Dan, I’m pleased to see you suggest an option trade for DIS. Picked up some of the common Friday when it poked it’s head up.
Separately, no need to apologize for bringing OMM along slowly. I think I speak for many members when I say that we’ve chosen you as our mentor because of your skills, passion for teaching and concern for protecting against the downside. Keep up the good work!
Regarding recommended stops: Dan said “as with the other trade on Citigroup I’m not imposing a stop right now because I need to see how the stock trades in a few days and so I’ll leave you to your own devices on the stops just know that my initial my initial entries tend to be pretty small in terms of dollars I like to know that the option’s moving in my favor before I really pile in and so just be real careful that your not taking a position that you are unwilling to lose you know substantial amount if the stock moves against you. That’s the real key point. Leverage works in our favor unless it works against us because we have too much on.” What kind of stops do the Veterans recommend?
Also what is the recommended Target/Return premium for Dis? I did not hear or see any in the video.
rayinpa…. I tend to look at the price action of the stock to determine my stops. For me I would be looking to the low on Thursday at 38.51 as a near term stop. This is 1.23 below the close on Friday and hence is the risk that I see on this trade. Based on 1.23 of risk…I will set my position size based on my parameters for any given trade..which for me is 2% to 3%. Lets assume I can risk 1,000 per trade…this would allow me to buy 8 contracts….I would likely start with a half position of 4 contracts and then scale in another 4 contracts. I generally buy deeper in the money options as I am looking for delta of .85 or better. The option Dan has recommended has much more time value so delta is lower and a near term move up/down on the stock will not be dollar for dollar in the option….If I were buying these options I might consider more contracts because a move down to my stop in terms of the stock price would not be as bad on the option. Another way to set stops is based on ATR (average true range on the stock…currently this is .64. For longer term trades I will look at the overall trendline as a basis for setting a stop. The current line I have drawn from the 8/25 Low to the 12/31 low is sitting at about 38.06 as of fridays close.
rayinpa – I would figure, mind you I am very new, I have a delta of .59 for every dollar. So a quick way to estimate I think is basically $0.60 for every $1.00 or $5.00 move in the stock = $3.00 return in option. I’ll let you figure percentage. If I am wrong some one please correct me. This is only a quick estimate.
Dan, Thanks for the trades. I notice there is no Target/Return on Disney, is that because of the speculative nature of the trade by planning to hold over earnings? I plan to heed your warning to not start with a big position. I appreciate the opportunity to participate in this beta group and it occurs to me great progress is being made.
Dan, I’m pleased you picked DIS also, no position in the stock. Since I’m new to this I’m glad your moving slowly. Your explanations are easy to understand. Your a great member, proud to be here.
Dan, is the reason we don’t go deeper in the money strictly to limit our losses if the price moves against us? Maybe you can cover it on an upcoming video. I’m tempted to chase the bigger delta and put a tight stop but I’m new to this and not sure I see the risks clearly. OMM is great… keep it up.
another good choice. Love this company. I bought 38Apr11 @ 217.95. I also bought some puts. This market freaks me out. I’m playing the volitility. Might work. Might not. Perhaps I just need to get more focused.
Michael, the target price he has listed is for the stock to reach $45.00. Since we don’t know when that will happen (early or late) the price of the option can’t be predicted so unlike Citibank we don’t have a price target for the option price.
Dan Like Ray I would like to use deeper in the money options, so when a stock price hits a stop price i get out.. You said something to that effect on the Dis trade.. Could you give us some of your education on this matter. ( Is it open interest, vol.,bid and ask spreads, amount of investment and if we use this type of investment and buy 6 months out a third now and if it drops we can dollar cost average if we believe in that story
In at 2.07 – small position as suggested – no stop pending a look at the trade direction as you suggested. maybe add if going our way. Thanks Dan…. I’m learning .. Being new the learning is sometimes the hard way but learning nonetheless.
Dan I like the way you are presenting the Options . Keep up the good works. Now to try to answer a question about the target price for the option . Members that are asking this question can go to the option chain for April 39 bid or ask price and go up to the up to 5 and read the number . It should be about $6. This number will change with time etc.
Steve was asking why not go deeper into the money? Even tho the delta increases for the ddper in-the-money the leverage actually decreases ofr the deeper INM for example the current value for DIS APR 39 is $3.19 Deeper into the money by $5 the value is $6.25. 6.25/2.19 gives a leverahe value of 2.85. If we take the comparable values for an
Steve ask why not use deeper In-The Money Options. There is more leverage in lower In-the-money prices.
