Why I Am Content That I Sold Apple And Gave Up Trading [View article]
Ag,
Well you can be partially correct in very highly limited situations. First let's start with a correct situation: Luck is a factor when the trial size (how many events) is small. We can both agree with this and if the trial size is one than one could argue luck is a big factor.
As you increase the trial size (and this happens very quickly) luck loses it's influence and becomes a non factor. Increase the trials to a large enough number and the actual result will be very close to the odds. As someone already pointed out, as you increase the frequency of trading you lower the luck factor and increase the skill factor into the results.
I write this kindly and informative, but "luck" NEVER equals odds. It does not matter how lucky you believe you may or may not be, the odds of a coin landing on heads on any given correct toss is still 50%. It makes no difference if the last five tosses are heads or tails (or any combination) the NEXT toss is still 50/50.
If you wish to grow as an investor and if you wish to maximize your talents and abilities let go of "luck" and own all your victories and mistakes. The process of owning everything you do and the results will take you to new levels. Luck is something you don't get to control but your actions and choices are. You can control your choices and when you decide that your choices are what matters and luck is just a distraction EVERYTHING not just investing but EVERYTHING in your life can be better. Let it go, set yourself free on a path YOU choose to take.
Why I Am Content That I Sold Apple And Gave Up Trading [View article]
It would appear you're using a moralistic approach instead of an informed one about traders.
Firstly, how are you able to say what is and is not of value? Why does adding value even matter? does "Katy Perry" add value or a football player add value? How about Bruce Springsteen?
What about market makers who work in chicago, NYC, and other places, do they add value? How is a market maker any different than a daytrader or YOU? Are not all market participants involved in the market to make money?
Who do you think drives inovation in the marketplace? Do you think investors making a few trades a year are driving companies to develop better trading platforms or the day trader? What about costs? Do you believe it's the day trader or the investor that drives costs lower for everyone?
In highly liquid markets an investor can get in or out of a position with little or no slippage. In markets that are illiquid the spreads and slippage can change a positive expectation into a negative one in a hurry.
Take a look at a stock without daytraders, like the ones trading 5K -50K shares a day and see what an absence of "no value" feels like. I been around long enough to remember the market without daytraders and it was 1/8 point spreads that you HAD to pay and large commissions.
You are actually part of the problem by having a willingness to express an opinion without knowing what the issue is about. I know it sounds harsh, but I fear thoughts like yours will drive the capital markets to other places like China and they will be able to enjoy all the riches that come from highly efficient capital markets.
We didn't have day traders (in the sense you're talking about) in 1989,1987, 1934,1929 and many other dates of "crashes" and rebounds. The market is "illogical" and "unstable" because emotion is a component, not because of the frequency of trading.
Why I Am Content That I Sold Apple And Gave Up Trading [View article]
Dem,
You make a good point. If you're self directed (which is likely a fair assumption if you're spending time on seelingalpha) the concepts apply to all frequency levels of investing.
There are different skill sets required depending on the length of a trade. As you shorten the time horizon of a position, technical analysis abilities increasingly become more influential, while relatively longer holding times increases the fundamental influence on price. For example, the price changes of AAPL in the next three or four hours absent a news event has little to do with the fundamentals. At the same time the price change from now and a year from now will have little to do with technicals relative to fundamentals.
I can not agree with you more about leverage. Most should not use leverage most of the time. My chat room would have a lot more "old timers" if only people would lower their leverage.
