All things STOCKS

Orange.

Pocket presents
Joined
Nov 24, 2021
Messages
3,053
Likes
17,205
Just look at the numbers for the last three weeks. Ever since Earnings and FOMC week, volume has been turrrrrrrible. When that happens there is always a melt up that takes place. Volume on the SP is usually over 6 billion, but in the last three weeks it has barely reacher 3 billion per day and sometimes only hits 2-2.5. These are the dog days of summer.
So what happens when the volume comes back iyo?
 

mrorange211

Well-Known Member
Joined
Dec 9, 2011
Messages
5,588
Likes
6,492
Well volume usually picks up the first Monday after Labor Day. There isn't a large pool of buyers out there right now which pushed up the price. That should change once more people come back from Summer, or it usually has in the past. Check out stock in Sept 2020, 2021. Seems to happen that month every year.

That being said, I'm buying a lot of 50 SPY puts at close dated for Dec. Probably around a 410 strike. I don't really care what happens much between now and labor day. I should have a bag by Halloween (or I won't because I was terribly wrong).
 
Likes: Orange.

Velo Vol

Internets Expert
Joined
Aug 19, 2009
Messages
33,570
Likes
13,267
Well volume usually picks up the first Monday after Labor Day. There isn't a large pool of buyers out there right now which pushed up the price. That should change once more people come back from Summer, or it usually has in the past. Check out stock in Sept 2020, 2021. Seems to happen that month every year.

That being said, I'm buying a lot of 50 SPY puts at close dated for Dec. Probably around a 410 strike. I don't really care what happens much between now and labor day. I should have a bag by Halloween (or I won't because I was terribly wrong).
It just seems like with so much computer trading the averages shouldn't drift that far from where they would otherwise be, even if half the portfolio managers were at the beach.

I could be wrong.
 
Likes: Orange.

mrorange211

Well-Known Member
Joined
Dec 9, 2011
Messages
5,588
Likes
6,492
Lots of thos managers put those same algos on cruise while they are absent. They have the algos but they also actively monitor them and change their positions in the formula based on other metrics. End of July and August jsut seems to bring inactivity across the board. I do get what you mean though. You would think it wouldn't make THAT big of a difference, but it sure seems to the last two years at least.
 

Ernest T. Vol

It's me...Ernest T.
Joined
Sep 17, 2013
Messages
7,396
Likes
11,372
I finally took the five minutes to get options trading enabled on my account. But, having no confidence in my ability to predict the direction of anything, I'm unsure I'll use it.


Sell a covered call of something that you want to get rid of anyway. You get a premium at least and called out (sold) at worst.
 
Likes: Firebirdparts

Thunder Good-Oil

Well-Known Member
Joined
Dec 2, 2011
Messages
38,181
Likes
32,623


Sell a covered call of something that you want to get rid of anyway. You get a premium at least and called out (sold) at worst.
Or sell a put on a stock that you want to buy. The downside is that your cash or purchase power is tied up while the option is open. You can also be forced to buy shares higher than market if the bottom falls out, but that’s not too different from having already bought the shares anyway.
 

Thunder Good-Oil

Well-Known Member
Joined
Dec 2, 2011
Messages
38,181
Likes
32,623
I finally took the five minutes to get options trading enabled on my account. But, having no confidence in my ability to predict the direction of anything, I'm unsure I'll use it.
I’m approaching it slowly, remembering that most options will expire with zero value. Selling options caps the profits on the derivatives. Selling covered calls prevents unlimited losses on that option. Sell naked and it can get messy.

Knowing the direction that the market will move is really difficult. So I’m looking at selling covered calls (with no more than 2 or 3 weeks until expiration) after strong moves up and selling puts after strong moves down. Now, when I want to buy shares in a company (or ETF) I’ll instead sell puts with strikes several hundred basis points below the current market. I’ll pocket the cash for the option no matter what and I’ll either own the security cheaper or not at all.

I’m also going to buy to close short positions after the options fall 75% +/-. No need to be too greedy when there isn’t too much profit left.
 