Thank you for clarifing that the trades are put in as Limit DAY buys. I got caught on UNP because I put in a GTC buy. I appreciate your slow approach. Thanks
Check your email. The stops were issued. You also have to keep in mind the time frame on the trade and…. let it work. Sorry to here your having problems. Check junk mail folder and make sure you are not filtering it out. I was unfortunately… and almost missed some critical information on crus. Take that back I actually did and got stopped out because my stops were to tight. Only made 25% on that trade while a lot of others faired better. The toughest battle to be fought in options trading is our own emotions and some days are better than others. Everybody fights that battle….even DAN! With that being said I have traded for ten years very successfully and I have learned more between SMM and OMM in the past fives months than all those years combined including all the reading I have done which is considerable. That being said my results have been flat and the reason is that learning new things can sometimes come at a cost. I consider flat to be ok but the future holds better results for you and me both. Cheers and heres to prosperous new year!
Not me. The original premise was that we would speculatively hold over earnings. That was the plan. What has changed? I am open to changing a plan with sound reasoning. What are your thoughts on why you would change course now?
I don’t recall Dan discussing what to do with Disney over Earnings. I think he has been VERY clear not to hold over earnings except in very rare circumstances (speculation was clearly not in his list). So, I was wondering the same question.
Earl – With all due respect you need to listen to the video above again. Dan starts 15 seconds in by saying this is a speculative trade that he expects that we will have to hold over earnings and talks about just that for the next minute and repeats again 1:28 seconds into the video. You are correct that this is not what he typically teaches. He was pretty emphatic about making that clear. I do not know Dan’s mind but if he changes his mind about holding over earnings I trust he will issue new guidance or an update. Meanwhile it is working, its your trade, you own it and can punch out of the trade at anytime. Right now for a tidy profit too. Cheers!
Dan, I got the DIS trade alert to close the position. Standing by for your analysis as to why we are closing this trade before the target price is reached.
Hmm. How come there’s no stop associated with this one? Is it because it is a fairly inexpensive option? Just curious. Rem
Dan, I’m pleased to see you suggest an option trade for DIS. Picked up some of the common Friday when it poked it’s head up.
Separately, no need to apologize for bringing OMM along slowly. I think I speak for many members when I say that we’ve chosen you as our mentor because of your skills, passion for teaching and concern for protecting against the downside. Keep up the good work!
Regarding recommended stops: Dan said “as with the other trade on Citigroup I’m not imposing a stop right now because I need to see how the stock trades in a few days and so I’ll leave you to your own devices on the stops just know that my initial my initial entries tend to be pretty small in terms of dollars I like to know that the option’s moving in my favor before I really pile in and so just be real careful that your not taking a position that you are unwilling to lose you know substantial amount if the stock moves against you. That’s the real key point. Leverage works in our favor unless it works against us because we have too much on.” What kind of stops do the Veterans recommend?
Also what is the recommended Target/Return premium for Dis? I did not hear or see any in the video.
rayinpa…. I tend to look at the price action of the stock to determine my stops. For me I would be looking to the low on Thursday at 38.51 as a near term stop. This is 1.23 below the close on Friday and hence is the risk that I see on this trade. Based on 1.23 of risk…I will set my position size based on my parameters for any given trade..which for me is 2% to 3%. Lets assume I can risk 1,000 per trade…this would allow me to buy 8 contracts….I would likely start with a half position of 4 contracts and then scale in another 4 contracts. I generally buy deeper in the money options as I am looking for delta of .85 or better. The option Dan has recommended has much more time value so delta is lower and a near term move up/down on the stock will not be dollar for dollar in the option….If I were buying these options I might consider more contracts because a move down to my stop in terms of the stock price would not be as bad on the option. Another way to set stops is based on ATR (average true range on the stock…currently this is .64. For longer term trades I will look at the overall trendline as a basis for setting a stop. The current line I have drawn from the 8/25 Low to the 12/31 low is sitting at about 38.06 as of fridays close.
rayinpa – I would figure, mind you I am very new, I have a delta of .59 for every dollar. So a quick way to estimate I think is basically $0.60 for every $1.00 or $5.00 move in the stock = $3.00 return in option. I’ll let you figure percentage. If I am wrong some one please correct me. This is only a quick estimate.
Dan, Thanks for the trades. I notice there is no Target/Return on Disney, is that because of the speculative nature of the trade by planning to hold over earnings? I plan to heed your warning to not start with a big position. I appreciate the opportunity to participate in this beta group and it occurs to me great progress is being made.
