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GOOG

 
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n7kon



Joined: 09 Oct 2004
Posts: 52

PostPosted: Tue Nov 30, 2004 10:43 pm    Post subject: GOOG Reply with quote

Hi every one just thought I would share. I have been doing Bull Put Spreads on goog for the last two months and doing very well I have been doing deep in the money for less risk and have been making about 25% per spread. The one I have going now is the Dec 165/170 net of $1 when I put it on. Just as long as the stock stays above 170 for the next 17 days I have a winner. This spread has $4100 on hold in my account until expiration or until I buy back the sold put. Not going to get rich fast but it has been working well for me. Laughing
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goodedesign



Joined: 29 Nov 2004
Posts: 43
Location: Charlotte, NC

PostPosted: Wed Dec 01, 2004 2:47 am    Post subject: GOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOGLE Reply with quote

HOW FUN IS THAT!!! i wish you the best with GOOOOOOOGLE. i know some other people who have made a killing on it... heck, i made a couple bucks off of it my self. Very Happy
have a great day...
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abbo



Joined: 12 Sep 2004
Posts: 148
Location: australia

PostPosted: Wed Dec 01, 2004 6:53 pm    Post subject: Reply with quote

Hi n7kon; I would be interested in what was your criteria for entering this trade and on what day you initiated the spread. Also, at what point will you decide to close the spread should it move against you (ie exit strategy for an options trade that is lasting for several weeks) Thanks for sharing.
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n7kon



Joined: 09 Oct 2004
Posts: 52

PostPosted: Wed Dec 01, 2004 10:09 pm    Post subject: goog Reply with quote

The trade was entered on Nov 29. The reason I entered the trade is I think that goog will stay above 170 by expiration date Dec 17. I try to make all of these trades no more than 3 weeks out. I do only Bull Put Spreads and Bear Call Spreads. I try to find stocks that have a spread that will give me 20-25%, in no more than three week time span and still be below near term support. In the case of goog it is just a hot stock now and a lot of people are talking prices above $200 near term. For goog I was staying two strikes below the money and still getting my return most of the time. I got a little closer this time just because the 10 and 20 day MA are at 175, which have been good support. Also any time in near past when it has fallen below $170 the buyers have been all over it. The rest of the time I use the candle formations to enter the trades up or down. I am working on using about 25k to bring in a steady income of $3000 a month income, and still build the account. I picked 25k because it is what I felt I could take from the trading account and still be able to make other trades. My exit strategy is that if the stock falls.25 or more below/above my obligation (the sold option) I buy it back, if it comes back up I have a contingency order in to buy it again. If I am here to watch it I may unwind the trade all together and drop down for a lower strike spread. If it looks like the stock will continue down you just keep the bought PUT and make back the small loss and more some times. Unless you do these spreads on stocks that are in the high $75 there is not enough premium to pay off. For stocks smaller then $75 you have to lower your percent gain on each trade and do more trades. I do a lot of those also. It takes a little more time to find them but they work well. Good risk reward ratio which means less profit per trade but I like safety when trying to perfect my trading to generate a monthly income to live on. My goal is to quit working in no more than 5 years and trade full time. Sorry got a little long winded here.
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abbo



Joined: 12 Sep 2004
Posts: 148
Location: australia

PostPosted: Thu Dec 02, 2004 6:20 pm    Post subject: Reply with quote

Good reply, thanks n7kon.
What risk reward ratio do you like to work with? Are you saying that when you want to get 20 to 25% you are risking $1 to make 20 to 25 cents or is there another meaning here?
I am also curious as to why you entered on 29Nov rather than some other day earlier in the week when the spread would have been more favourable and it appears the other criteria for your trading plan would have been met(except perhaps for the 3 week to expiry rule).
I trade the Australian options market and am very interested in reading your thought processes. The following link may provide some material for you: http:/www.universalsolutions.com.au/newsletter/ . Whilst the homepage marketer is a bit commercialised, by reading the articles you can decipher his trading strategy and it does have some merits for the options market (while he trades the ausy market his techniques are applicable to all stock markets). This trading plan is also useful if you link it with the candlestick forum approach to trading equities.
Good fortune
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n7kon



Joined: 09 Oct 2004
Posts: 52

PostPosted: Thu Dec 02, 2004 10:03 pm    Post subject: GOOG Reply with quote

The $1 to .2-.25 is my min. I am more concerned with how far away my sold put/call is from the nearest support/resistance. This goog trade came late in the week because I was at work and my limit order was to far off and did not get filled. By the time I was able to get to it and change the limit it was late in the week. Just a bad guess on my part on what the net credit should have been. KMRT has been another good one to run Bull Put Spreads also. KMRT has a spread in Jan A little far out but not bad. Jan 90/95 net is $1 it would take almost a $9 move down to make this a bad trade it could happen but I donít think it likely at this point, Break even is $94.
Each stock really determines what I think the best risk is as with any other trade. The big thing I look for is at least 20% with as much cushion as I can get. In the regular trading account I do at the money spreads on stocks that show a good trend reversal formation with the stoís in the right area. Those I look for a $1000 return on ten contracts. I do those at least 45 days out. I look for credits of around $2 and buy back the sold put when I have a gain of 1k plus commissions. I could wait to collect the full credit but that puts me at risk much longer. If it is a good candle formation I can get out in 15 to 18 days most of times. Hope this helps
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n7kon



Joined: 09 Oct 2004
Posts: 52

PostPosted: Thu Dec 09, 2004 4:24 pm    Post subject: Goog fix Reply with quote

Not sure if anyone is interested but one I first wrote this about GOOG, I felt that my Bull Put Spread was safe. It clearly was not as safe as I thought. I still feel that the $170 is a good support level for GOOG and did not back out of the trade but what I did do when I saw it going south on me is to buy the $175 put for Dec for $4.00 and then sold it the other day for $6.75 this more than covered my possible loss with out unwinding my bull put spread. All in all I got lucky made a nice profit from the put and GOOG shot back up to $173. Any way I try to do this type of trade if I think the stock will take a temp dip below my sold put level as insurance on the trade. Not always does it work out this well but some times you just have to get lucky.
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