and hold it for a VERY long period of time and be rewarded.  Those that need their fix on gambling can get  their fix on the biotech play of the day..

...  if you have lots of patience and a long time horizon,  the XLV should pay off handsomely for you.  

Assuming you had the June 19 (17 Calls).  They opened at .45 -- traded up to .75 and closed at .05.  Not sure exactly what time you got them.  But you should have made money off of these.  IF you HAD put the sell in AS you purchased them.  UNLESS you bought them around 3:15 or so because after that they never traded down until close.  DID you have a sell order in place at any time during the day?  Or were you watching and planning to put a sell in?  ALWAYS have TWO sell orders in place -- ONE for a STOP and ONE for a price you WANT to close out at for profit.

Good volume 4534.  With good volatility for the stock and the call today.  For this size of trade — I really have no issue with this as a daytrade.  Just make sure you have your sell orders in place right away.  

Sorry. Didn’t answer your main question. The correct math should be based on your option call itself — not the stock price. As explained earlier in this thread — there is a correlation.  But is it not always something consistent — but if a stock goes up the call should go up, etc.

21x75= 1575   Would theoretically have been at the highest price it traded at today. 

Also, my previous post was based on me misreading your purchase price. Sorry I read that in a hurry. I read your post to say your purchase price was 21 not the 43.  

For that to have worked you would have had to have bought it right after 11:00 and sold right around 11:15 or so.  So you actually had a very small window for it to work at that price.  

However, if you had purchased first thing in the morning at 21 then you would have chances all day to make a profit.  But you had a few times still to get out at half the loss or so.

Very sorry I didn’t pay closer attention before replying. 

But you should be able to go back and look at the chart and see what I mean when I say this.  

But my point is you should always have a stop order in place to limit your potential loss.  That way it will not expire worthless.  

I hope this helps more than it confuses you with my previous posts based on a wrong purchase price. 

Rush51 not bad with JAGLX but doing better with TMFGX - Put order in on XLV @ 85 also on the other one that you liked WMT @ 100 //  Thanks for asking hope all is well with you & all the participants.

“If you had the sell in as your purchased them .”   What does that mean    I apologize     I bought them damn near at open 9:32   

“One for a stop and one for a price I want to close out at a profit “     I was banking on this closing out ABOVE 17   what happens if it NEVER hit 17 during the day ?   and at what strike price would I have bought puts at?  I just don’t get playing BOTH sides because wouldn’t they be risky as hell ? Losing BOTH calls and puts ?  unfortunately   I don’t have a job at which I can look at a computer screen all day which is a blow obviously to what I’m trying to do here.  I get what you’re saying in always try and lock in profits but I just don’t see clearly how to obtain that.  I mean this stock was down     Damn near a dollar within ten minutes of open   It said I already lost like   85% of the investment within minutes.    thanks for responding to all these ROOKIE questions of mine 

Give me a bit and I will post a link to better explain it  But basically you want sell orders in place that get triggered to sell at your 'desired' price or triggered at a price when it drops too far down and you do not want to risk it going down further -- cut your losses.  You can put them in as soon as you purchase and have both in place at the same time!

Man I was going down the wrong road of thinking here. .  Selling at open is the option under buying at open.  this is one of the only stocks I follow other than the twice a week CALLS posted on cnbc.  They never closed above the strike price in the last two weeks.  Chewy failed , Kroger failed.  And carmax was a HUGE fail at the 100 price on Friday.  Earnings must’ve been shi! Since that plummeted six points or so.  The next one is Wells Fargo.  Bulls are banking that a jump of six points is in order for wells Fargo by July 2.  there are ONE HUNDRED MILLION loans out there that aren’t currently being paid.  how would this result in POSITIVE for banks?  also would love to read into these “stress tests” for banks and if they pass   I just don’t see how banks make money when people are in default.  But that’s a different issue you’ll teach me by weeks end       thanks again 

If you bought that early AND if you had a sell order in place it would have gotten triggered and sold around 10:45 - 11:30 depending at what price you set it at.  Because it traded all the way up to .75   So, you did NOT have a sell order in place?  You were just trying to wait and sell it?  Or did you have one in place?  Obviously, if you had it set at like 1.15 it never would have sold.  Also, if you would have another order at say .15 it would have had multiple chances to sell at a loss -- but not a total loss.

Ok one last question as I am reading into this if you would.  My strike price was 17 and let’s say it DID close at 17.17.  I would now own 2100 shares at that price if I didn’t close them out by expiration on Friday?  Then come Monday I would’ve gotten a margin call from the broker.   Saying I own 2100 shares at the new price of 17.17?  $ 35,700 obviously I don’t have that in my account so I’d have to sell them immediately and if the stock was trading UNDER 17.17 come Monday morning I’d be at a loss? Man I’m confused. I thought I could ONLY lose my original 905$ investment   So not only do I need to buy the call. I need to sell the call at close and invest more money in this ? 