Why I Am Content That I Sold Apple And Gave Up Trading [View article]
A young lady walks into a broker’s office and asks “How do you become an investor?” The broker at the desk replies “Start out as a day trader and buy a stock that refuses to come back to even”. For some this joke may hit a little close to home. Seeking Alpha is an investment site with short term swing positions and options as the “high frequency” types of trading for the most part. I don’t know what the numbers are, but it’s probably a fair statement that many on this site have thought about or tried to trade with greater frequency like day trading. I have been in the same trading chat room for maybe six years hardly missing any days. In that time I have seen many come and go with one almost universal reason why they leave. Just about every story of losing involves a loss of discipline one way or another. Can you make money day trading? Yes, but you have to be willing to work hard and put in the hours and training needed. As many have said it “can be a hard way to make an easy buck”. Crazy enough, after you have done it for a while it actually becomes quite easy like driving a car. Anyone who has been to Vegas has likely seen all the blackjack tables in the big casinos. It’s no longer a secret anymore that the game can be beat. The reason why the game survives is because there are many people willing to wager money who are also unwilling to put the effort in to become a winner. Many casinos will even let some known card counters play because they know the real edge is the emotion and lack of discipline most have which destroys their capital. The father of card counting Ed Thorp with his book “beat the dealer” is well known too. But did you know he also wrote another book called “beat the market”? Not only did Mr. Thorp make money in blackjack, but he did it on Wall Street too. One can make money and it’s not about luck (the statistics prove it’s not luck), it’s about a lot of time, effort, and study. It should be treated like learning to practice law, medicine, or learning to fly jets. Anything less and well I guess you will have “bad luck”. Those with the right mental attitude can be spotted by their statements describing the odds and how much they have at risk. Those that are likely to fail are those who think about how much money they can make, don’t know the historic odds, or can’t produce a written plan. The former is not as easy to find as the latter. I didn’t really come here to point out the failings in some of the comments, but to add some light on what it takes and it is not for most just like flying airplane is not for most including me (I took pilot lessons). What I did come here for was to say thank you to Rocco for his overly kind and generous words. I have known Rocco for about a year now and if seems like we have been great friends for a long time. It’s been a two way street of rewards and Rocco is one of the most sharing intelligent people I have had the honor to meet. I have been blessed by Rocco letting me participate in his outstanding options newsletter. I believe it is a fair statement to say the response has been incredible with new sign ups every day from all parts of the globe.
Thanks again Rocco, you made my day with your article.
I appreciate the kind words. I do agree one can often get just as far looking at the reaction of investors to the price as one can by trying to learn everything there is to know about a company in 10 hours
I can call $JAG oversold because based on my TA the odds favor a move lower in the $4 April call price relative to the price of the stock.
Pretty simple actually, this happens all the time. Ok, maybe not simple as it took me years and years to get to where I am now, but once I had the "ah ha" moment it became simple.
Unless your investing for the long term, the facts about how much money they make and other similar factors are relatively meaningless absent a news event to change the perception.
I made about 10% on the shares I liquidated in pre-market and continue to be short covered calls.
I am long technically. I have some shares without a hedge, but mostly I have a covered call position on because of the implied volatility is so high I want to capture a directional move as well as time decay.
If what you're asking is how large proportionally I can tell you no single trade changes my lifestyle for better or worse. risk management is what I get paid for, not trying to get lucky.
$JAG on the "please do not short me list" today and tomorrow. Implied volatility is sky high. The names of the stocks may change, but people don't. Today was the typical panic sell at any cost and unless they are simply closing up the doors in the next week it will most likely bounce like they (almost) always do.
It still amazes me how predictable the markets really are at times.
Nokia Stock Option Hedged Dividend Capture [View article]
Right, if your comfortable holding for a longer period of time (say 6 months or more) I think it makes a lot of sense to look at longer dated options. The key though is liquidity and being able to sell the call hedges with enough premium to justify it. Easier said than done. Best to you
Nokia Stock Option Hedged Dividend Capture [View article]
Hello Double beta,
Very nice catch and thank you for taking the time to bring this to my attention. Yes, I put in today's date by accident. May 4th is the ex-dividend date. Nothing changes with the strategy as it was built with the correct ex-dividend date in mind.
Research In Motion May Be Attractive With The Right Approach [View article]
If that is what you took from the article it would appear you didn't understand it. It's been about six trading days since my article hit the wire. Regardless if the price moved higher or lower (absent a buyout offer) it is too early to suggest success or failure. This was not meant to be a "day trader" type of position as should be clear by the use of a hedge.
3 Speculative Stocks And A Smart Way To Get Long [View article]
San Diego,
I "think" your attack comment is directed (half way anyway) at me.
I am in no way trying to attack you and actually went to great pains in an attempt to make my comment easy to understand without sounding rude. If I failed in my desire to be polite and add value I apologize.
3 Speculative Stocks And A Smart Way To Get Long [View article]
San Diego,
The easy answer is at expiration "NOT" at any time. There is some premium built into an option IN THEORY due to the ability of American options to exercise at any time. We both agree an "efficient market" (how efficient is another debate) does price in some small premium. We are both on the same side of that fence as I commented earlier.
Where your comment falls off the tracks is the idea (based on my understanding of your comment) that if you could not exercise at any time volatility would not affect premium. Even if you could not exercise at any time volatility would still impact premiums AND would do so almost the same as an option that can be exercised at any point (American style). The difference between American and European style options is very small in terms of added premium from anytime exercise.
It doesn't mean someone needs to believe they WILL hold until expiration, because if someone has a favorable price move in the underlying, it will still impact the price (value) relatively speaking of the derivative. The impact the style of an option has on the coloration between volatility and premium is a non factor for retail traders.