Dan, I’m pleased you picked DIS also, no position in the stock. Since I’m new to this I’m glad your moving slowly. Your explanations are easy to understand. Your a great member, proud to be here.
Dan, is the reason we don’t go deeper in the money strictly to limit our losses if the price moves against us? Maybe you can cover it on an upcoming video. I’m tempted to chase the bigger delta and put a tight stop but I’m new to this and not sure I see the risks clearly. OMM is great… keep it up.
another good choice. Love this company. I bought 38Apr11 @ 217.95. I also bought some puts. This market freaks me out. I’m playing the volitility. Might work. Might not. Perhaps I just need to get more focused.
What would be the target profit price?
Michael, the target price he has listed is for the stock to reach $45.00. Since we don’t know when that will happen (early or late) the price of the option can’t be predicted so unlike Citibank we don’t have a price target for the option price.
Dan Like Ray I would like to use deeper in the money options, so when a stock price hits a stop price i get out.. You said something to that effect on the Dis trade.. Could you give us some of your education on this matter. ( Is it open interest, vol.,bid and ask spreads, amount of investment and if we use this type of investment and buy 6 months out a third now and if it drops we can dollar cost average if we believe in that story
In at 2.07 – small position as suggested – no stop pending a look at the trade direction as you suggested. maybe add if going our way. Thanks Dan…. I’m learning .. Being new the learning is sometimes the hard way but learning nonetheless.
Dan I like the way you are presenting the Options . Keep up the good works. Now to try to answer a question about the target price for the option . Members that are asking this question can go to the option chain for April 39 bid or ask price and go up to the up to 5 and read the number . It should be about $6. This number will change with time etc.
Steve was asking why not go deeper into the money? Even tho the delta increases for the ddper in-the-money the leverage actually decreases ofr the deeper INM for example the current value for DIS APR 39 is $3.19 Deeper into the money by $5 the value is $6.25. 6.25/2.19 gives a leverahe value of 2.85. If we take the comparable values for an
Steve ask why not use deeper In-The Money Options. There is more leverage in lower In-the-money prices.
Thank you for clarifing that the trades are put in as Limit DAY buys. I got caught on UNP because I put in a GTC buy. I appreciate your slow approach. Thanks
Futures down yet again and still no stop on Disney.
I’m very disappointed that Dan isn’t taking this seriously. Issuing trade alerts without stops is irresponsible.
Me taking the trade instead of cancelling my subscription was even more irresponsible.
Check your email. The stops were issued. You also have to keep in mind the time frame on the trade and…. let it work. Sorry to here your having problems. Check junk mail folder and make sure you are not filtering it out. I was unfortunately… and almost missed some critical information on crus. Take that back I actually did and got stopped out because my stops were to tight. Only made 25% on that trade while a lot of others faired better. The toughest battle to be fought in options trading is our own emotions and some days are better than others. Everybody fights that battle….even DAN! With that being said I have traded for ten years very successfully and I have learned more between SMM and OMM in the past fives months than all those years combined including all the reading I have done which is considerable. That being said my results have been flat and the reason is that learning new things can sometimes come at a cost. I consider flat to be ok but the future holds better results for you and me both. Cheers and heres to prosperous new year!
since earnings are reported on the 8th at 5PM EST is anybody closing this trade this week, say very soon since the market is doing very well?
Not me. The original premise was that we would speculatively hold over earnings. That was the plan. What has changed? I am open to changing a plan with sound reasoning. What are your thoughts on why you would change course now?
I don’t recall Dan discussing what to do with Disney over Earnings. I think he has been VERY clear not to hold over earnings except in very rare circumstances (speculation was clearly not in his list). So, I was wondering the same question.
Earl – With all due respect you need to listen to the video above again. Dan starts 15 seconds in by saying this is a speculative trade that he expects that we will have to hold over earnings and talks about just that for the next minute and repeats again 1:28 seconds into the video. You are correct that this is not what he typically teaches. He was pretty emphatic about making that clear. I do not know Dan’s mind but if he changes his mind about holding over earnings I trust he will issue new guidance or an update. Meanwhile it is working, its your trade, you own it and can punch out of the trade at anytime. Right now for a tidy profit too. Cheers!
Dan, I got the DIS trade alert to close the position. Standing by for your analysis as to why we are closing this trade before the target price is reached.
Never mind, I just read an hours worth of posts in the forum covering it.