How many vids I’ve watched and I still can’t figure it out.  If I finish above the strike price and don’t initiate a sell to close by expiration what happens ?   
do I have to exercise to buy the stock or how do you just take your profits after expiration ?

lets say I put in a sell to close the option at 17.17 when my strike price was 17.  I had 2100 shares at the premium of .43     
I’m assuming I cannot calculate a profit until I find out what the new premium price was going as ?  Man I need an hour long tutorial about the basics     

Hey guys long time options trader. This pertains to the young man that recently committed suicide and some of your questions. If your options expire in the money, then they automatically exercise. If the money isnt into your account then it takes 2-3 days to settle and return profit, if any, but no matter they will always exercise on expiration date. this isnt new or a glitch, it's been going on for atleast the 10 years I've been trading. It's just becoming such a big thing now due to recent suicide and an influx in new traders. 

Yes. If you let options expire In The Money they will be automatically exercised and the options are ‘assigned’.  Most brokers will notify you to close out ITM options that might have a negative margin impact.  But you better not depend on that — you need to be aware of when they expire.  A lot of places will charge what is known as assignment fees.  I think a lot of places now have zero assignment fees — but be aware of this, also. So the costs of letting options expire ITM can be expensive.  It is also very, very rare — but you can be assigned early in some instances.  In some rare cases, you can even be assigned after hours on options you thought expired OTM and after hours went ITM.  You can even, specifically, request to your broker that they not be exercised.  But know the rules.  So, always best to close the position out before expiration.

You have basically three types of options, American, European, and Bermuda.  And as they say, this has nothing to do with geography.  But they all expire on different dates (Thursdays instead of Fridays) and can or have to be exercised on different dates (only at expiration date or any time before expiration date) — Bermuda’s are an exotic mix of the American and European. But nearly all stocks are going to be American — so Fridays will be the key date. Etc., etc.

You don’t want to have a goal of buying stock when the options expire In The Money — this is counterproductive.  You are buying the calls to sell at a profit when the stock price goes up.  If you wait and then buy the stock on expiration you will be paying more than you would if you had bought the stock outright.

Also, know the requirements and criteria that will deem you a pattern or daytrader as well.  For example, making a certain amount of ‘day trades’ in a certain period of time.  Or even if you trade and sell the same equity multiple times over a certain period of time.  Because this will require more funds to be in your account.

It sounds like a lot to get your head around.  But it comes to you as you study and trade.  Just start small.  Paper trade some.  Read and study a lot!

But most importantly go into it with a plan.  And absolutely always have your sell orders in place.  This is very key!  It will limit your losses, lock in profits and will make it less stressful.

To answer the other part.  Theoretically you could only lose the $905 — because they could expire worthless.  There are rare instances when it is better to let the options expire worthless, for example, because the fees will add to your loss, etc.  But they are rare.

But this assumes that you do NOT plan to exercise the options.

However, if you get ‘assigned’ shares that is a different story.

So, now to close out the trade — you will have to sell the stock.  If the stock sells below the exercise price — then that loss will come out of your account.

If you don’t have the cash in your account to buy the stock the broker will usually immediately sell the shares at the current price and post a loss or a profit to your account minus commissions.

So, no...you would not be on the hook for $35,700 (2100*17 {your strike price}). Immediately at 17.17 would be $357 minus whatever commissions.

But you can read what your broker’s rules are or call them so that you are clear.

Bottom line is that most people are not day trading options in order to hold them through expiration.

So what is the goal here of buying calls?  Hoping the stock goes up so you can SELL these calls at a higher premium when the stock goes up?  

HAPPY FATHER'S DAY TOO ALL  

Short answer:  yes. 

Options are cheaper, have more leverage, risk is limited (usually), and fundamentals do not matter as much as you need them to with buying stocks for the long haul. 

The bottom line is that the most important component of investing, is time. Playing puts/calls and options gives you less time to be wrong and it's very easy to be wrong when time is compacted. Investing in the market, as a buy and hold investor, gives you all the time that you need. Time virtually guarantees success. There are exactly zero instances in the history of investing that "generational exposure" didn't make investors a profit. 

very good.  I’ll keep the questions coming later this week as these “stress tests “ come for the banks.  the next questions I’ll have pertain to shorting stocks and buying puts.  thanks again for all the info over the past three days.  

The markets sure have a quick trigger finger when it comes to China - U.S. trade deals.  Just tonight,  Lighthizer announced trade talks are over w China in a FOX interview,  sending Dow futures down almost 500 points.  .. ( Trump quickly walked back the comments). Meanwhile,  the U.S. has had 3 carrier groups passing through the straight of Taiwan in recent days... with little attention from the markets at all.  And Chinese Virus case mounts are accelerating here again,  with uncertain consequences to the reopening efforts.   It really is a fools game to try and figure out markets on a daily basis ; I would be a lousy day trader.  Lol. 

My apology,  Navarro made the comments... not Lighthizer. 

Haha!  Yeah day trading not for the faint of heart for sure. But you want some volatile markets. 

But if you in for the long haul — all you have to know is:  Up, up, down, up, up etc.