3 Speculative Stocks And A Smart Way To Get Long [View article]
San Diego,
Actually he is correct. It's true that American style options have a premium built in due to the ability to exercise at any time during the life of the contract, but the premium is relatively small in comparison.
Just because you CAN exercise an option doesn't mean you want to. It doesn't take much more than looking at the prices of options currently ITM to see that time premium to expiration IS the driving factor
Greater amount of time = greater chance they will be ITM. It is as simple as that and MOST of the time premium is based on expiration for most options most of the time (earnings and FDA etc..aside)
Why I Am Content That I Sold Apple And Gave Up Trading [View article]
Well you can be partially correct in very highly limited situations. First let's start with a correct situation: Luck is a factor when the trial size (how many events) is small. We can both agree with this and if the trial size is one than one could argue luck is a big factor.
As you increase the trial size (and this happens very quickly) luck loses it's influence and becomes a non factor. Increase the trials to a large enough number and the actual result will be very close to the odds. As someone already pointed out, as you increase the frequency of trading you lower the luck factor and increase the skill factor into the results.
I write this kindly and informative, but "luck" NEVER equals odds. It does not matter how lucky you believe you may or may not be, the odds of a coin landing on heads on any given correct toss is still 50%. It makes no difference if the last five tosses are heads or tails (or any combination) the NEXT toss is still 50/50.
If you wish to grow as an investor and if you wish to maximize your talents and abilities let go of "luck" and own all your victories and mistakes. The process of owning everything you do and the results will take you to new levels. Luck is something you don't get to control but your actions and choices are. You can control your choices and when you decide that your choices are what matters and luck is just a distraction EVERYTHING not just investing but EVERYTHING in your life can be better. Let it go, set yourself free on a path YOU choose to take.
Why I Am Content That I Sold Apple And Gave Up Trading [View article]
Firstly, how are you able to say what is and is not of value? Why does adding value even matter? does "Katy Perry" add value or a football player add value? How about Bruce Springsteen?
What about market makers who work in chicago, NYC, and other places, do they add value? How is a market maker any different than a daytrader or YOU? Are not all market participants involved in the market to make money?
Who do you think drives inovation in the marketplace? Do you think investors making a few trades a year are driving companies to develop better trading platforms or the day trader? What about costs? Do you believe it's the day trader or the investor that drives costs lower for everyone?
In highly liquid markets an investor can get in or out of a position with little or no slippage. In markets that are illiquid the spreads and slippage can change a positive expectation into a negative one in a hurry.
Take a look at a stock without daytraders, like the ones trading 5K -50K shares a day and see what an absence of "no value" feels like. I been around long enough to remember the market without daytraders and it was 1/8 point spreads that you HAD to pay and large commissions.
You are actually part of the problem by having a willingness to express an opinion without knowing what the issue is about. I know it sounds harsh, but I fear thoughts like yours will drive the capital markets to other places like China and they will be able to enjoy all the riches that come from highly efficient capital markets.
We didn't have day traders (in the sense you're talking about) in 1989,1987, 1934,1929 and many other dates of "crashes" and rebounds. The market is "illogical" and "unstable" because emotion is a component, not because of the frequency of trading.
Best
Robert
Why I Am Content That I Sold Apple And Gave Up Trading [View article]
You make a good point. If you're self directed (which is likely a fair assumption if you're spending time on seelingalpha) the concepts apply to all frequency levels of investing.
There are different skill sets required depending on the length of a trade. As you shorten the time horizon of a position, technical analysis abilities increasingly become more influential, while relatively longer holding times increases the fundamental influence on price. For example, the price changes of AAPL in the next three or four hours absent a news event has little to do with the fundamentals. At the same time the price change from now and a year from now will have little to do with technicals relative to fundamentals.
I can not agree with you more about leverage. Most should not use leverage most of the time. My chat room would have a lot more "old timers" if only people would lower their leverage.
Why I Am Content That I Sold Apple And Gave Up Trading [View article]
For some this joke may hit a little close to home. Seeking Alpha is an investment site with short term swing positions and options as the “high frequency” types of trading for the most part. I don’t know what the numbers are, but it’s probably a fair statement that many on this site have thought about or tried to trade with greater frequency like day trading. I have been in the same trading chat room for maybe six years hardly missing any days. In that time I have seen many come and go with one almost universal reason why they leave. Just about every story of losing involves a loss of discipline one way or another. Can you make money day trading? Yes, but you have to be willing to work hard and put in the hours and training needed. As many have said it “can be a hard way to make an easy buck”. Crazy enough, after you have done it for a while it actually becomes quite easy like driving a car.