Likes: Velo Vol

Thunder Good-Oil

Well-Known Member
Joined
Dec 2, 2011
Messages
38,181
Likes
32,623
Start with $500 and go from there. Everyone has to start somewhere. Thunder is giving good advice with the covered calls info, imo.
I might get my shares of AMAT called away this week. I sold the 112s (calls) that expire on 8/19. Shares are at $110.38 ($110.18/$110.80). Hit a high of $111.32 on Friday. I sold the 112s for $1.75 on Friday morning and could buy them to close the option position for about $2.42 right now (actually when markets open at 9:30am). But I’ll just go with the market. Either sell my AMAT shares for $1.62 ($112.00 - $110.38) more than the current quote or just rinse and repeat next week if the 112s expire (I might buy to close if they drop below about $0.50).

I’m scanning my accounts for more potential covered calls to sell. CSCO, AMZN, NVDA, AAPL, ISRG, and ORCL are the most likely candidates if markets surge on Monday. I don’t have any put sales on my radar right now since equities rose so much recently. Maybe a leveraged inverse bear ETF like FAZ. But I don’t know if I really want to own FAZ right now. Markets could easily keep going up all the way to the mid-terms and beyond.

I’m brand new at this. It’s actually not as complicated as it seemed. Need to stay focused though. It’s not necessarily extremely complex, but it can be tricky with the 4 possible positions. Bullish: buy calls or sell puts. Bearish outlook: sell calls or buy puts. Unlimited losses: selling naked calls.

What I like is that no matter which way the market moves, I can look for opportunities. I had been just waiting for and looking for pull backs to add shares or looking for shares to sell when market advance. When markets are in the middle of a trading range I was just not paying much attention to the day-to-day noise.

I don’t think I’ll mess with it, but I own shares of SAVE and JetBlue is buying them for $33.50. SAVE is at $24.50 +/-. SAVE shareholders are supposed to receive $2.50 once they approve the deal (which they have). I can’t find anything about when that will be paid - but it seems like it would be for shareholders of record on the date of the vote considering how big the difference is from $24.50 to $33.50. So what I’m not going to fool around with are the SAVE options. I’d kind of like to sell covered calls while waiting. Out of the money would expire worthless. I don’t know how the in the money options will wind down. The math is really weird on SAVE right now. I understand that there is a discount built in in case regulators block the deal, but even if that were to happen it seems like airline stocks are advancing. $33.50 minus $24.50 just seems silly imo.
 

Velo Vol

Internets Expert
Joined
Aug 19, 2009
Messages
33,570
Likes
13,267
Per someone on Bloomberg (I didn't catch the name), since WWII in a bear market (S&P) that recovered 50% of the drop (which happened Friday) the market has never gone back down to hit a lower low.
 

Firebirdparts

Best tackle for his weight the old school ever had
Joined
Sep 13, 2014
Messages
2,672
Likes
4,206
Who knows. I'm not a chartist. The current direction and what I see using about any indicator is certainly bigly up. There are some that tell us we're close to the top, but these things lie.
 

Thunder Good-Oil

Well-Known Member
Joined
Dec 2, 2011
Messages
38,181
Likes
32,623
For more than a decade I’ve been doing it wrong. I’d set limit buy and sell orders. Selling covered calls and cash/equity backed puts is so much better. However, it is easier to quickly adjust prices as the market changes with the simple limit orders. Also, if watching tick-by-tick the limit orders can be adjusted to the Penny. I’ve never used a trailing stop - I figured I’d always be leaving a percent or two on the table. Selling the 1-3 weeks to expiration options sure seem like a far better approach.
 

Thunder Good-Oil

Well-Known Member
Joined
Dec 2, 2011
Messages
38,181
Likes
32,623
I’m interested in buying BLDR ($68.63/share).

So I might instead sell the 9/16 $65 put and pocket $190. Share price increases, I don’t own the shares - but I get a free $190.

It works better with stocks that are more actively traded. BLDR doesn’t trade weekly options. I’d rather not go out to 9/16 and there’s not much money in the 8/19s.
 

Firebirdparts

Best tackle for his weight the old school ever had
Joined
Sep 13, 2014
Messages
2,672
Likes
4,206
The only thing that makes sense is volume.
To me, the greater force is the desire to get inflation under control. Here's how they do it:
1. Raise interest rates
2. Asset prices will fall
3. Investment and consumption with other people's money becomes painful or scary
4. Recession
5. People with products to sell aren't quite so prissy anymore.

So really, it's not weird to me when *bad* economic data causes a pop in asset prices, as people think this painful torture is closer to ending. Now, the first time I saw it, yes, I was surprised. But honestly, the first time I saw it was 30 years ago or more.
 

VN Store




Top