Anyone who has been to Vegas has likely seen all the blackjack tables in the big casinos. It’s no longer a secret anymore that the game can be beat. The reason why the game survives is because there are many people willing to wager money who are also unwilling to put the effort in to become a winner. Many casinos will even let some known card counters play because they know the real edge is the emotion and lack of discipline most have which destroys their capital. The father of card counting Ed Thorp with his book “beat the dealer” is well known too. But did you know he also wrote another book called “beat the market”? Not only did Mr. Thorp make money in blackjack, but he did it on Wall Street too. One can make money and it’s not about luck (the statistics prove it’s not luck), it’s about a lot of time, effort, and study. It should be treated like learning to practice law, medicine, or learning to fly jets. Anything less and well I guess you will have “bad luck”.
Those with the right mental attitude can be spotted by their statements describing the odds and how much they have at risk. Those that are likely to fail are those who think about how much money they can make, don’t know the historic odds, or can’t produce a written plan. The former is not as easy to find as the latter.
I didn’t really come here to point out the failings in some of the comments, but to add some light on what it takes and it is not for most just like flying airplane is not for most including me (I took pilot lessons).
What I did come here for was to say thank you to Rocco for his overly kind and generous words. I have known Rocco for about a year now and if seems like we have been great friends for a long time. It’s been a two way street of rewards and Rocco is one of the most sharing intelligent people I have had the honor to meet. I have been blessed by Rocco letting me participate in his outstanding options newsletter. I believe it is a fair statement to say the response has been incredible with new sign ups every day from all parts of the globe.
Thanks again Rocco, you made my day with your article.
Robert
Sirius Overload: Pandora Has Little To Do With Satellite Radio's Demise [View article]
Jaguar Mining Might Be Oversold [View article]
I appreciate the kind words. I do agree one can often get just as far looking at the reaction of investors to the price as one can by trying to learn everything there is to know about a company in 10 hours
Jaguar Mining Might Be Oversold [View article]
Pretty simple actually, this happens all the time. Ok, maybe not simple as it took me years and years to get to where I am now, but once I had the "ah ha" moment it became simple.
Unless your investing for the long term, the facts about how much money they make and other similar factors are relatively meaningless absent a news event to change the perception.
I made about 10% on the shares I liquidated in pre-market and continue to be short covered calls.
Jaguar Mining Might Be Oversold [View article]
If what you're asking is how large proportionally I can tell you no single trade changes my lifestyle for better or worse. risk management is what I get paid for, not trying to get lucky.
Jaguar Mining Might Be Oversold [View article]
It still amazes me how predictable the markets really are at times.
Nokia Stock Option Hedged Dividend Capture [View article]
Nokia Stock Option Hedged Dividend Capture [View article]
Very nice catch and thank you for taking the time to bring this to my attention. Yes, I put in today's date by accident. May 4th is the ex-dividend date. Nothing changes with the strategy as it was built with the correct ex-dividend date in mind.
Research In Motion May Be Attractive With The Right Approach [View article]
3 Speculative Stocks And A Smart Way To Get Long [View article]
I "think" your attack comment is directed (half way anyway) at me.
I am in no way trying to attack you and actually went to great pains in an attempt to make my comment easy to understand without sounding rude. If I failed in my desire to be polite and add value I apologize.
I wish you the very best with your investing
3 Speculative Stocks And A Smart Way To Get Long [View article]
The easy answer is at expiration "NOT" at any time. There is some premium built into an option IN THEORY due to the ability of American options to exercise at any time. We both agree an "efficient market" (how efficient is another debate) does price in some small premium. We are both on the same side of that fence as I commented earlier.
Where your comment falls off the tracks is the idea (based on my understanding of your comment) that if you could not exercise at any time volatility would not affect premium. Even if you could not exercise at any time volatility would still impact premiums AND would do so almost the same as an option that can be exercised at any point (American style). The difference between American and European style options is very small in terms of added premium from anytime exercise.
It doesn't mean someone needs to believe they WILL hold until expiration, because if someone has a favorable price move in the underlying, it will still impact the price (value) relatively speaking of the derivative. The impact the style of an option has on the coloration between volatility and premium is a non factor for retail traders.
3 Speculative Stocks And A Smart Way To Get Long [View article]
Actually he is correct. It's true that American style options have a premium built in due to the ability to exercise at any time during the life of the contract, but the premium is relatively small in comparison.
Just because you CAN exercise an option doesn't mean you want to. It doesn't take much more than looking at the prices of options currently ITM to see that time premium to expiration IS the driving factor
Greater amount of time = greater chance they will be ITM. It is as simple as that and MOST of the time premium is based on expiration for most options most of the time (earnings and FDA etc..aside)